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BioPharma, Inc
Introduction
BioPharma, Inc is a global manufacturer of patented chemicals utilized within the
pharmaceutical industry. In 2013, BioPharma biggest issue in their organization was their
financial performance specifically in their supply chain operations. The company dealt with a
loss in profits from their two of their international manufacturing plants which were in Germany
and Japan. This lead to BioPharma to deal with high costs at these facilities. In response,
BioPharma’s President Landgraf acted and developed a plan where implementing a cost-
effective network would be ideal for the organization to cut costs.
Biopharma manufactures two patented chemical which are called Highcal and Relax.
Even with having access to materials across the globe, Biopharma’s current facilities produce the
chemicals they have and abide by the rules and regulations of the respected country. This gives
Biopharma the ability to analyze all their operating facilities and determine which facilities are
operating at high volume while maintaining low operating costs. President Landgraf believes this
will help his organization combat their decline in profits.
BioPharma Production Network Operations in 2013
BioPharma’s ability to overcome their current deficit begins with having an answer for
their financial miscues they endured in 2013. The company needs to adopt a flexible supply
chain strategy and while promoting flexibility in the product line they offer in each of their
facilities. Piprani (2022) discusses the increase risks in current globalized supply chains that are
in answer to rising consumer demands. A more volatile business climate, and the greater
exposure to internal and external risk events (Piprani, 2022). This is something BioPharma is
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BioPharma, Inc
going to have to monitor with having their facilities overseas and need to be prepared to think
quickly on their feet when it comes to their supply chain network. It will also be vital to monitor
the overall ability of BioPharma’s manufacturing facilities, specifically each facility’s
manufacturing process of Highcal and Relax. Analyzation of their inputs and outputs would
provided detail that could be used to determine efficiency.
When overlooking the overall ability of each facility, data will show that facility in Japan
should be liquidated due to the market being oversaturated by other facilities. Liquidating the
Japan facility would benefit the Germany facility due the fact that they would be the only
producer of Highcal chemical with the ability to support a greater demand for the product. Now,
for the other facilities they will produce both products to gradually meet the needs of BioPharma
and most importantly answer the demand for the product. When looking at the cost BioPharma
will acquire for the year, they would have to calculate fixed facility cost, production line costs,
variable production costs, and tariffs. When analyzing the data this network change would be
around $1.267 million. BioPharma with these proposed changes would be able to meet their
production demands.
Structuring BioPharma’s Production Network
Tariffs and exchange rates are vital when analyzing a global production network,
specifically looking at the trend of fluctuation. Analyzing the past trends allow for better
interpretations of potential changes an organization can see and provide a prediction of variables
that effect a business in a global economy (Chakraborty & Ikeda, 2020). Analyzing these
exchange rates for example, can be beneficial to see when the US dollar and Euro are high in
value and when they aren’t. Keeping in mind the world currencies other than US dollar and Euro
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BioPharma, Inc
appear to be stagnant with no high fluctuation. BioPharma should produce products in countries
with a lower value currency while hammering sales in countries with a higher value currency to
allow the organization to inflate profits. This strategy of analyzing exchange rates will be
optimal when reconstructing operations for BioPharma. When taking into account this
observation, it benefits BioPharma’s presidents decree to produce both Highcal and Relax across
operating facilities with minor adjustments to their production process to keep up with varying
exchange rates in order to maximize profits to the fullest.
Increasing Capacity to $3 Million Per Year
When analyzing the current capacity of BioPharma’s manufacturing facilities, it seems it
would do more harm than good for the organization. When overlooking the capacity of each
facility in connection to operating costs, it doesn’t show that adding additional capacity would be
beneficial at all. This helps create a baseline for leadership to determine which of their facilities
can take on extra capacity while optimizing operating costs. Focusing efforts as well to not
oversaturate the market and harming value of products being sold (Reich et al., 2020). If
BioPharma would add capacity to any of the facility, it will have a negative consequence on
market share and operation costs. BioPharma should focus on optimizing their manufacturing
facilities to achieve the capacity the organization has determined and focus efforts on demand to
be efficient for their products.
