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					Pharmaceutical industry audit program - Distribution - Transportation management

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Application of transportation management:

For pharmaceutical distribution companies, transportation expenses include:

i)     inbound freight and international shipments, for deliver of goods from suppliers to warehouse
       (Note: company-brand products require domestic inbound transportation; third-party brand products need
       international shipments and domestic inbound transportation.)

ii)    domestic outbound transportation, for deliver of goods from warehouse to customers.


Objectives:

i)     to ensure transportation procurement, planning and execution are properly monitored.

ii)    to ensure transportation performance measurement is properly exercised.

iii)   to ensure the company has exercised transportation spend management.




a4f41350-4404-46b6-9837-a5cbda2f158b.xls - Transportation management 10/30/2012 4:44 AM                                                                                   Page 1
Pharmaceutical industry audit program - Distribution - Transportation management

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Audit Procedures:

1.     Transportation procurement

i)     Discuss with business unit logistics manager whether transportation management has been centralized
       to exercise greater control of inbound and outbound freight.

ii)    Check with business unit procurement manager / logistics manager whether corporate-wide shipping /
       transportation volumes are used during contract negotiations, rate shopping and load shifting to obtain
       lower freight costs.

iii)   Discuss with business unit procurement manager / logistics manager whether the company has utilized
       bid optimization to cut freight costs.

iv)    Check with business unit procurement manager / logistics manager whether the company has control
       mechanism to minimize decentralized transportation spending,

v)     Discuss with business unit procurement manager / logistics manager for ways to obtain best available
       pricing and to reduce time to source transportation service provider.

vi)    Enquire whether the company utilizes single, company-wide carrier system or multi-carrier system.

vii)   Discuss with business unit procurement manager / logistics manager for transportation service provider
       consolidation.

viii) Check with business unit procurement manager / logistics manager for selection of transportation
      service provider, whether the company has considered the following criteria:
       - past record / reputation on on-time delivery
       - provide carrier system which can integrate into the company's ERP system




a4f41350-4404-46b6-9837-a5cbda2f158b.xls - Transportation management 10/30/2012 4:44 AM                                                                                    Page 2
Pharmaceutical industry audit program - Distribution - Transportation management

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ix)    Discuss with business unit procurement manager / logistics manager for implement "carrier friendly"
       programs (i.e. to become lower-cost customers and in return, receives lower freight charges by carriers).


x)     Discuss with business unit procurement manager / logistics manager for inbound and outbound cost
       optimization program.


2.     Transportation planning & execution

i)     Check with business unit procurement manager / logistics manager for ways to reduce maverick
       spending (e.g. set up control mechanism and assign who can place order, how to place order and track
       order).

ii)    Discuss with business unit logistics manager for control mechanism to reduce unfettered consumption
       of transportation services:
        - shipment / transportation optimization
        - set up load planning centre
        - with universal information access

iii)   Check with business unit logistics manager for centralize transportation processes and ways to improve
       container / carrier capacity utilization.

iv)    Discuss with business unit logistics manager for process alignment with other departments to create
       delivery efficiencies.

v)     Check with business unit logistics manager for setting delivery schedules for goods delivery from
       vendors to warehouse and from warehouse to customers.

vi)    Enquire whether logistics department has provided other departments with online transportation cost
       and status information to monitor transportation activities.

vii)   Discuss with business unit logistics manager for carrier collaboration (e.g. sharing rolling 2-week
       capacity forecasts with carriers and to reduce driver turnaround time at pickup and delivery locations
       (i.e. at supplier warehouse and at customer).




a4f41350-4404-46b6-9837-a5cbda2f158b.xls - Transportation management 10/30/2012 4:44 AM                                                                                      Page 3
Pharmaceutical industry audit program - Distribution - Transportation management

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                                               AUDIT PROCEDURES                                                Ref.    By    Spent   Expected   Finished   Remarks     By:

3.     Transportation performance measurement

i)     Discuss with business unit logistics manager for frequency of transportation performance measurement.

ii)    Check with business unit logistics manager whether the company has shared online transportation
       information internally and with business partners.

iii)   Discuss with business unit logistics manager for daily transportation score carding.

iv)    Discuss with business unit logistics manager for sharing tactical capacity forecasts with carriers.

v)     Discuss with business unit logistics manager for adopt 360-degree transportation management:
       - inbound and international transportation management
       - outbound transportation management
       - carrier collaboration

vi)    Check with business unit logistics manager for impact of information sharing on reduce freight spend.


4.     Transportation spend management

i)     Check with business unit logistics manager / finance manager whether the company has assigned a
       designated person to monitor transportation expenses.

ii)    Check with business unit logistics manager / finance manager whether the company has set up a formal
       transportation spend management program.

iii)   Discuss with business unit finance manager for charge back of transportation expenses to user
       department (i.e. to promote transparency and accountability for consumption of services).

iv)    Check with business unit finance manager whether the company has exercised budgetary control over
       transportation spending.

v)     Check with business unit finance manager for provide transportation expense report on periodic basis
       (e.g. weekly / monthly) to individual user.




a4f41350-4404-46b6-9837-a5cbda2f158b.xls - Transportation management 10/30/2012 4:44 AM                                                                                  Page 4
Pharmaceutical industry audit program - Distribution - Transportation management

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5.     Overall comment

i)     Check with business unit procurement manager / logistics manager / finance manager for percentage of
       transportation spend under management.

ii)    Discuss with business unit procurement manager / logistics manager / finance manager for benefits
       obtained from transportation management:
        - gain cost control
        - improve staff productivity
        - shipment / transportation visibility
        - compliance management

iii)   Check with business unit procurement manager / logistics manager for cost and service impact of
       transportation on overall supply chain performance.




a4f41350-4404-46b6-9837-a5cbda2f158b.xls - Transportation management 10/30/2012 4:44 AM                                                                                 Page 5

				
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