Designing a supplier selection model based on supply chain risks in the country's pharmaceutical industry

Master's Thesis of MBA, Strategy Orientation

Abstract

In global competition, the customer's demand for high quality and fast service has made companies unable to handle all the work alone. Based on this, activities such as material procurement, product production and planning, product storage service, inventory control, distribution, delivery and customer service have now been transferred to the supply chain level. The key issue in a supply chain is the management and control of coordination between all these activities. Variability in the field of possible outcomes and results of the supply chain, the probability of occurrence and its effects are called supply chain risk management. Supply chain risks include risks arising from changes in the flow of materials, products, and information that begin with the primary supplier and end with the final consumer. The pharmaceutical industry is defined as a set of processes, operations, and organizations involved in the discovery, creation, and production of drugs. Considering the extent of the pharmaceutical supply chain, the focus of this research has been on the selection of suppliers and what factors should be considered for selecting a supplier in a supply chain in order to reduce the risk in this chain.

In this research, according to the risk reduction strategies in the supply chain and the consultation of professors and experts in the supply chain and pharmaceuticals, a checklist for supplier selection with eight main indicators and 30 secondary indicators in the field of selecting the best supplier and four main indicators and 9 indicators A sub-section was obtained in the field of influential environmental risks. After examining the statistical results of the questionnaires and using the TOPSIS fuzzy method, we finally arrived at seven main indicators "quality, flexibility, delivery, technology, communication systems and information technology, cost and history" with 24 sub-indices in the field of choosing the best supplier and four main indicators "economic, political, natural disasters and cultural/social" with 8 sub-indices in the field of environmental risks. The aim is to improve the current situation of the selection of exploitable suppliers. Key words: supply chain management, risk management, supply chain risk management, drug supply chain, top supplier selection indicators, fuzzy TOPSIS method. Chapter 1: Research overview - Introduction In this chapter, the research overview and concepts are discussed. Thus, this chapter includes the following: definition of the topic and importance of the research, research objectives, statement of the research problem and questions, research hypotheses, application of the research results and research audience, method of conducting the research and specialized vocabulary. To achieve these goals, paying attention to the efficiency and effectiveness of the supply chain is of great importance in every organization.

In order to increase the competitive power, in the 60s and 70s, organizations tried to take an effective step towards increasing their customers by standardizing and improving processes. In the 1990s, these efforts continued with the development of human resource management methods considering strategic suppliers and logistics operations. (Ferazelle, 2001)

In today's era, organizations have realized this important issue for a long time that in order to continue in the global competition scene and be successful in the market, they must bring certain factors such as the quality of the products and the quality of the executive and production process to the desired and acceptable level in their structure and products. However, the key to success in achieving these goals is to focus more on the main activities and goals of the organization. Therefore, in order to solve this fundamental problem, many managers of large organizations decided to leave activities that are not of strategic importance to the organization to sources outside the organization, so that with this action, they can focus more on management and then on the activities in the organization that have a direct impact on the aforementioned factors and perform them optimally. But during the process of outsourcing, various issues with a wide range of information are considered, such as the selection of suppliers, the type of selection algorithm and many other factors that are among the intellectual concerns of managers..

The increase in the number of service provider companies outside the main organization in recent years has caused organizations and outsourcing companies to face various selection situations when choosing an external source. In addition to this issue, the increase in commercial competition and the expansion of global markets have caused organizations to pay more attention to the optimization of all their affairs and processes in all competitive aspects, which includes the selection of suppliers. When choosing a supplier, decision-makers in the field of outsourcing try to choose an option from among volunteer sources (suppliers) that can provide the best possible way to provide all the needs of the outsourced process in the most optimal way. (Razmi, Jafar et al., 1387)

1-2-1- Supply chain management

Intensification of competition since the 1990s put pressure on companies to improve their efficiency in all aspects. On the other hand, the increase in variables led to allocating more resources in order to predict demand and supply in order to further strengthen the supply chain. Researchers believe that effective supply chain management is a strong enabler in the organization's performance and is also considered a valuable way to protect competitive advantage. (Childerhouse, P., Hermiz, R., Mason-Jones, R., 2003)

Supply chain management as an integrated approach to properly manage the flow of materials and goods, information and monetary flow, has the ability to respond to these conditions. The supply chain is an integrated system of related processes for the purpose of: obtaining the required materials and parts, converting raw materials into products, valuing products, distributing products to customers, simplifying the transfer of information between chain components (including suppliers, manufacturers, distributors, intermediaries, retailers, and customers). (Shafizadeh, 1383)

1-2-2-Risk

Sitkin and Pablo in 1992 defined risk as "domains in which there is uncertainty about whether successful or disappointing outcomes [1] of decisions will be realized or not". (Sitkin B., Pablo A., 1992)

The actions that probably produce profitable effects often include risks. Ritchie and Brandley define business risk as: the level of exposure to uncertainties that the company must understand and effectively manage when implementing its strategies to achieve its business goals. (Ritchie B., Brindley C., 2007).

1-2-3- Risk management in the supply chain

The possibility of change in the context of expected outcomes and results of the supply chain, the possibility of changes and their effects are called supply chain risk management. Supply chain risks include risks arising from changes in the flow of materials, products and information, which starts from the primary supplier and ends with the final consumer. Therefore, in general, supply chain risks are related to the probability and effect of a mismatch between supply and demand.

Risk management in the supply chain is an important issue in supply chain management. The importance of this issue is related to increasing the outsourcing strategy in factories, globalization of markets, increasing trust in suppliers for special abilities and innovations, relying on the supply network for competitive advantage and the emergence of information technology that makes it possible to control and expand the supply chain. (Narasimhan, R., Tallur, S., 2009)

Supply chain risk management (SCRM[2]) can be considered as a management strategy activity that affects the operational, marketing and financial performance of the factory. (Duncan, 1972)

As long as the process of outsourcing exists as an important strategy in factories, work continues on both areas of risk assessment and identification and risk reduction (methods and theories). (Narasimhan, R., Tallur, S., 2009) Faizal and colleagues as well as Tang (2006) believe that effective risk management in a supply chain is a requirement for factories today. Factories like Ericsson and Nokia have realized this for a long time. Primary research in any field basically starts with identifying and introducing concepts and specifying categories or classifications. Early works in the field of risk management in the supply chain also followed this method.