Impact of Disturbance Factors on Supply Chain Configuration Strategy: Insights from the Pharmaceutical Industry

Fahian Huq, Kulwant Pawar, Helen Rogers

Research output: Chapter in Book/Report/Conference proceedingConference contributionpeer-review

Abstract

How a supply chain is configured can have a significant impact on the performance of global firms. More specifically, disturbance factors (i.e. those factors associated with uncertainty and risk) are increasingly important considerations. In the recent past, whole rafts of supply chain disturbances have hit the pharmaceutical sector. For example, in 2008 Baxter Healthcare Corporation was obliged to recall batches of heparin, a blood-thinning drug, following reports of 81 deaths associated with the product. Johnson & Johnson lost over $900 million in revenue in 2010 owing to supply chain disturbances related to manufacturing and quality issues. These incidents demonstrate how important it is for the focal pharmaceutical firms to understand that supply chain related disturbances can occur at all levels within the supply network and to identify their sources. Therefore, this paper focuses on firm, network and environment-related supply chain disturbance factors and their relative importance when configuring global supply chains. Three alternative scenarios of supply chain configurations for European-based pharmaceutical firms are presented (insource nearshore, outsource nearshore and outsource offshore). A multi-stage, mixed-method approach was undertaken. The results reveal that the importance of the disturbance factors differs substantially across the three chosen configurations. For example, our findings show that quality defects represent the top disturbance factor for Western Europe and Eastern Europe. This demonstrates that the cost of quality defects has implications all along the SC, especially given the critical nature of pharmaceutical products. Also, the three propositions derived offer guidance to firms to assess the holistic cost of supply chain disturbances as well as enhance their awareness of key disturbance factors.
Original languageEnglish
Title of host publicationhost publication
Publication statusPublished - 2015
Event23rd International Conference for Production Research - Manila, Philippines
Duration: 1 Jan 1824 → …

Conference

Conference23rd International Conference for Production Research
CityManila, Philippines
Period1/01/24 → …

Keywords

  • supply chain configurations
  • pharmaceutical industry
  • supply chain disturbances
  • risk
  • uncertainty
  • outsourcing

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