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Friends with Benefits: Secret business advantages to new pharmaceutical manufacturers from logistics services providers

By Contributing Author | 04/06/2018 | 5:42 AM

By Lawrence Hotz, WDSrx – Woodfield Distribution LLC


New conventional and virtual manufacturers focus on developing commercial products and often under-estimate the complexity of bringing their medications to market. 

Smaller manufacturers unacquainted with logistics that take it upon themselves to deliver their products to retailers and wholesalers soon discover the process is more costly and difficult than they imagined, particularly when retailers impose financial penalties for rejected or late deliveries.

It may seem counter-intuitive for young companies to select a Logistics Services Provider (“LSP”) for healthcare supply chain solutions that minimize cost, however partnering with an experienced pharmaceutical LSP streamlines the fulfillment process, minimizes supply chain disruptions, helps assure product is properly received, reduces potential penalties and enables faster payment and re-orders.

Reputable LSP partners place a high priority on service to clients.  The best LSP firms consider the word ‘service’ to mean ‘capability’ and also ‘to support.’  This article highlights four key LSP services of special interest to newly-commercialized manufacturers that elevate the partnership to ‘friends with benefits’ status:   GS1-128 labeling; Customs Bond warehousing; extensive retailer relationships; and Sortation and Segmentation.


Hotz 1 - Friends With BenefitsBiopharma and other manufacturers beginning commercialization often treat shipping as an afterthought until they realize that retailers pay invoices only when the product is received into their inventory.

New players in the pharmaceutical industry that place a standard shipping label on boxes and believe a tracking number is sufficient to document delivery are making mistakes that will result in financial hardship from lost and rejected  shipments.  Superior Logistics Services Providers treat labeling with extreme precision, using current GS1-128 shipping labels with EDI information transfer to move packages within the pharmaceutical supply chain.

(Figure 1: GS1-128 labels conform to international standards for efficient fulfillment. ©WDSrx)


 Shipping labels must meet current technical standards and guidelines set by             
authorities and consignees including GS1 which is the international standard                  
for companies to identify, capture and share this supply chain data.  The
GS1-128 label is a standard label format printed with codes to reveal package contents eliminating the need to open the container.                                                                                                                           
Electronic Data Interchange (“EDI”) systems enable business documents to be shared between different computer systems.  The ASN-856 (Advanced Ship Notice) is an electronic file shared between EDI systems that alerts recipients to expect a delivery. EDI systems gather data from GS1-128 labels for accurate reporting.

The GS1-128 label is a vital component of EDI transactions because it satisfies requirements established by the receiving party for shipment details including origin, destination, contents, purchase order and additional data.  These labels can be affixed to pallets and packages and enable consignees to route packages efficiently within their own distribution network without opening them. In some cases, the LSP must break down secondary packaging or remove non-compliant labels from manufacturer deliveries, then re-package them with GS1-128 labels to avoid shipping disruption.

According to Adam Runsdorf, President of WDSrx – Woodfield Distribution, LLC, a pharmaceutical logistics services provider, “Sharing our knowledge with new clients improves everyone’s efficiency and fosters long-term relationships that promote business growth.”

Advanced labeling and data transmission technology are necessary steps for efficient shipping and receiving.  Logistics Services Providers perform labeling services for start-ups as a standard benefit that scales up as their deliveries increase. 

Labeling and EDI are not enough to assure shipments are properly received.  Experienced Logistics Services Providers take additional steps to assure shipments move efficiently between manufacturers and their retailer accounts, even managing shipments arriving from international points of origin.


Hotz 2 - GS1 128 LabelOtis Redding’s classic song “Sittin’ On The Dock Of The Bay” is a common refrain for international manufacturers and suppliers of raw materials, API or finished goods that are unaccustomed with government requirements when they learn their shipments are detained on receiving docks at U.S. Ports of Entry. 

Manufacturers from outside the United States often realize cost savings when shipping raw materials in bulk to our shores instead of finished goods.  Those savings can disappear however, when the shipment fails to clear U.S Customs or other regulatory checks upon arrival. 

(Figure 2: Detained shipments may be stored safely at an LSP with a Customs bond. ©WDSrx).


When a pharmaceutical shipment arrives at a U.S. port, contents must be examined and documentation reviewed by three separate regulatory authorities
before the product is approved for clearance:  U.S. Customs and Border Protection, the United States Department of Agriculture (USDA) and the Federal Drug Administration (FDA).

When things go wrong in the United States for a company based in another country, the situation can quickly spiral out of control.  Manufacturers working with reputable Logistics Services Providers based in the United States can more easily navigate customs procedures and can correct problems expeditiously if and when they occur.


Improper completion of the Bill of Lading is a common reason that shipments into the U.S. are detained by U.S. Customs inspectors.  For example, if the Importer of Record or Consignee listed on the form is not known or missing, the entire shipment can be transferred to a U.S. Customs warehouse on site for further action.  These temporary facilities do not accommodate special handling requirements, resulting in temperature excursions and greater risk of contamination.  A similar scenario can play out if the FDA or USDA delays clearance.

