The unexpected impact of information sharing on US pharmaceutical supply chains

Leroy B. Schwarz, Hui Zhao

Research output: Contribution to journalArticlepeer-review

19 Scopus citations

Abstract

This paper examines a change in business practices in the pharmaceutical manufacturer-to-distributor supply chain, a change that essentially forced pharmaceutical distributors to maintain lower inventories. This change also provided pharmaceutical manufacturers with information about distributor customer demand and inventories that had previously been withheld from them. Supply chain theory and practice in other industries suggest that by improving decision making and implementation, companies can operate with substantially lower inventories. This happened in pharmaceutical distribution when a Securities and Exchange Commission investigation led manufacturers to force distributors to operate with less inventory. Theory and practice further suggest that manufacturers who are provided with relevant information that they did not have previously would take advantage of this information to reduce their inventories. This evidently did not happen in pharmaceutical manufacturing. We contend that pharmaceutical manufacturers either do not know how to take advantage of such information or they do not care.

Original languageEnglish (US)
Pages (from-to)354-364
Number of pages11
JournalInterfaces
Volume41
Issue number4
DOIs
StatePublished - Jul 2011

All Science Journal Classification (ASJC) codes

  • Strategy and Management
  • Management Science and Operations Research
  • Management of Technology and Innovation

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