Market dynamics and reverse logistics for sustainability in the Indian Pharmaceuticals industry

• Published in: Journal of cleaner production 2019-01, Vol.208, p.968-987
• Main Authors: Narayana, Sushmita A., Pati, Rupesh K., Padhi, Sidhartha S.
• Format: Article
• Language: English
• Subjects: Brand differentiation; Design of experiments; Pharmaceuticals industry; Reverse logistics; Sustainability; System dynamics
• ISSN: 0959-6526; 1879-1786
• DOI: 10.1016/j.jclepro.2018.10.171

The pharmaceutical industry is increasingly employing reverse logistics practices in their supply chain activities to be more sustainable. However, the absence of voluntary take-back for relocation to needy markets limits the benefits of reverse logistics for sustainability practices in India. Production planning and RL design without taking product category and feedback into consideration are ineffective. Resulting in a pressing need to devise policies by incorporating economic costs, environmental costs, and effective product returns in the model aimed at sustainability through RL. This article demonstrates how the principles of Taguchi's Orthogonal Arrays can be applied in a system dynamics model highlighting the presence of two brand categories (preferred & un-preferred) and their respective RL processes that substantially influences product shelf life, maximum allowable sales loss, and delays in the reverse logistics process. The contributions of this research are: (i) market flooding of expired stock can be alleviated for longer shelf life and preferred brands by increasing marketing efforts. (ii) Increasing safety stocks helps sales in a dynamic market but does not alleviate market flooding. (iii) Due to the absence of feedback between reverse and forward logistics processes, improvements in reverse logistics attributes like product return and claims processing delays do not impact sales rather it alleviates market flooding. The medicine take-back policies in India need to be sensitive to the category of the product. There is also a potential for placing checks on the supply side to alleviate market flooding, and a need to provide feedback between reverse and forward logistics through risk-sharing agreements in order to enable product take-back for both disposal and relocation to needy markets. The possible research extensions include the structural changes in the proposed model to test RL, for sustainability policies and the study of brand/product level competition. •Dynamic relations among factors like production, sales, reverse logistics practices and industry growth is mapped.•Model developed consists of reverse logistics practices for preferred and un-preferred brands.•System Dynamics model is used to capture the market dynamics of the Indian pharmaceuticals industry.•Important control factors are identified to improve existing RL and sustainability.•Structural changes using the SD model are suggested to achieve sustainable goals by the industr