Cost and Carbon Implications of a Patient - Centric Supply Chain

Abstract

Trends toward patient-centric deliveries in the pharmaceutical industry pose a challenge for integration of sustainable supply chain design. This patient-centricity entails more distributed demand, smaller shipments, and more frequent deliveries. Our research utilizes scenario planning for quantification of CO2e and taxation within a pharmaceutical distribution network located in Brazil, where tax policy has a major impact on supply chain costs. Comparison between various scenarios allows for analysis of the taxation and CO2e emissions variations, with results showing how the patient-centric scenario is associated with increased CO2e emissions, and how taxation is not directly impacted by patient-centricity. Despite this, taxation does have a major effect on decision making for the location of distribution centers in Brazil. A scenario assessing the consolidation of demand at a weighted center-of-gravity (CoG) distribution center resulted in an estimated 10.1% savings on tax and 23.4% of CO2e reduction when compared to the base case scenario.