A Case Study at Asia’s Pharmaceutical Industry
Introduction
To effectively utilize a company’s short-term assets and liabilities, working capital management is an essential function. E-commerce and other online marketplaces brought in a new era of optimization and efficiency in the management of a company’s working capital. This article looks at how the pharmaceutical industry in Asia is using e-commerce and other online platforms to improve its working capital management. Our in-depth case study investigation will reveal how the advent of e-commerce and online platforms has revolutionized the way pharmaceutical firms manage their working capital, leading to better financial results, lower expenses, and a more competitive market.
Written By: Gourav Dudeja (Linkedin)
Course– PhD Scholar – Amity Business School
Major Subject– Finance & Supply Chain Management
University: Amity University, Gurgaon
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An Overview of Working Capital Management
To keep operations running effectively, businesses must carefully manage their working capital, or the money they have on hand right now. It requires skillful administration of money, stock, invoices, and payments.
Due to its specific characteristics, including lengthy manufacturing cycles, strict regulatory compliance, and significant working capital requirements, the pharmaceutical industry places a premium on effective working capital management. The pharmaceutical business is known for its complicated supply chain, lengthy payment cycles, and large inventory levels, all of which contribute to inefficient working capital management practices.
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The Emergence of E-commerce and Online Platforms in the Pharmaceutical Sector
E-commerce and the proliferation of e-commerce platforms have had profound effects on the Asian pharmaceutical industry. By facilitating communication between pharmaceutical producers, distributors, and retailers, e-commerce platforms have streamlined the supply chain.
As a result of the change, working capital management is more effective than ever before.
Pharmaceutical firms can gain greater exposure and more sales prospects by showcasing their products on online channels. These systems include features like automatic order fulfilment, streamlined invoicing, secure online payments, and customer relationship management (CRM) dashboards. The pharmaceutical industry can improve its working capital management with the help of these features.
Leader’s Tip:
Accept automation and digitization to improve cash flow management and streamline processes.
Case Study: Optimizing Working Capital Management in the Pharmaceutical Sector in Asia
Let’s look at the case of a successful Asian pharmaceutical company to see how e-commerce and online platforms might improve the administration of working capital.
This firm moved to a specialized e-commerce platform developed with the pharmaceutical industry in mind. Inventory management, order processing, customer relationship management, and tools for collaborating with suppliers were all built into a single, unified platform. The company reaped the following benefits from using the platform:
a. Effective Inventory Management: The internet platform allowed for constant stock monitoring, allowing for the prompt detection of stale or surplus goods. The corporation enhanced inventory turnover, decreased carrying costs, and lessened the likelihood of stock obsolescence by adjusting inventory levels.
b. Streamlined Order Processing: Reduced human error and increased speed of order fulfilment were two benefits of the e-commerce platform’s automated order processing workflow. This resulted in shorter times from placing an order to receiving payment, which in turn increased the company’s cash on hand. Furthermore, computerised order processing reduced order lead times, which meant products could be delivered to clients on time.
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c. Improved Customer Satisfaction: Customer satisfaction increased as a result of the company’s enhanced efforts in customer service made possible by the online platform. Customers were able to easily explore inventory, make purchases, and keep tabs on their deliveries all in the comfort of their own homes. Customers’ information, preferences, and comments were collected using the platform’s CRM technologies, paving the way for targeted advertising and the development of lasting relationships.
d. Supplier Collaboration: The e-commerce platform allowed for simple coordination with vendors. The business eliminated the need for manual exchange of purchase orders and invoicing by using electronic data interchange (EDI) capabilities with its suppliers. As a result, interactions with suppliers became more productive, and procurement times were cut down.
Leader’s Tip:
To better understand customer behavior and manage inventories, use data analytics.
Conclusion
In conclusion, e-commerce and online platforms have been instrumental in improving the pharmaceutical industry’s working capital management in Asia. Pharmaceutical organizations can benefit from better inventory management, order processing, customer satisfaction, and supplier collaboration with the use of such platforms. The offered case study shows how an Asian pharmaceutical company benefited from adopting an e-commerce platform, which in turn enhanced the company’s ability to manage its working capital.
As the pharmaceutical industry develops, companies will need to optimize their working capital management procedures by adopting digital technologies such as e-commerce and online platforms. Doing so can help businesses save money, become more competitive, and secure their future.
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References
- Janssen, F., & Waegenaere, B. (2018). Inventory management in the pharmaceutical industry: A review of literature. European Journal of Operational Research, 267(3), 923-935.
- Kapil, S. (2020). Emerging Role of E-commerce in Pharmaceutical Industry. International Journal of Scientific Research and Engineering Development, 3(1), 313-318.
- Leng, J., Tjahjadi, B., & Yap, L. (2017). Pharmaceutical supply chain management through e-commerce channels: Insights from a Malaysian case study. Journal of Industrial Engineering and Management, 10(1), 188-210.
FAQs
What is the impact of e-commerce and online platforms on working capital management optimization?
E-commerce and online platforms revolutionize working capital management by optimizing efficiency and profitability through automation, digitization, and data analytics.
How do e-commerce and online platforms streamline working capital management processes?
E-commerce and online platforms streamline working capital management processes by automating inventory management, improving cash flow management, and providing real-time visibility into cash flows.
Key Takeaways
- Faster inventory turnover and lower working capital requirements are made possible through e-commerce.
- Online systems improve liquidity management by giving real-time visibility into financial flows.
- On digital platforms, efficient working capital management can promote profitability and long-term expansion.