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BioPharma, Inc
Reduction of Duties Impact on Recommendations
Analyzing BioPharma’s data, it shows little to zero value than as seen prior to removing
duties. Chalavadi et al., (2020) discusses decreases in duties would result in appeal for cross-
regional trade resulting in a united supply chain network between manufacturing facilities
globally. Taking away duties would result in liquidation of Brazil and Japan manufacturing
which would make the rest of European facilities produce one of the patented products. The
patented product Highcal is only manufactured in Mexico and India, while Relax is only
manufactured in Germany. A forfeiture of duties can be the driving force to develop a well-
integrated network of different departments and business partners working together to achieve a
tight supply chain.
Analysis Based on Yield Differences
A successful company will evaluate the output of their manufacturing facilities to
determine the quality of the yield of product they are producing. Yield uncertainty is contributor
to supply chain risk. This is caused by unexpected factors like: emergency events, capacity
constraints, quality issues, labor shortage and quantity production meeting quantity ordered
(Chen & Liu, 2021). Facilities aren’t expected to be perfect, which means outputs for a facility
will never be close to 100%. Facilities need to be prepared to handle fluctuations in their output
based on product quality. This will give BioPharma a better outlook to track if their investment is
profitable.
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BioPharma, Inc
Additional Factors
When dealing with a global supply chain network, an organization is open to
susceptibility of exposure to risk and uncertainties that come with their organizations field of
work. An organization like BioPharma will have to face uncertanities like: price volatility for
materials, shortages in workers, supply chain shortages, or manufacturing delays that are out of
an organization control. Piprani et al., (2022) discusses the importance for an organization to be
flexible when dealing with supply chain globally. An organization like BioPharma must have
contingency plans to maintain order to combat unseen factors. BioPharma won’t be able to
predict what’s coming next but should have a baseline of actions to be taken if need be.
Conclusion
BioPharma adopting a global supply chain network can be very rewarding for their
operations to be successful. However, like anything in business it brings along a set of challenges
that the organization needs to identify and learn how to operate through. Keeping in mind that
when adopting a global supply chain network, an organization must be prepared for different
variables and influences that will put an organization to the test to see if they can overcome
efficiently while meeting demands for their products. A successful organization will perform an
analysis to see where the overall health of the organization and how their global supply chain is
operating. At the same time, an organization must be flexible to combat the uknown challenges
ahead and continue to analysis what changes need to be made to be successful.
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BioPharma, Inc
References
Chen, Z., & Liu, F. (2021). Multi-outsourcing supply chain coordination under yield and demand
uncertainties.Expert Systems with Applications,181,
115177.Dhttps://doi.org/10.1016/j.eswa.2021.115177
Chalavadi, V., Das, S. P., Sridharan, R., Kumar, P. R., & Narahari, N. S. (2020). Development of
a reliable and flexible supply chain network design model: a genetic algorithm based approach.
International Journal of Production Research, 59(20), 6185–6209.
https://doi.org/10.1080/00207543.2020.1808256
Chakraborty, A., & Ikeda, Y. (2020). Testing "efficient supply chain propositions" using
topological characterization of the global supply chain network. PloS one, 15(10), e0239669.
https://doi.org/10.1371/journal.pone.0239669
Chopra, S. (2021). Supply chain management: strategy, planning, and operation (Vol. 7).
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Piprani, A. Z., Jaafar, N. I., Ali, S. M., Mubarik, M. S., & Shahbaz, M. (2022). Multi-
dimensional supply chain flexibility and supply chain resilience: the role of supply chain risks
exposure. Operations Management Research, 15(1-2), 307-325. https://doi.org/10.1007/s12063-
021-00232-w
Reich, J., Kinra, A., Kotzab, H., & Brusset, X. (2020). Strategic global supply chain network
design – how decision analysis combining MILP and AHP on a Pareto front can improve
decision-making. International Journal of Production Research, 59(5), 1557–1572.
https://doi.org/10.1080/00207543.2020.1847341
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