Decision modeling of risks in pharmaceutical supply chains
| Date | 13 August 2018 |
| Published date | 13 August 2018 |
| Pages | 1388-1412 |
| DOI | https://doi.org/10.1108/IMDS-10-2017-0465 |
| Author | Md. Abdul Moktadir,Syed Mithun Ali,Sachin Kumar Mangla,Tasnim Ahmed Sharmy,Sunil Luthra,Nishikant Mishra,Jose Arturo Garza-Reyes |
| Subject Matter | Information & knowledge management,Information systems,Data management systems,Knowledge management,Knowledge sharing,Management science & operations,Supply chain management,Supply chain information systems,Logistics,Quality management/systems |
Decision modeling of risks in
pharmaceutical supply chains
Md. Abdul Moktadir and Syed Mithun Ali
Department of Industrial and Production Engineering,
Bangladesh University of Engineering and Technology, Dhaka, Bangladesh
Sachin Kumar Mangla
Plymouth Business School (PBS), University of Plymouth, Plymouth, UK
Tasnim Ahmed Sharmy
Department of Industrial and Production Engineering,
Bangladesh University of Engineering and Technology, Dhaka, Bangladesh
Sunil Luthra
Department of Mechanical Engineering,
State Institute of Engineering and Technology, Nilokheri, India
Nishikant Mishra
Hull University Business School, University of Hull, Hull, UK, and
Jose Arturo Garza-Reyes
Centre for Supply Chain Improvement, The University of Derby, Derby, UK
Abstract
Purpose –Managing risks is becoming a highly focused activity in the health service sector. In particular,
due to the complex nature of processes in the pharmaceutical industry, several risks have been associated to
its supply chains. The purpose of this paper is to identify and analyze the risks occurring in the supply chains
of the pharmaceutical industry and propose a decision model, based on the Analytical Hierarchy Process
(AHP) method, for evaluating risks in pharmaceutical supply chains (PSCs).
Design/methodology/approach –The proposed model was developed based on the Delphi method and
AHP techniques. The Delphi method helped to select the relevant risks associated to PSCs. A total of 16 sub
risks within four main risks were identified through an extensive review of the literature and by conducting a
further investigation with experts from five pharmaceutical companies in Bangladesh. AHP contributed to
the analysis of the risks and determination of their priorities.
Findings –The results of the study indicated that supply-related risks such as fluctuation in imports arrival,
lack of information sharing, key supplier failure and non-availability of materials should be prioritized over
operational, financial and demand-related risks.
Originality/value –This work is one of the initial contributions in the literature that focused on identifying
and evaluating PSC risks in the context of Bangladesh. This research work can assist practitioners and
industrial managers in the pharmaceutical industry in taking proactive action to minimize its supply chain
risks. To the end, the authors performed a sensitivity analysis test, which gives an understanding of the
stability of ranking of risks.
Keywords Bangladesh, Analytical hierarchy process, Supply chain management, Risks, Delphi method,
Pharmaceutical supply chain
Paper type Research paper
1. Introduction
Risk is represented in terms of uncertain event, which possesses the probability of
occurrence of unfavorable outcomes like late delivery, financial burdens, business loss,
etc. (Holton, 2004; Mangla et al., 2016). Risk exists in various fields of research like
insurance, finance, manufacturing, healthcare, supply chain management, etc. (Kouvelis
et al., 2006; Kleczyk, 2008; Mangla et al., 2015a; Vian et al., 2017). In today’s scenario,
organizations are becoming more vulnerable in their supply chain due to irregularities of
Industrial Management & Data
Systems
Vol. 118 No. 7, 2018
pp. 1388-1412
© Emerald PublishingLimited
0263-5577
DOI 10.1108/IMDS-10-2017-0465
Received 6 October 2017
Revised 30 December 2017
Accepted 25 January 2018
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0263-5577.htm
1388
IMDS
118,7
material supply, product demand, skills and equipment requirements (Finch, 2004;
Enyinda et al., 2009; Gandhi et al., 2016). Therefore, managing of risk has become
important to tackle such kinds of disturbances from a supply chain context (Christopher
and Lee, 2004; Tuncel and Alpan, 2010; Mangla et al., 2016). Managing risk can be a
challenging part in pharmaceutical supply chain (PSC) due to its complex and dynamic
network structure ( Jaberidoost et al., 2013). PSC is responsible for a smooth flow of
medicine to reach the customers (Manuj and Mentzer, 2008; Jaberidoost et al., 2015).
Being a significant element of the health scheme, PSC covers various activities like
purchasing and procurement of raw materials, manufacturing, 3P (third party) for
logistics and distribution, marketing, financing, sales and promotions (Wagner et al., 2011;
Vian et al., 2017).
Pharmaceutical industry plays a significant role in providing medicines and saving
human life. In this sense, any risk affecting the PSC could affect the efficiency of health
system and disrupt the supply of medicines (Hung et al., 2005; Tazin, 2016). To deal with
such vulnerabilities, it is important to examine the related risks and to reduce their
occurrence to ensure the best practices in the PSC for quality ingredient of drug and
flexibility in the business. An adequate understanding of risks can help pharmaceutical
industries to minimize costs and liability, avoid waste, and thus, results in enhanced
efficiency of the supply chain (Kwak and Dixon, 2008; Rogachev, 2008). Notably, over the
past few years, researchers addressed the theme of risk assessment in pharmaceutical sector
and the majority of studies conducted by considering a particular supply chain activity,
such as outsourcing and off shoring (Enyinda et al., 2009; Mokrini, Dafaoui, Berrado and El
Mhamedi (2016), Mokrini, Kafa, Dafaoui, El Mhamedi and Berrado (2016)). This work aims
to evaluate risks for the PSC by taking a holistic view. In addition, the present study aims
to address the following questions:
RQ1. What are underlying supply chain risks in the PSC context?
RQ2. How the identified risks are modeled to know their priority?
This work is one of the initial contributions in the literature that focused on identifying and
evaluating PSC risks in the context of Bangladesh. The first aim of this work is to select the
most suitable risks in PSC in Bangladesh. The pharmaceutical industry plays a very
important role in Bangladesh economy as the demand of medicine in its local market
increased due to improved level of people awareness about health, higher income rate and
increased governmental interventions (Ahamed, 2012). The second aim of this study is to
evaluate the identified risks for determining their priority. For this purpose, Analytical
Hierarchy Process (AHP) tool is used (Luthra, Sachin Mangla, Venkatesh and Jakhar, 2017).
The rest of this paper is structured as follows. Section 2 provides a comprehensive
literature review. Section 3 illustrates the problem addressed in this research work.
The solution methodology is provided in Section 4. Section 5 offers data analysis and results
for the study. The sensitivity analysis is conducted in Section 6. Discussions of results and
research implications are given in Section 7. Finally, Section 8 concludes the paper
and provides limitations and scope for future work as well.
2. Literature review
This section present the literature related to PSC and risks in PSC context. At the end of this
section, research gaps are provided.
2.1 Pharmaceutical supply chain
Supply chain involves movement of goods/information/money to satisfy customer
requirements and consists of various entities –producers and suppliers, transporters,
1389
Risks in
pharmaceutical
supply chains
To continue reading
Request your trial