Paper Sample on Pfizer Ireland: Outsourcing Logistics & Supply Chain Strategies

Introduction

The purpose of this discussion is to explore the literature review and the research findings to determine whether the outsourcing of logistics and elements of the supply chain is of strategic importance to Pfizer in Ireland. The discussion aims to provide show how Pfizer makes a decision on what aspects of a supply chain they will outsource in Ireland. Some challenges and limitations of outsourcing logistics and elements of supply chain management in Ireland will be highlighted. Moreover, the discussion will provide the strategic benefits of outsourcing elements of the supply change for Pfizer in Ireland. The discussion will answer the research primary and secondary questions through analyzing the findings, linking them with theories in the literature review, and past research. The chapter is structured simply with each issue being examined, showing the operations of Pfizer in Ireland.

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Deciding the Elements to Outsource

Outsourcing is a business concept that entails employing other firms to take on particular elements of the business. Scholars say that if there are business areas with minimal strategic significance and less operational performance, it would be advisable for a company to outsource (de Frutos et al., 2013). In outsourcing, the business will benefit from the expertise of the outsourced company. Additionally, there will be a cost reduction in production. Therefore, during outsourcing, the company must look at the optimal conditions. This means that the company must weigh the available options and decide on the most profitable option. Today, many countries are experiencing tough economic times because of the current pandemic, and thus, when making a decision, different factors should be considered. The pharmaceutical industry, being one of the essential service providers globally, has also experienced economic challenges due to various countries' varying situations.

The pharmaceutical industry has adopted outsourcing as a strategic business option to enable growth and competitiveness in the marketplace. Initially, the pharmaceutical companies perceived outsourcing as a way to reduce production costs. However, today most companies have realized that outsourcing a vital means of getting into the global marketplace. During outsourcing, a company interacts with different suppliers and experts who have been in the market for along time. Those interactions enable the business to expand in various ways. Firstly, once a business develops a good relationship with an outsourced company, it is easier to get the supplies on time (Dewan, 2013). Additionally, outsourcing helps companies to network. This networking enables businesses to create new clients while maintaining good relationships with existing ones due to quality products and efficiency.

Williamson's theory asserts that businesses outsourcing decision comes directly from transaction and manufacturing costs. Companies must remain profitable for them to continue offering services. The business profits are realized when there is reduced manufacturing cost (de Frutos et al., 2013). Therefore, if a business gets an option that offers low prices during manufacturing while maintaining the quality, there is a higher chance of taking the option. The primary question that companies ask is whether it is less expensive to outsource or do the work themselves. If it is cheaper for the business to outsource, then the decision is made to allow another company to do some elements in the supply chain.

Many pharmaceutical companies consider cost as a significant factor during outsourcing. During the research findings, most participants said that Pfizer outsources because of three significant elements: financial reasons, expertise, and quality services. The majority of the participants agreed that Pfizer would continue to outsource if the cost of doing so is less than when they do it themselves. The selection of the right activities to be outsourced is a critical consideration. Firstly, the outsourced activity should be non-core because it is not profitable for a business to train and employ workers to do a non-core activity.

The needs of the business push the selection of the right element to outsource. As logistic complexities continue to increase, Pfizer has been forced to outsource logistics and supply chain elements. Over time, there has been a widening gap between what companies want to achieve and what they can do. As such, there has been an increased pressure for companies to outsource logistics services. One of the primary purposes of supply chain management is to enable businesses to achieve a competitive advantage over their competitors (Dewan, 2013). Pfizer has focused on its core competencies while outsourcing other activities to companies with better expertise. Therefore, Pfizer company has selected logistics and supply chain as an element to outsource because the outsourcing has a strategic advantage of ensuring competitiveness with rival firms.

Challenges and Limitations

Outsourcing logistics and supply chain elements has its fair share of challenges. The research findings show that all five participants acknowledge some challenges working with the vendors. Three participants said that working with vendors in different time zone can lead to staff working during unfavorable hours. At times, the vendors have engagements when the staff members are tired or sleepy. Such may lead to problems in the workplace. Although staff members work in shifts, some staff may feel overworked or called to duty when they are supposed to be resting.

