Pharma Global: Logistical Issues, Transit Times and Inventory Levels (Coursework Sample)

The Logistics of Changing Suppliers Serving Pharma Global Company, Middle East region
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The Logistics of Changing Suppliers Serving Pharma Global Company, Middle East region
Introduction
Pharma Global is an international pharmaceutical company that specializes in the production of pharmaceuticals and cosmetics. The company manufactures pharmaceutical at its factory plant in Hamburg, Germany and cosmetics in Charleston in the United States. The company has the Middle East region as one of its growing markets. The Middle East region distribution center has been receiving pharmaceutical and cosmetics products from Hamburg and Charleston, respectively.
However, due to the increased market demand for the products in the Middle East region, Pharma Global management has decided to use their factories in Sao Paulo and Bangalore in India that have been serving the domestic market to supply the Middle East region. The management expects the two factories to meet the initial demand of 120 containers annually.
Since the Sao Paulo and Bangalore Pharma Global factories concentrate on the domestic market, the factory officers are not familiar with the foreign market. There is a need for working out logistics on how to transport the products from the factories to Jebel Ali. As the logistics manager for the Middle East region, it is my responsibility together with Transport manager from each factory to work out the logistical issues for this transportation.
This paper discusses the logistical issues to consider before commencing the imports from the two new factories, considering necessary procedures, transport modes to adopt and the ports selected for each country. The paper will also compare the transit times for the previously used ports for both Hamburg and Charleston with the ports preferred for Brazil and India. The paper will finally discuss the proposal for any change in inventory level that may arise because of change in products’ origin.
Logistical operations
Since factories located in Brazil and India have been dealing with domestic supply, it is expected that relevant rules and regulations regarding the process of export in the respective countries must be observed. The logistics manager for the Middle East region will work closely with the respective transport manager to ensure that all relevant requirements are met before the importation starts.
Despite the complications associated with acquiring licenses and necessary documentations for the process, the expertise, and knowledge of the logistics manager is expected to speed up the process to its success. Among the documentation and procedural issues that the logistics manager will work out include: complying with all requirements of the various authorities involved in export like tax and regulatory authority, as well as the provision of and acquisition of all relevant documents required such as the letter of credit. Insurance cover arrangement for the new consignments will also be necessary (Husdal & Bråthen, 2010).
After ensuring that both factories in Brazil and India have complied with all statutory export requirements, the next step involves evaluating and identifying the best ports to use as the ports of origin. It is important to note the Pharma Global Company has been using shipping as the main mean of transport. This is because shipment is cheaper compared to the use of air transport, suitable for big and heavy consignments and the presence of the Pacific Sea, Atlantic Sea and the Indian Ocean which connect the regions, making it even more preferable (Wood, Barone, Murphy, & Wardlow, 2012).
Selection of ports and transportation logistics
Preferred port in Sao Paulo, Brazil
Considering the distance from the factory in Sao Paolo in Brazil to the nearest port terminal, the Port of Santos is selected because it has the shortest distance of approximately 83 kilometers. This represents about one hour drive from the factory to the Santos port when delivering products for shipments. The time of transit from the port of Santos to the port of Jebel Ali is approximately 25 days, assuming that there is no alteration of the shipments schedule and contracting a competitive carrier.
Since the demand for the Middle East region is 250, containers (50%) goods are transported using 20ft containers, then the Sao Paulo factory will have to ship 20 containers in every four weeks to ensure uninterrupted supply of the pharmaceutical products in the Middle East region. With a regular supply of 20 containers in every 4 weeks, we expect to receive 240 containers from Sao Paulo by the end of the year. There will be a deficit of 10 containers to be supplied in the market but considering we have arranged with a company providing air service for urgent transport, we can always plan on how to transport the remaining batch of containers.
The factory in Sao Paulo does not own vehicles to transport the goods. Identification of a courier who is aware of the transport technicalities from Sao Paulo to the Santo port is necessary. The courier must be able to provide vehicles with a refrigeration system to support the 50 percent goods that require controlled condition through refrigeration. The transport managers will be responsible for the transport of the goods to the port and discharge officers will ensure a successful dispatch of the goods.
Preferred port in Bangalore, India
From Bangalore where the India factory is located, two ports can be used to ship the good to the United Arab Emirates (UAE), the Mumbai port, and Chennai port. Chennai port is approximately 4,324 km from the Jebel Ali port, with a transit time of about 7 days. Mumbai port is approximately 2,135 km from the Jebel Ali, with a transit time of about 4 days. The Shipment cost using both the port Chennai and Mumbai port is approximately 250 dollars, according to the Searate (2015), a community market website (website link provided in the reference section).
Although there will be an additional cost of transporting containers by road from Bangalore to Mumbai port, we prefer the port of Mumbai as the port of origin. The rationale behind this decision lies on the issue of time. Considering that, the approximated transport time from Bangalore to Mumbai through road is 10 hours, which implies that the total transit time remains 4 days. The extra cost associated with transporting a container from Bangalore to Mumbai port is lower compared to the benefit of having a delivery three days earlier.
Bangalore will supply the Middle East region with cosmetic product 250 containers annually. Therefore, we can transport 20 containers per 4 weeks to meet the annual demand, although more trips can be made considering the short distance and consequently few days to transport the cosmetic. The proximity of India to the Middle East region is of great significance to Pharma Global. The shorter distance if well utilized will result in reduced cost of transport and transaction related to the shipment. Reduced cost of doing business should translate into higher profits for the company (Rushton, Croucher, & Baker, 2014; Martin, 2013).
Transport mode
Use of road transport
We shall use the road to transport pharmaceuticals from Sao Paulo to the port of Santos an approximated distance of about 83 km. Although the road from the factory to the port is not fully developed, it will take us 1 hour to 2 hours to deliver the goods to the port of Santos. In India, the distance from Bangalore to Mumbai is quite long and proper arrangement is necessary to ensure that goods are delivered at the port of Mumbai at the right time. The distance from Bangalore to Mumbai is approximately 981km, hence it will take a track ferrying a container about 10 hours.
Sea transport
After delivering the goods to the port of Santos, the goods shall be shipped through South Atlantic Sea, Indian Ocean, and finally the Arabian Ocean to connect to the port of Jebel Ali. The shipment from Mumbai will take shorter duration and will involve navigating through the Indian Ocean to its northern part, the Arabian Ocean. The sea transit from Port Santos to Port Jebel will take approximately 24 days. Transporting goods from the port of Mumbai to the port of Jebel will take 4 days.
Courier selection
In transporting products from both countries, we shall contract Mediterranean Shipping Company (MSC). This is among the world best shipping service providers. The Mediterranean Shipping Company provides a wide range of transport services and integrates rail, road and sea transport. We shall contract MSC to provide both sea transport and inland transport. Contracting Mediterranean Shipping Company makes it easier for us to plan for the transport efficiently for various reasons.
First is the ability of MSC to offer quality transportation services in various parts of the world and of most interest India and Brazil. Second is the ability to integrate sea transport to road transport, eliminating the need for contracting two different carriers. Third is the fact that MSC has been contracted to transport Pharma Global products globally. Contracting MSC for this service will be cheaper for the company compared to engaging a new service provider. This is because some processes of engaging into the contract may not be necessary, as they would be to a new service provider (Rushton, Croucher, & Baker, 2014). Additionally, dealing with MSC, a company that we have confidence with will enable us undertakes proper and realistic risk management planning.
From our previous engagement with MSC, we have benefited with logistical assistance from the company because the company provides an expert that works together with our logistic team. We find this very helpful in developing realistic, cost effective and achievable plans. Also, the company has many years of experience transporting ...