A custom-designed consolidation center and end-to-end review of freight flows led to significant savings for a European pharma company using contract manufacturers in India.
Life sciences companies making medicines in India need to be able to surmount significant logistics and infrastructure hurdles to be competitive. One leading pharmaceutical company worked with Agility to establish a safe, compliant supply chain that would ensure reliability, improve efficiency and lower shipping costs.
India is the world’s third-largest producer of generic pharmaceuticals with industry revenues that exceed $13 billion a year and annual growth rates of about 15%. Foreign life sciences companies can choose from among 400 approved contract manufacturers (CMOs), many of them world-class operations.
Companies looking to take advantage of low-cost manufacturing in India often underestimate the time and effort it will take to navigate India’s uncertain regulatory environment and move goods from manufacturer to market.
One global seller of generic drugs uses a network of 30 CMOs in India to fulfill demand in Europe. The company struggled to develop a reliable and compliant process for managing transport from the point of manufacture through market delivery. Looking to make a change, the company approached Agility with three specific objectives:
- Create an end-to-end, GDP-compliant (Good Distribution Practices) supply chain
- Reduce shipping costs through better order consolidation
- Improve in-country operations management
Agility worked with the company to create a one-of-a-kind consolidation center in Mumbai compliant with both GDP rules and U.S. Food and Drug Administration requirements. Key to making this facility a success was Agility’s experience operating in the local market. Agility helped the customer cut through complex, often ambiguous rules governing GDP compliance.
Agility’s role also included hiring and training qualified workers to staff the operation. The dedicated team was able to coordinate transportation from suppliers, improving operations, cutting down on calls from supplier to the customer, and eliminating most supply disruptions.
The consolidation center – relatively small at 300 square meters – was enough to address multiple needs for the customer. Mainly, through careful planning and inbound transportation management, it allowed the customer to bring together and manage products made by its 30 different producers.
CMOs typically want to ship product as it is produced, preferring to not store finished goods or hold them to be combined with other orders. The bonded, temperature-controlled facility allowed the customer to meet GDP requirements for handling and storing pharmaceuticals.
Cutting freight costs
Agility looked at the customer’s transportation costs and freight use. Air freight – up to 90% more expensive than ocean freight – had become the customer’s default choice in certain cases because the customer had poor visibility into order status and delivery schedules, particularly those from small-batch producers shipping just one to five pallets at a time.
Agility’s efforts to get more visibility into orders improved scheduling and allowed for regular consolidation of smaller orders into Full Container Load (FCL) shipments at the lowest ocean rates.
In addition to ensuring regulatory compliance, changes in consolidation and transportation management enabled the customer to reduce its reliance on air freight. Ocean container use – just 55% before the changes – rose to 90%.