Crucial Service Levels for Logistics Providers of Pharmaceutical Products

Written by Pannir Selvam P Marimuthu, DLSM

The process of discovering a molecule and conducting clinical trials before approval for pharmaceutical purposes is not only challenging but also complex. Different stakeholders play different responsibilities in the process which might take years before actualization. Larger players with the capacity to provide a large range of services, support, and materials play the crucial role of providing the equipment and materials which facilitate the initial discovery.

Experts in large-scale production usually replace the scientists and scale-up production to create a sustainable commercial supply chain model. Most organizations have adopted outsourcing trends for most of the research and manufacturing activities hence creating a virtual operation which needs effective communication and collaboration. Pharmaceutical logistics entails the following Service Levels necessary for virtually all Logistics Providers.

Packaging Strategy Service Level

The packaging strategy is a key level of the overall pharmaceutical logistics business and the related strategy of the supply chain. Being an integral part of every product, the packaging strategy should preserve the integrity and stability of the unit packaged. For products which are environmentally susceptible, the packaging strategy adopted should preserve the contents on transit to ensure the product integrity is maintained. Those responsible for the development and implementation of packaging strategies in the supply chain management should inculcate best practices to ensure the quality of the product is maintained from the packaging level (Chin, 2018).

For instance, the transportation and storage of a pharmaceutical product in a work in process state should be designed in such a manner to allow the fulfilment of orders in time. This approach enhances flexibility and enables the pack to patient or pack to market including any special package inserts and labels. The packaging strategy might also include postponement alternatives at the final package level and entails product risk when handling, inventory valuation and management, and regulatory restrictions.

Other requirements for item-level serialization include market labelling, definition of terms of package, and any other measures meant to protect the product such as tamper-evident seals. The packaging strategy should be a cross-functional role for regulatory, quality, marketing, sales, and customer advocates.

Management of Pharmaceutical Inventory

In pharmaceuticals supply logistics, inventory refers to finished goods, which might be sellable units, bulk, packages or even work in progress. The determination and management of established products is simple but the management of inventory for new products with unknown demand is a challenge. For such products, matching the supply with demand, calls for effective collaboration within the supply chain. Nevertheless, the functional requirements should be defined.

The supply and support of inventory in different levels such as labelling, packaging, handling of materials, etc., requires proper comprehension of the constraints and risks within the respective operational regions. Such fulfilment models should be accurately reviewed by stakeholders for ensuring patients or buyers gain easy access to such products.

This is usually made possible through the multi-dimensional application of multi-dimensional strategies for inventory management such as consignment inventory and provider managed inventory. It should be noted that the user requirements specifications should comprise of the capabilities needed for inventory control and management. This also should include the value chain from drug production to the packaging operations and the profiling of the product.

The Supply Chain Strategy Service Level

The supply chain strategy encompasses all those procedures, processes and policies meant to facilitate the final delivery of the pharmaceutical product from the manufacturer to the administration to a patient. In the development of the supply chain management and the consequent implementation, the three basic flows must be considered. First, the information flow which encompasses the informational systems which support the formation of a digital data trail for the formation of a single version of the truth. The second is the financial flow which encompasses the different value-added processes and activities in the product conversion cycle meant to enhance the financial value that should be tracked throughout the cash to cash cycle.

The last is the material flow which entails activities such as packaging, disposition, receipt, and transportation from one end of the supply chain custody to the other maintaining the visibility of goods on transit. An effective commercial supply chain strategy covers aspects such as distribution planning, risk evaluation, logistics, and execution. Other key parameters in this level includes exception management and alerting, receipt and unpacking of shipment, implementation of planned packaging and shipment process, shipment planning, and scheduling the logistics process. For organizations with undefined supply chains, the customer, market, and product requirements should be determined first while for new products with existing distribution channels and portfolios, planning of the additional considerations should be implemented.

Storage and Delivery Strategy Service Level

While it is easy to plan for mature pharmaceutical products with known patient populations and known demographic profiles, new products pose a greater challenge, especially for novel therapies with smaller patient populations with fewer points of care stations and a changing standard of care. Therefore, the distribution strategy adopted should support the patient experience as well as the overall market message. The varying models of demand hence ought to be weighed in the determination if the most cost-effective and efficient design of the distribution and storage network.

Nevertheless, several factors must be considered in an outsourced model where the fulfilment of orders is done within the distribution network. The qualification of the supplier is a key aspect since the products supplied as well as the packaged components determine the overall quality of the final drug. The qualification of the customer also should be established using credit arrangements and master files with the relevant authorities. In addition to this, the service legal agreements with the carrier must be reviewed to ensure integrity and compliance. Lastly, the planning of the shipment and packaging qualification must be conducted to assess the risks and determine the stability of the process.

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Safety and Security of Supply Chain Service Level

One of the primary concerns for pharmaceuticals is the efficacy and quality of the drug materials manufactured and supplied to patients for use. As such, the industry must deal with issues of diversion, adulteration, and even counterfeiting. The stakeholders hence have a tall order off ensuring the same during storage, distribution, and reimbursement of pharmaceuticals. This has prompted the formation of different bodies responsible for monitoring and control of the manufacture, handling, and supply of drugs for human usage. These control methods encompass serialization and reporting channels.

Serialization is implemented through marking the drugs being supplied with four key data elements which include product identification, the batch number of the drug, the serial number, and the expiry date. Serialization occurs at the secondary unit sale level for product verification before dispensing. Reporting on the other end refers to the use of the data on the product label to verify whether it is eligible for sale in the market. Moreover, this level has in the recent past integrated interoperable electronic system which helps in the authentication and traceability of drugs across the supply chain.


Supply chain management in pharmaceutics is therefore a sophisticated process characterized by imperative multi-level procedures towards the delivery of life-saving or life-changing substances to the patient of the point of care. In coming up with an effective plan regulatory compliance, service and supply, inventory staging, and access to therapy must be considered. The above Service Levels are necessary for virtually all Logistics Providers of Pharmaceutical Products.


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Peggy Ang Pei Qi, DPSM. (2018). “Key Factors to consider for Global Sourcing”. Retrieved from SIPMM:, accessed 15/12/2018.

Robles, Y. R., Casauay, J. F. C., &Bulatao, B. P. I. (2015). “Addressing the Barriers to Effective Monitoring, Reporting and Containment of Spurious, Substandard, Falsely-labelled, Falsified, Counterfeit Medical Products through Sustainable Multi-stakeholder Collaboration and Community/Consumer-based Interventions”. A report prepared for the Medicines Transparency Alliance, Philippines. Manila: Medicines Transparency Alliance, 84.

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About the Author: Pannir Selvam has substantive years of experience in the field of logistics and supply management, specifically as a logistics service provider in the pharmaceutical industry. He is a member of Singapore Institute of Purchasing and Materials Management (SIPMM). Pannir completed the Diploma in Logistics and Supply Management (DLSM) course on December 2018 at SIPMM.