Mahindra LogiquestSupply Chain Case Study

Team Name: Dark horses

Campus: NITIE Mumbai

Members:

1. Shubroto Pani

2. Rohan Desai

Executive SummaryRoadmap for 3PL Evaluation in Pharma Industry

Pharma Supply Chain Opportunity for 3PL 3PL Selection AHP Analysis

Understanding the Pharmaceutical Supply Chain Business Strategy using 3PL

Pharma Supply Chain AHP Analysis Opportunities for

Mahindra Logistics

Unique export oriented supply chain

dealing with perishable productsLeveraging core competency & more

importantly identifying improvement areas

Need for on-time delivery

Contamination free

distribution

Managing optimal inventory

levels with demand visibility

Reverse Logistics comprise

12 to 15%

Scalability & Flexibility of

Logistics Partner

Counterfeit products

FDA Legal compliance and

global policy adherence

Challenges for 3PL in

Pharma industry

Gap Analysis

Indian pharma market

expected to grow at CAGR

of 12.1%

Benchmarking against

Global Best Practices

Competitor Analysis &

leveraging on KPIs

Customization on scalability

and reliance factors as per

scope

Instant access to real-time

updates and alerts

Technology for Visibility &

traceability of all handovers

Manage perishable good

Maintain product quality

Cold Chain temperature

Distribution: Minimal inter-

node control

Indian firms: majorly export

oriented

Complex distribution &

logistics network

High value/unit weight

Inventory management:

Avoiding out of stock

Criticality & geographic expanse has

it’s own limitations & hurdles

Evaluation & Selection of Optimal

3PL service provider

Understanding need of

pharma companies

Survey of executives from

Pharma companies

Insight on KPIs

Relative ranking & weighing

of the KPIs

Mathematical model to select

the optimal 3PL service

provider

Gap analysis wrt competitor

competencies

Self scorecard to measure

performance

Complex Network

Complex & vast geographic

network design (high growth rate)

Need for scalability & flexibility

during crisis

Need for efficient reverse logistics

Out of stock is unacceptable

Pharmaceutical Supply Chain

Existing Strategy Characteristics

Perishable Products

Maintaining Ambient Temperature

(avoid loss of potency)

Expiration period for critical

product

Monitoring standards when

passing through nodes

Security Concerns

5 % Counterfeit Drugs

Patents & Copyright violation

Damage to products: Mishap while

transportation or packaging

Cost of 38 billion due to cases

Expansion StrategyPharma Supply Chain Opportunity for 3PL 3PL Selection AHP Analysis Gap Analysis

Apprehension

Unaware of 3PL services except

for transportation. More of 2PL

Pilferage and security concerns

Loss of control, warehousing

capabilities and regulatory

compliance

Manufacturing FootprintDemand Forecast Shelf Life Stock PolicyEpansion Strategy

Third Party Logistics

Basis of selection Challenges tackled by 3PL

Expansion StrategyPharma Supply Chain Opportunity for 3PL 3PL Selection AHP Analysis Gap Analysis

1) Primary needs of the company

2) Industry regulatory norms

3) Needs in terms of reverse logistics

4) Need for temperature compliance

5) Life-cycle stage of the company

Benefits of 3PL

1) Core competency management

2) Economies of Scale

3) Integrated IT infrastructure

4) Better logistics network

5) Efficient distribution channels

Stock PolicyExpansion Strategy Demand Forecast Manufacturing Footprint Shelf Life

Selecting and Managing 3PL

Best Practices Monitoring Performance of 3PL

Expansion StrategyPharma Supply Chain Opportunity for 3PL 3PL Selection AHP Analysis Gap Analysis

To select a 3PL

• Internal assessment of current and future needs

• Detailed plan for the 3PL selection process

• Review the checklist of 3PL capabilities for RFI/RFP

• Evaluate, interview, and select.

To manage a 3PL:

• Develop Contract based on the type of 3PL relationship aimed.

• Select the appropriate metrics to develop a scorecard.

• Tactical relationships Task-based SLAs

• Strategic relationships Adopt KPIs where the Company and 3PL work collaboratively to achieve mutually defined desired outcomes.

• Establish and implement governance mechanisms to effectively manage the business with your supplier.

• More complex and strategic relationship more effort should be put into governance.

