Daewoong Pharmaceutical is revolutionizing its drug distribution system. The company is implementing a block-type hub wholesaler approach to enhance real-time delivery, inventory tracking (TMS), and streamline returns. While some industry players argue this shift could disrupt the existing distribution structure, proponents highlight the significant advantages of data-driven supply chain management and increased transparency.
Industry sources revealed on Thursday that the domestic pharmaceutical distribution market is highly fragmented, with over 3,500 wholesalers. This fragmentation has historically hindered real-time inventory management and timely supply during periods of instability.
Despite pharmaceuticals being critical to public health, information gaps in the distribution process have long been a source of chronic inefficiency. Critics argue that these gaps undermine quality control and supply management effectiveness.
In response, the government is pushing for improved efficiency in pharmaceutical distribution stages while promoting data-driven supply chain management and enhanced transparency. The Health Insurance Review and Assessment Service has emphasized the need for an efficient pharmaceutical supply chain structure centered on capable and competitive companies in its report on distribution system improvements.
To address these challenges, Daewoong Pharmaceutical has established a data-centric distribution structure based on the block-type hub wholesaler system. The company recently expanded its network to ten regional hubs nationwide and finalized partner selections. This move effectively implements the government’s policy for advancing pharmaceutical distribution at the ground level.
Daewoong’s system provides real-time updates on shipment status, delivery routes, and estimated arrival times for pharmaceuticals ordered by pharmacies. It also ensures transparent quantity management and reduces unnecessary transactions between wholesalers.
While initial concerns arose regarding changes in the transaction structure, reports now indicate that the regional supply system is operating smoothly without delivery interruptions or significant supply disruptions.
Data-Driven Inventory Management: Tackling Chronic Stock-Out Issues
Recent recurring stock-out incidents have highlighted the difficulty in real-time monitoring of inventory locations and quantities. The dispersed supply chain has limited the industry’s ability to promptly address supply imbalances in specific regions.
However, Daewoong Pharmaceutical has implemented a system for transparent regional inventory flow management, enabling swift adjustments to address supply imbalances.
Moreover, by analyzing demand fluctuations based on inventory and delivery data, the company can now detect early signs of increased demand or potential stock-outs for specific drugs, allowing for proactive supply adjustments.
A Daewoong spokesperson stated that the shift to data-driven pharmaceutical distribution has significantly increased supply chain predictability. With a system that accurately assesses inventory situations and enables proactive responses, it can positively impact the resolution of supply instability issues.
The spokesperson further emphasized that with end-to-end transparency in the pharmaceutical distribution process, it can now swiftly trace and address issues such as misdeliveries or quality incidents. This serves as essential infrastructure not just for logistics efficiency but also for ensuring pharmaceutical safety.
Meanwhile, the growing need for management at Good Distribution Practice (GDP) standards has been identified as a key driver for discussions on improving distribution structures.
The importance of comprehensive supply chain management, including temperature control, security, and distribution history tracking, is increasingly recognized in pharmaceutical distribution. Additionally, the rising proportion of highly regulated pharmaceuticals, such as biologics, underscores the need for enhanced traceability and monitoring systems during delivery.
An industry expert noted that managing inventory at the regional level can facilitate quicker redistribution of supplies between areas, significantly improving response times to stock-out situations.
