Companies outside the United States manufacturing pharmaceutical drug products, supplements, components and API for the American market may benefit by establishing a Vendor-Managed-Inventory (VMI) program with a reputable third party logistics (3PL) provider. VMI programs include multiple services to anticipate issues that may affect movement of products within the supply chain.
Any delay for pharmaceutical drug products carries significant costs, since the U.S. is the world’s largest drug importer, valued at $86 billion in 2015. In many cases delays are avoidable or can be minimized with a proactive VMI plan.
These eight business challenges for international companies can be overcome by working with a 3PL based in the United States.
1. Customs Clearance
Products sent from international countries require inspection by the U.S. Customs and Border Protection Service upon reaching the United States. Improper documentation is a common cause for products to be held in quarantine by U.S. government authorities. Additional testing may be ordered. Quarantined products are often kept in unapproved facilities without temperature or humidity controls. Shipments in quarantine have been known to take months to be cleared and may be destroyed.
In a VMI environment, the supplier ships bulk quantities of product directly to a U.S. port of entry. When the shipment arrives, the 3PL instructs their customs broker to speed the release of the product. For shipments that are not able to be released immediately, select logistics providers are authorized by the U.S. government to allow the product to be transported to one of their approved climate-controlled facilities until the release is secured.
2. Local Intelligence
Time differences and geographic distance make communication difficult when quick decisions must be made to conduct business. Companies from other countries operating in the United States gain confidence working with a U.S. based company committed to their business interests.
3. Packaging and Labeling
When bulk product is received in the United States, the 3PL partner processes and fulfills orders. In certain cases, the product owner desires the bulk products to be packaged and labeled for commercial purposes. Drug products and supplements are often less costly to transport in bulk compared with the same amount of packaged product. Third party logistics providers with on-site packaging and labeling are equipped to fill bottles in various sizes according to demand and in compliance with U.S FDA regulatory requirements. Once packaged and labeled, orders are assembled and delivered from the same facility, saving the client time, increasing control and convenience.
4. Order Fulfillment
Manufacturers reduce efficiency when they manage international shipping within the U.S. from their home office. A comprehensive VMI program shifts the responsibility of order fulfillment to the 3PL provider. The 3PL manages order fulfillment directly with every facility in the client distribution network. Independent 3PL firms are not tied to a specific transportation company. For many international suppliers, independent 3PL firms offer additional cost control because they select from several approved freight forwarders and couriers to secure the best shipping solution for the client based on safety, speed and cost.
The 3PL provider also assures sufficient product is available to fulfill all current order requests and anticipates future inventory requirements.
5. Invoicing and Payment
Companies based outside the U.S. that manage order fulfillment and invoicing often confront difficulties. When individual orders are delayed entering the country or when deliveries are not received, invoicing becomes complex. Replacement orders may be shipped and original invoices may require cancellation.
These issues can be minimized when shipping and invoicing are managed together in the same country. When required, third party logistics firms with integrated financial services departments have the ability to manage invoicing for all transactions that helps speed payments and maintain accurate records. With advanced 3PL companies, order information is accessible any time by clients from a secure online portal providing real-time status updates for every transaction.
6. Customer Satisfaction
Shipping delays create customer service problems. When international companies send orders directly to their U.S. customers there is a greater chance of delivery delays compared with packages originating within the U.S. When bulk inventory is managed effectively between the U.S. 3PL and the international client, individual orders are fulfilled efficiently to reach their destinations as promised.
Third party logistics providers with on-site call centers can set up programs that manage customer interactions to manage questions, returns and other issues on a timely basis. These programs save time and reduce cost for the client by outsourcing customer service activity and by enabling customer inquiries to be resolved in their native language and during their normal business hours.
7. Maximize Return
Vendor-Managed-Inventory programs developed with third party logistics providers enable international clients to retain full ownership of their inventory. As the product moves directly through the 3PL to the recipient, the original seller retains significant control over profitability and financial return.
8. Reputation and Recognition