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Anyone who watches or reads the news today hears about how the sourcing of materials from overseas, particularly from Asia, has impacted the amount of manufacturing jobs avail

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

able in America. What manufacturing insiders worry about the most when it comes to sourcing from overseas is more closely related to inventory levels. While purchasing materia

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

overseas may bring a company advantages in terms of lower prices, the negative impact is the growth of inventory carried on the balance sheet. For large manufacturing firms w

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

th the financial scale to absorb an increase in inventory, this may not present itself as an issue. However for manufacturing firms, the stress on working capital and the inve

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

tory turn rate can be significant.

The other issue related to inventory and sourcing from overseas is the variation in lead times. While one shipment may arrive in 6-8 weeks,

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

the next shipment may arrive in 8-10 weeks. Since manufacturers cannot afford to be without materials, they’ll increase their safety stock levels to compensate for the variab

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

lity with that lead time.

Certainly when we look toward solving an inventory dilemma, we naturally focus on how inventory is being planned. In order to do so, it’s important

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

o understand the evolution of how inventory has been planned during the past 30-40 years. In the 1970’s companies began stratifying their stock by an ABC analysis. A’s represe

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

ting the fastest movers for example. In the 80’s we were exposed to a more analytical approach by adding to the ABC analysis with other variables such as cost per unit, usage

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

rates, and perhaps even a Gross Margin contribution per unit. In the 90’s we were introduced to ERP, MRP, and other similar applications. Today, sophisticated planning involve

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

Advanced Inventory Optimization.

Inventory Optimization takes into account all dynamic variables that impact inventory levels. Through the use of these variables, and runnin

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

them through algorithmic engines, an inventory profile can be achieved which will show an optimal balance between achieving the highest possible level of service with the low

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

st amount of network inventory.

The results often seen include 10-40% reductions in inventory while maintaining or increasing service levels (fill rates) above 98%. These res

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

ults satisfy two competing divisions within any organization: that of finance, by maintaining lower levels of inventory; and that of sales, by maintaining higher service level

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

.

One example is the inventory optimization effort performed at Juno Lighting Group. As a manufacturer of commercial and residential lighting, they recognized that in order t

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

be more competitive they would have to reduce costs while increasing quality and service levels. For Juno, this meant adopting lean manufacturing processes, sourcing componen

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

s from Asia, and optimizing their inventory beyond the capabilities of the ERP system.

Once the inventory optimization solution was implemented, Juno was capable of providing

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

critical data and analyses across multiple SKU families. They are now performing “what-if” scenarios to examine how much inventory is required to meet a particular service le

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

el by facility, by product family, or even down to the individual SKU level. In doing so, their material planners are now able to play a more strategic function within their o

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

ganization rather than the typical expeditor or “firefighter” role. The end result has been a reduction of safety stock by 25% while maintaining critically high service levels

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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