Reducing Global Supply Chain Risk Exposure of Pharmaceutical Companies by Further Incorporating Warehouse Capacity Planning into the Strategic Supply Chain Planning Process

Purpose Warehouse capacity planning in the pharmaceutical industry is characterized by high uncertainty and limited transparency within companies, a situation that often leads to reactive firefighting solutions by local warehouse managers. Using a deterministic simulation model, this study presents a practical approach to further integrate long-term warehouse capacity planning into strategic supply chain planning at a more detailed level in order to enable proactive planning. Methods This study includes a literature analysis and a series of interviews with 11 of the largest research-based pharmaceutical companies. The study analyzes the current situation and future requirements of strategic warehouse capacity planning. We then formulate a deterministic simulation model and validate it within an extensive embedded case study. In order to verify our model's applicability, the concept is developed with more than 15 warehouses at a case study company between January 2013 and July 2014. Results The results show that warehouse capacities must be further considered in strategic supply chain planning in order to mitigate the risk of exhausting logistics capacities after business developments such as the market entry of new products. Conclusions We have provided a practical way to improve the strategic warehouse capacity planning process by breaking it down to a level that warehouse managers can handle, while at the same time limiting the effort required to ensure applicability. Indeed, the case study company is in discussion with a vendor to implement the study's findings in its commercial software. Other companies would also profit from this research.