Three participants said that communication is a challenge, especially when working with working from non-English speaking countries. Since Pfizer has vendors from all over the world, it becomes difficult to communicate well with some vendors. The participants noted that some vendors do not express themselves clearly because of their inability to speak or write appropriate English. Most participants indicated that due to the current situation of COVID-19, the travel restrictions had been put in place, and calls have become the most common communication means. As such, communications have been difficult with vendors who do not use English as their first language.

Individual participants have noted challenges when working with different vendors. The fifth participant indicated that they had difficulty dealing with a supplier from a specific country. The supplier was providing incomplete compounds for Pfizer's plant in Newbridge. As a result, all the compounds were being tested, thus creating a bad relationship with the supplier. Participant three reported that a vendor they had outsourced for data management had been hacked and sensitive data exposed. Additionally, the third participant noted some challenges with outsourcing, especially during the shipment of products.

The participant noted that there are shipment delays and product damages during transit. Some of these challenges are not in the control of both the outsourced vendor or Pfizer. Moreover, participant one noted that there is a slower delivery of products requested from other parts of the world than outsourcing locally. This means that when products are outsourced locally, they can reach their destination faster; hence, the pharmaceutical items can be manufactured more quickly. On the other hand, when raw materials are requested from a faraway place, they can take an extended delivery time; thus, the company may not make the profits at the required time. In some instances, when the raw materials waste a lot of time in transit, the prices of pharmaceutical products may drop, leading to losses.

Strategic Importance of Outsourcing

The study aimed to explore if outsourcing logistics and supply chain management is of strategic importance. The researchers wanted to know the participants' knowledge of strategy and the reasons behind outsourcing in Pfizer companies. The research indicates that all the participants had some knowledge about outsourcing strategy expect participant four. Participant four was new in the business and needed sufficient time to understand its depths and how it conducts businesses. Additionally, participant four did not work directly in the supply chain department. Participant five and participant one were directly working in the supply chain department. Therefore, both were aware of the three types of outsourcing: transformational, tactical, and strategic.

Participant five had the correct understanding of outsourcing. As such, he said that Pfizer Newbridge deal with strategic and tactical outsourcing. Participant one highlighted that if the company needed the preparation of statistical analysis or medical writing, the company would outsource for a vendor to do the work within a limited period. This is because the two kinds of work fall under the category of non-core business that the company can employ another company to do on its behalf. Additionally, Pfizer decides to outsource for the two services to give the work to the experts who can do it better. Participant two confirmed that the company uses outsourcing companies to offer statistical analysis services related to finance. The second participant perceived that companies that work with Pfizer for a long time develop a good relationship. This means that outsourcing is essential for the well-being of the company in terms of networking and efficiency. During networking, the company can create new clients while retaining good relations with existing ones.

All participants agreed that Pfizer outsources are to enable it to concentrate on its core competencies. Various scholars have asserted that companies outsource non-core services to focus on their main competency areas (de Frutos et al., 2013). Both participants one and five highlighted that Pfizer uses Contract Research Organization (CRO) for research and development. They stated that these CROs could design drugs much faster, which allows the plant in Newbridge to concentrate on Manufacturing them. This enables the company to offer the required drugs to the clients due to efficiency. Participant three notes that if Pfizer company-operated Logistics operations on their own, it would need more time and utilize many resources. Therefore, outsourcing the logistics and supply chain services enables the company to concentrate fully on manufacturing. Thus, the act of outsourcing logistics services is a strategic move to allow the company to focus on manufacturing only while the outsourced experts deal with other activities. The second participant hints at the possibility of the company re-looking the concept of outsourcing and determining whether it can help the company gain a competitive advantage through reduced costs and increased profits.

Conclusion

In conclusion, Pfizer outsources its services for financial reasons: cost reductions and higher profits. The business is focused on ensuring higher profits by minimizing costs. The first participant noted that the company is committed to reducing production cost by all possible means. The participant further said that raw materials could be obtained at a lower price in Asia than in Irish and other European countries. As such, the company has considered outsourcing most raw materials from Asian countries that are cheaper. Moreover, participant five noted that it was of strategic importance to outsource products from vendors for along term. Long-term relationships with vendors who can complete tasks at a lower price and on time have strategic significance.