The Role of Disturbance Factors during Configuration of the Optimal Supply Chain in the Pharmaceutical Industry: A Conceptual Model

In an atmosphere of declining R&D productivity, increase pricing pressure and changing regulatory requirements, pharmaceutical MNCs are under increasing challenges to improve profit margins by global outsourcing of R&D and manufacturing. Through the trends of globalisation and outsourcing, the complexity of the pharmaceutical supply network has increased and it has been increasingly exposed to SC disturbances. This has led to calls for changes to the structure of the modern pharmaceutical SC and is causing firms to rethink and redesign their SC. For these reasons, this study aims is to build a framework to identify all the important disturbance factors affecting the pharmaceutical SC; which can be later used to run simulations in order to gauge the performance of the different possible SC configurations. An extensive literature review and in-depth semi-structured interviews were the methods used in support of this work. First, three possible SC configurations that are available to European based pharmaceutical MNCs (focal company) is conceptualised. Next, the SC disturbance framework is developed, which is a tool that can be used to increase visibility of the disturbances that actors in a supply network are exposed to, or might potentially become exposed to, and to help in the assessment and management of those disturbances. The SC disturbance framework incorporates endogenous (firm related), exogenous (network related) and environmental (site related) disturbance factors; and suggests appropriate performance measures for the possible SC network configurations. Finally, a modelling approach to support strategic decision makers is created and a tool for solving the complex problem of SC configuration presented. This is called the SC configuration model, the novelty of which lies in the integration of SC design strategy and the degree of disturbance present in the SC. From the practical point of view, this research has contributed to the better understanding of how to identify disturbances along the SC and it suggests what strategies to choose while designing the optimal SC configuration, given the degree of disturbance. From a theoretical point of view, this study contributes to the research on supply chain risk management by providing a detailed conceptual framework of the supply chain disturbance constructs. It has also advanced the understanding of how to model and analyse the SC strategies and contributed to theory development in the emerging field of Supply Chain Management

The architecture of coopetition: strategic intent, ambidextrous managers, and knowledge sharing

The study investigates the significance of strategic intent, manager's ambidexterity, and knowledge sharing routines for firms in their quest to pursue coopetition. We utilize the resource-based view and the dynamic capabilities theory to ground our hypotheses. We test the hypotheses using the data collected from 313 firms that engage in coopetition relationships through an online survey. The findings forward knowledge sharing and ambidextrous managers as intervening variables, in that when complemented with knowledge sharing, a firm's strategic intent could better guide the firm's managers to pursue coopetition successfully. Findings further advocate that knowledge sharing complements to enable the relationship between a firm's strategic intent and its ambidextrous managers, as well as the relationship between strategic intent and coopetition. Furthermore, results also indicate that ambidextrous managers, with a skillset of a combination of exploration and exploitation, are positively associated to coopetition. Overall, the findings make important theoretical as well as empirical contributions to the coopetition and strategic alliance literature

Supply chain configuration conundrum: how does the pharmaceutical industry mitigate disturbance factors?

How a supply chain (SC) 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. This paper focuses on endogenous, exogenous and environment-related SC disturbance factors and their relative importance when configuring global SCs. Three alternative scenarios of SC configurations for European-based pharmaceutical firms are identified - insource nearshore, outsource nearshore and outsource offshore. Through a multi-phase, mixed-method approach we find that the top five disturbance factors managers should be aware of while configuring their SCs are quality defects, unforeseen and random interruptions in manufacturing processes, order processing difficulties, untimely delivery of products, and a mismatch between market demand and supplier responsiveness. This study is able to provide insights into the impact of disturbance factors on the SC configuration strategy for Big Pharmas. We show that SC disturbances influenced the decision to bring production back home (reshoring) or to a closer location (near-shoring). To mitigate the effects of disturbances many Big Pharmas recalibrated their SC configurations by insourcing core products, outsourcing non-core products offshore and developing offshore insourcing capabilities through ‘captives’

Contextualisation of the complexity in the selection of developing country outsourcees by developed country outsourcers

© 2018 Informa UK Limited, trading as Taylor & Francis Group. Outsourcing research has recognised that selecting the right offshore supplier (outsourcee) in low-cost distant developing countries is complex, but central to outsourcing success. More specifically, the combination of outsourcee contextual internal factors (e.g. capabilities) with outsourced-to country contextual external factors (e.g. political, legal, economic, socio-cultural) as two fundamental and interconnected decisions firms make when outsourcing remains an underexplored research gap. Therefore, through a rigorous three-tier qualitative approach we, firstly, develop a contextual Environmental Separation Index (ESI) decision tool to help outsourcing firms in making more informed decisions when selecting outsourcees and outsourcing locations. Secondly, we operationalise the ESI as intuitive and easy to use decision tool, yet with a provision to deliver a truly context proof outsourcee selection decision. Thirdly, we adopt a complexity theory lens to explain that narrowing the contextual outsourcer–outsourcee gap facilitates a mind-set shift in outsourcing relationships from hierarchies to networks and from controlling to empowering developing country outsourcees. We show from a complexity theory perspective how contextual separation gaps between developed country outsourcers and developing country outsourcees can be an effective way to grasp the evolutionary path of outsourcing relationships

