Placing the product at right place in right time is possible through physical distribution only. In pharmaceutical marketing Physical distribution involves three main areas of concern as inventory control, warehousing and transportation.
Inventory control is a major area of concern to maintain low cost of distribution. Inventory the word includes raw material, packing material, work in progress and finished goods. So managing inventory level at minimum to meet customer need in time through minimum investment are the most important objectives of inventory management. Also short supply or stock outs shouldn’t be there because it is very harmful for the company in long run as the prescriptions get substituted.
In correlation with other department like sales, material, production and finance cost effectiveness can be achieved through best inventory control method. In Indian pharmaceutical industry, ABC analysis is most commonly used technique for inventory control to avoid short supply or stock out position.
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In this ABC analysis products are categorized as per their sales in descending order and inventory is maintained on that basis of the priority product. Managing inventory level at a profitable level is one part; another equally important thing is about payment of receivables from stockists and C&F agent.
Company usually operated on minimum inventory level and cannot afford the delay in payment. Also distribution manager has to use the method of E.O.Q (Economic Order Quantity) to balance demand and supply of product.
Beside this it is necessary for him to maintain buffer stock or safety stock in case of emergency. So management of inventory and receivables are very important to maintain profitability trend in pharmaceutical industry.
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The second major area of concern in physical distribution is of warehousing. Warehousing should be as per the guidelines laid by Indian government as well as G.M.P. (Good Manufacturing Practices) standard described by W.H.O. (World Health Organization).
As already discussed many Indian pharmaceutical companies having both own depot and C&F agent for them cost minimization and optimum utilization is easier. A suitable and ideal warehousing for storage is mainly depends on its central locality, easy access of transportation, cheaper labor cost etc.
In physical distribution the third factor that is also important is transportation. Transportation in Indian pharmaceutical marketing is mostly through road transportation as it is available at cheaper rate than air or rail transport.
For certain life saving drugs that requires specific temperature like injectible and tablets in that case is send by Air route also. And therefore for other pharmaceutical preparations the best transportation available in Maharashtra are Arco, Shri Jetendra transport etc.
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The objective of good physical distribution is to balance the supply as per demand in time and to minimize cost of it. There are definite some performance standards laid in Indian pharmaceutical industry for physical distribution are execution and supply of complete order, quick delivery i.e. for local with 24 hour and for outstation parties within 48 hours, proper handling etc.