Stock PolicyExpansion Strategy Demand Forecast Manufacturing Footprint Shelf Life

AHP Model

Expansion StrategyPharma Supply Chain Opportunity for 3PL 3PL Selection AHP Analysis Gap Analysis

Reverse Logistics Cost Flexibility Quality Cold Chain Regulatory Comp. IT Infra Experience

Reverse Logistics 1 1/4 1/3 1/5 2 3 1 1/2

Cost 4 1 2 1/2 5 6 4 3

Flexibility 3 1/2 1 1/3 4 5 3 2

Quality 5 2 3 1 6 4 5 4

Cold Chain 1/2 1/5 1/4 1/6 1 2 1/2 1/3

Regulatory Comp. 1/3 1/6 1/5 1/4 1/2 1 1/2 1/3

IT Infra 1 1/4 1/3 1/5 2 2 1 1/2

Experience 2 1/3 1/2 1/4 3 3 2 1

Companies

Reverse Logistics

6%

Cost 21%

Flexibility 13%

Quality 35%

Cold Chain 5%

Regulatory 5%

IT Infra 6%

Experience 9%

Final Score

Rank

DHL 6 6 6 5 5 5 4 6 5.44 2

V-Xpress 5 4 5 6 4 4 4 5 4.98 3

TCI 4 5 6 5 5 4 4 5 4.96 4

Rivigo 6 6 6 4 5 5 6 3 4.95 5

GATI 5 5 6 6 6 5 5 6 5.62 1

VRL 6 5 6 4 4 6 4 5 4.79 6

Stock PolicyExpansion Strategy Demand Forecast Manufacturing Footprint Shelf Life

Competitive Landscape

Expansion StrategyPharma Supply Chain Opportunity for 3PL 3PL Selection AHP Analysis Gap Analysis

GATI

• Preferred by Dr Reddy & Torrent Pharma for Quality

• KWE Merger infusion of capital for infrastructure

• Raised funds for GATI Kausar, Longest established Cold Chain Company since 30 years

• ISO 22000

TCI

• Handling 1000+ shipments/day for Pharma industry

• High rank in flexibility. Expertise in 24 hr to 36 hr service

• Infrastructure in 7 airportswith specialized service for next flight out shipment. Moves 2.5% of India’s GDP by value

• Temperature control movement & Dry Ice Shipment

DHL

• Vast scope of services across the pharma supply chain.

• Best in Temp control logistics

• Economies of Scale enables DHL’s low Cost of Operations

• Advanced IT infra to enable tracking and reverse logistics

• Known for warehousing and order fulfilment services

V-Xpress

• Preferred by Abbott for on-time delivery. Record upto 90%

• Pan India express Cargo by road, air and railway

• Covers 24 states serving 100+ companies

• Recorded 0.2% damages in 2015 against 0.5% industry std

VRL

•Large fleet. Covers 28 states& 662 cities

•Considered best for last mile connectivity

•Lowest incidences of theft, pilferage, damage

•Preferred by Abbott for southern region logistics

Rivigo

•Unique driver management model

•Technology for automation and route optimization

•Robust cold-chain frame-work and remote temperature control technology

•Provides lowest transit times in cities

Stock PolicyExpansion Strategy Demand Forecast Manufacturing Footprint Shelf Life

Road Ahead for Mahindra Logistics

Proposed Strategy

Expansion StrategyPharma Supply Chain Opportunity for 3PL 3PL Selection AHP Analysis Gap Analysis

Joint Venture/Partnership to improve reach and capabilities in multi-modal logistics

Acquire or develop an IT arm to boost analytics

Develop export competency and foreign capabilities

Adopt best quality practices to ensure top class service

Achieve six sigma level of safety to reduce accidents and pilferage

Deploy continuous monitoring/alert systems and help service-network.

Zero-error Cold-Chain

Re-envision the Logistics sector to improve service levels

Invest in process automation, driver analytics and network optimization

Design network model and fleet strength to reach air equivalent transit times

Develop Customer query handling competency

Improve its Cold chain arm for cost efficiency and reliability

Technology for real-time temp. monitoring and remote temp. management

Cut down transit time to reduce cold storage cost

Stock PolicyExpansion Strategy Demand Forecast Manufacturing Footprint Shelf LifeExpansion StrategyPharma Supply Chain Opportunity for 3PL 3PL Selection AHP Analysis Gap Analysis