Disturbances to the supply chains of high-value manufacturing firms: comparison of the perceptions of product managers and supply chain managers

We draw on the literature to categorise the supply chain disturbances (risks and uncertainties) that affect high-value manufacturing (HVM) firms when adopting the following two sourcing strategies: (a) insourcing/nearshore outsourcing, and (b) outsourcing/offshoring. We build a hierarchy structure of disturbances, which was tested in a case study of a European HVM operating in the aerospace industry. A novelty of this study is the quantitative prioritisation and comparison, using the analytic hierarchy process (AHP) method, of the disturbances reported by two groups of managers: three product managers (internally facing) and four supply chain managers (externally facing). Our findings show that managers’ perceptions of firm-related, network-related and location-related disturbances can be prejudiced by their functional boundaries. We show that both product and supply chain managers prefer the insource/nearshore outsource strategy, as they feel that the disturbances while outsourcing/offshoring are significantly greater and offset the benefits of low-cost production – a counterintuitive finding. Through in-depth interviews with both groups of managers, we found the mitigation strategies are reshoring, full consideration to the total cost of acquisition (including hidden costs of distant operations) and building clusters in emerging markets to support the firm’s regional hub by partnering with its existing suppliers from developed countries

The Role of Disturbance Factors during Configuration of the Optimal Supply Chain in the Pharmaceutical Industry: A Conceptual Model

In an atmosphere of declining R&D productivity, increase pricing pressure and changing regulatory requirements, pharmaceutical MNCs are under increasing challenges to improve profit margins by global outsourcing of R&D and manufacturing. Through the trends of globalisation and outsourcing, the complexity of the pharmaceutical supply network has increased and it has been increasingly exposed to SC disturbances. This has led to calls for changes to the structure of the modern pharmaceutical SC and is causing firms to rethink and redesign their SC. For these reasons, this study aims is to build a framework to identify all the important disturbance factors affecting the pharmaceutical SC; which can be later used to run simulations in order to gauge the performance of the different possible SC configurations. An extensive literature review and in-depth semi-structured interviews were the methods used in support of this work. First, three possible SC configurations that are available to European based pharmaceutical MNCs (focal company) is conceptualised. Next, the SC disturbance framework is developed, which is a tool that can be used to increase visibility of the disturbances that actors in a supply network are exposed to, or might potentially become exposed to, and to help in the assessment and management of those disturbances. The SC disturbance framework incorporates endogenous (firm related), exogenous (network related) and environmental (site related) disturbance factors; and suggests appropriate performance measures for the possible SC network configurations. Finally, a modelling approach to support strategic decision makers is created and a tool for solving the complex problem of SC configuration presented. This is called the SC configuration model, the novelty of which lies in the integration of SC design strategy and the degree of disturbance present in the SC. From the practical point of view, this research has contributed to the better understanding of how to identify disturbances along the SC and it suggests what strategies to choose while designing the optimal SC configuration, given the degree of disturbance. From a theoretical point of view, this study contributes to the research on supply chain risk management by providing a detailed conceptual framework of the supply chain disturbance constructs. It has also advanced the understanding of how to model and analyse the SC strategies and contributed to theory development in the emerging field of Supply Chain Management

Social sustainability in developing country suppliers:an exploratory study in the readymade garments industry of Bangladesh

Purpose: To investigate why developing country suppliers are adopting socially sustainable practices and how the implementation process is both impeded and enabled. Design/methodology/approach: A multi-case study approach is adopted based on four Ready Made Garment (RMG) industry suppliers in Bangladesh and the Bangladeshi buying houses of two large UK retailers. The primary mode of data collection is exploratory face-to-face interviews with 14 senior representatives. Findings are later interpreted using the Transaction Cost Economics (TCE) theory lens. Findings: One factor motivating implementation is labour retention – a skilled labour shortage means employees will migrate to other factories if suppliers do not improve certain social standards. Barriers to implementation include a misalignment between the requirements of Western codes of conduct and the cultural and socio-economic context in Bangladesh. Enablers include a shift from auditing and monitoring to more open dialogue and trust between buyers and suppliers. We also reveal evidence of mock compliance, e.g. suppliers keeping two sets of timesheets, and of the complexities of social sustainability. For example, while some initiatives are unanimously positive, removing child labour from RMG industry suppliers has simply diverted it to other, less regulated and more hazardous industries like construction. Research implications: An early, exploratory contribution is provided. The work could be extended, e.g. to other stakeholders like third-party auditors and Non-Governmental Organisations (NGOs). Practical implications: Being aware of the motivations, barriers and enablers will help Multi-National Corporations (MNCs) promote good practice and anticipate the challenges they are likely to face in improving the social sustainability of their supply chains. Use of TCE leads to suggesting MNCs need to move beyond immediate suppliers and incorporate tier-two suppliers in their implementation efforts. Social implications: Social sustainability improvements should benefit vulnerable workers, help suppliers develop longer term relationships with MNCs, and contribute to economic growth. Originality/value: Most prior studies have been in the context of developed countries and focused on the perspective of the buying firm only