An Analysis of the Article: Pharmaceutical Shortages: Coming Up Short Introduction The role of operations management in businesses is undeniable. Asany business process relies heavily on planning and control, operations management provides managers and other heads of operations with the proper tools and strategies that may assist them in making sure that their organization runs as smoothly as possible. As a major business sector, pharmaceutical companies and the health industry, as a whole, require a great deal of planning and control for them to function properly and provide the much needed drugs and services to the market.
Thus, concepts of operations management are much needed for such an industry to work as smoothly as possible. The Article On September 3rd 2011, The Economist published an article entitled Pharmaceutical Shortages: Coming Up Short. The said article discusses how the number of drugs that the US is short of ballooned from a mere 58 in 2004 to 211 in 2010 and now at 198. The drugs that are of concerned supply are mostly generic, injected ones. The reasons being pointed out for the shortage include manufacturing problems, the merger of generic drug makers, and a pricing problem.
The article concludes by naming a number of politically laced suggestions for solving the drug shortage problem. Analysis Sales and Operations Planning This article illustrates how the concept of sales and operations planning (S&OP) may be harnessed in order to provide solutions to the current problem of drug shortage in the US. Sales and operations planning connects together strategic goals to production and practically puts into a harmonious flow the different planning endeavors of a business or organization (Jacobs, Berry and Whybark).
This planning encompasses all levels including marketing, financial, operations, and human resource planning, among others. In the case of the pharmaceutical industry in the US, since the sales and operations plans were not able to represent a harmonious, cross-functional plan, it has failed to satisfy the demands of the market. In reading this article, I have learned that sales and operations planning was not really implemented well in the pharmaceutical sector, hence the current shortage problem. For example, the article points out that manufacturing problems are faced by pharmaceutical companies because they try to lessen the costs of production.
One way by which they achieve lower costs is by importing cheaper ingredients that may tend to compromise the quality of the medicines. This practice leads to a failing mark when the FDA imposes quality control. However, this problem may be avoided if pharmaceutical companies just adhere to best practices in operations planning. Pharmaceutical companies need to realize that substituting some ingredients with substandard ones will simply jeopardize their manufacturing process and lead to an eventual failure in production. Quality, above other factors, is a prime concern in the pharmaceutical business.
Thus, this should be a primary concern among pharmaceutical companies when engaging in the production of medicines. This is emphasized by the six sigma strategy in the quality control procedures of businesses, which ensures that the products that they churn out are defect free by pointing out early on the sources of error to a very low level of statistical instance (Hayler and Nichols). The article also points to pricing problems as part of the reason why there is a current shortage.
This pricing problem occurs when patents for a certain drug is taken away and prices correspondingly drop because drug makers would want to take as large market share as possible. However, this problem may also be solved by proper sales and operations planning. Although drug manufacturers do not know how many companies are going to enter the market of producing the generic medicine in question, they are most likely aware of when patents of the drug and the corresponding price protection will be taken off.
Thus, a careful look into their sales and operations planning procedures would still ensure that only the right quantities of a given drug will be produced so as not to saturate the current market. Inventory Management A shortage problem is most likely caused by a failure in the industry inventory management system. Inventory is simply the available goods and commodities that a business has on hand (Kamauff). Thus, inventory management is the proper management of a business’ raw materials, unfinished goods in production, and finished goods. Clearly, there has been a problem with the inventory management process performed by the pharmaceutical companies as they were not able to maintain the sufficient quantities of a significant number of medicines on hand, thus elevating the current shortage problem.
One cause pointed out by the article is the merger of pharmaceutical companies producing generic medicines. Because of this merger, production of certain medicines are sometimes cut short and so available medicines on hand of that particular medicine is greatly depleted. Conclusion The concepts of operations management are clearly used in the given article from The Economist. In an industry that is being threatened by a shortage of supply as it faces a very high demand, the application of sales and operations planning and inventory management will truly help a lot in providing solutions to the current shortage problem.
Moreover, the concepts of risk management, quality, and six sigma may also be applied to further improve the problematic situation. This article simply illustrates the importance of operations management, its concepts and processes, in helping businesses and organizations in maximizing their performance potential. References: Hayler, Rowland and Michael Nichols. What is Six-Sigma Process Management?
Mcgraw-Hill Professional, 2005. Jacobs, F. Robert, et al. Manufacturing Planning and Control for Supply Chain Management. McGraw-Hill Publishing, Inc. , 2011. Kamauff, John. Managers Guide to Operations Management. McGraw-Hill Professional, 2009. "Pharmaceutical Shortages: Coming Up Short. " 3 September 2011. The Economist. 10 October 2011 .