If the shipper fails to be notified of a problem, the situation may last for an extended period, causing significant financial consequences. Expenses may include the cost of the initial shipment, warehousing and storage fees in the temporary customs warehouse, broker fees, production of a new order and shipment, destruction of the initial shipment and lost revenue from products that could not be manufactured and marketed in a timely manner.


When international manufacturers coordinate shipping efforts with a U.S.-based pharmaceutical Logistics Services Provider, clearance issues are handled on the ground at the Port of Entry, reducing delays and facilitating on-time delivery to the designated recipient.

A hidden benefit of relying on an experienced LSP within the United States for international shipments is their ability to secure a Customs Bond in case of a Customs clearance delay.  The Customs Bond enables the LSP to move the shipment within a 50-mile radius from the unsecure non-compliant temporary Customs warehouse at the Port of Entry to a secure temperature-regulated pharmaceutical-grade warehouse facility operated by the LSP. Once received, the shipment is properly stored and handled until clearance is granted. 

A few of the best pharmaceutical Logistics Services Providers are also Registered DEA Importers and Exporters, recognized by the U.S. Government to handle Controlled Substances as they enter and leave the country.

Logistics Services Providers benefit companies unfamiliar with transport regulations by keeping current with requirements for proper labeling and technical issues and by facilitating shipments entering U.S. ports.  

There is another hidden benefit to fledgling manufacturers that the right LSP can use to speed delivery…but it’s a secret!


An important hidden benefit for budding manufacturers working with an experienced Logistics Services Provider is profiting from established relationships with retailers that the LSP has nurtured over time. 

Retailers are more comfortable conducting business with companies they already know.  Companies that are new to the industry must develop relationships with business partners from scratch.  Young companies trying to conserve expenses by fulfilling their own orders may end up paying a steep cost in lost orders, rejected deliveries and missed opportunities.

Relationships between LSP firms and retailers are constantly evolving because both parties have a mutual interest in maintaining efficient business operations.  Information is often shared to speed deliveries.  Novice manufacturers with the right LSP partner receive the benefit of this communication at no additional charge. 


One example of an LSP gaining extensive knowledge about retailers they ship to is called the Lead Time Analysis report. This research document is compiled by the LSP and details the optimal timeframes to prepare, pack, ship and deliver an order from the original warehouse location to the retailer distribution center.  The results of the Lead Time Analysis provide consistency for order placement and shipping according to the specific retailer requirements.

In addition to the facts of the Lead Time Analysis shared with clients by their LSP, there are more subtle hints provided by retailers that help LSP firms to satisfy clients unacquainted with retailer relationships.  A particular distribution center for one retailer may prefer that deliveries be made by a specific freight forwarder or courier.  Time is money in every business.  Understanding the unique preferences of individual retailers demonstrates how superior LSP firms service their clients.

When the order finally reaches the receiving dock at the retailer distribution center, another hidden benefit called Sortation and Segmentation provides evidence for young manufacturers that their shipment was received by the Consignee.


Hotz 3 - Customs BondReceiving docks can be chaotic workspaces.  Multiple trucks and trailers arrive simultaneously.  Pallets, cartons and boxes cover the floor.  Warehouse technicians move among deliveries, drivers and other personnel while scales, scanners, forklifts and other equipment crowd the area. 

What are the odds that a retail distribution center will treat a shipment from a new account with the same attention as a full truckload arriving from an established manufacturer?  Actually, they are very favorable utilizing a service called Sortation and Segregation, or “Sort and Seg.”

Sortation and Segregation is a white glove service that involves locating each package on the vehicle that makes up a single order.  When located, the packages are organized and separated from remaining deliveries.  The order is then segregated from other deliveries on the receiving dock.  The Consignee processes the order quickly because preliminary work is completed. Finally, the Consignee signs documentation confirming receipt of the complete order.

With Sortation and Segregation, retailers gain confidence in new accounts because their product is consistently delivered on time, allowing the manufacturer to concentrate on business growth. The start-up receives notice in real-time their delivery was received.  High-fives all around.

(Figure 3: Sortation and Segmentation organizes valuable shipments at active receiving docks. ©WDSrx)



Hotz 4 - Sortation and SegregationBusiness success favors companies that spend strategically to gain competitive advantage.  Pharmaceutical manufacturers new to the commercial market that select a specialized Logistics Services Provider profit from the relationship. 

Often the support is hidden from view and occurs behind-the-scenes.  Attention to packaging and labeling compliance, Customs clearance services, retailer shipping preferences and white glove delivery procedures represent some of the tools available from LSP partners transforming progressive young manufacturers from understudies into leading players within their sales network.

Behind each package is the accumulated knowledge of the LSP partner at every step within the pharmaceutical supply chain. 

     (Figure 4: Newly commercial manufacturers benefit from expertise of reputable Logistics Services Providers © WDSrx)


Larry headshot





Lawrence Hotz is the Marketing Director at WDSrx – Woodfield Distribution, LL




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