Best practice points for all stakeholders in the pharmaceutical sector.

1. Rahul Gulrajani Innovation in the supply chain

3. sector overview

4. sector overview

5. sector overview

6. sector overview

7. sector overview

8. sector overview

9. research methodology

10. research methodology

11. research methodology

12. findings – manufacturer level

13. findings – wholesalers

14. findings – hospitals

15. findings – pharmacies

16. findings – overall performance Expected performance level - end user: patient Manufacturer cannot supply (% failing) Wholesaler cannot supply (% failing) True performance level - end user: patient Pharmacy/ Hospital cannot supply (% failing)

22. recommendations - wholesalers Recommended Actions Associated KPI’s (Supplier End) Design supply systems to ensure order fulfilment at the first attempt, including bar code technology for manual picks Process orders electronically using means that will notify purchasers of exceptions to order requirements, e.g. quantity, price and delays. Develop the facility to receive orders electronically. 11 – order (lines) transmitted electronically Issue invoices with goods or transmit them on despatch. Establish inventory management systems that ensure a high level of order completion at the first attempt. Wholesalers should provide regular performance data to customers. 1,2,3,6,7 and 9 Identify with pharmacy procurement managers the most economical order frequency for both parties. Review systems for handling invoices and other queries to ensure prompt resolution.

24. recommendations - hospitals

25. recommendations - hospitals

26. recommendations - hospitals

27. recommendations - hospitals Recommendation Action Related KPI’s (Supplier End) Ensure hospital procurement systems are designed to minimise manual intervention, duplication and the chance of failure. Implement interactive electronic trading systems that support order transmission, acknowledgement, and invoicing. 11 – order (lines) transmitted electronically 12 – invoices (lines) reconciled electronically Avoid duplication of effort involved in processing invoices – invoices should be passed by Pharmacy Ensure that invoices for pharmaceuticals are paid at frequent intervals and on time. 5 – timeliness of payment Ensure responsibility for each stage of invoice processing is clearly defined together with standards for timeliness. Work with finance managers to review urgently the invoice generation system in those pharmacies that act as suppliers to other hospitals.

28. recommendations - hospitals Enable electronic archiving of orders placed electronically. Paper copies should not routinely be produced for archive or internal audit purposes. Review the range of products managed through pharmacy systems and remove products for which no value is added by pharmacy procurement. Review short line stores trading arrangements. Understand computer re-order calculations methodology. Implement effective inventory management tools such as the Pareto 80/20 rule. Profile stocks of medicines held in all hospital locations periodically and take steps to reduce excess stock. 4 – stock turn

29. recommendations - hospitals Set order quantities for medium to high turnover items as multiples of outers. Establish the most efficient re-order parameters for stock, recognising the total cost of order placement. Establish the most efficient re-order times for wholesalers and other suppliers Establish electronic systems to ensure correct order price Establish systems to monitor and manage outstanding orders. Understand their local marginal costs of placing orders. Ensure that pre-notified contract price changes are acted on before orders are placed. Ensure invoices are cleared within 2 working days of receipt of invoice. 2 – invoices matched first time Ensure staff processing invoices are fully aware of the impact of process delays. Establish a control system to ensure outstanding invoices are routinely identified and followed up. Review current systems against the supplier preferences and implement systems for optimum efficiency. Benchmark inventory with comparable trusts. Not print electronically processed orders simply to provide an audit trail.

30. recommendations - pharmacies Recommendation Action Related KPI’s (Supplier End) Implement interactive electronic trading systems that support order transmission, pricing, expiry date tracking, acknowledgement, and invoicing. 11 – order (lines) transmitted electronically 12 – invoices (lines) reconciled electronically Agree and implement standard reason codes across industry for both returns and invoice queries 8 – lines returned Ensure that a range of procurement performance indicators are used regularly within the procurement. Indicators 1-12 Understand computer re-order calculations methodology and establish the most efficient re-order times from suppliers. Establish the most efficient re-order parameters for stock, recognising the total cost of order placement. Understand their local marginal costs of placing orders. Pharmacies should provide regular performance data to pharmaceutical companies. 1,2,3,6,7 and 9 Be sure to generate electronic and physical invoices which are despatched with every single sale.

34. thank you