CASE 9-1
Young Again Pharmaceuticals
Cliff Crandall, senior director of transportation for Young Again Pharmaceuticals (YAP), is gearing up for his company’s most critical product rollout in more than a decade. YAP has developed a breakthrough liquid suspension that reverses the ageing process for anyone over 35 year of age. Available only by prescription, the new product has been dubbed “Twenty-something in a Bottle” by the media. Demand is expected to be very high despite the outlandish price tag of $395 for a month’s supply.
The product is being manufactured in YAP’s San Juan, Puerto Rico laboratory and will be distributed to major retail pharmacies in the United States and Canada. Crandall is responsible for selecting the mode and contracting with carriers to deliver the product. He is concerned about the safe and timely delivery of the initial product shipments in May to the retailers’ distribution centers. The product is high value, somewhat fragile, and of interest to thieves. Some product, stolen from the laboratory, has already appeared on auction websites.
In an effort to make effective transportation decisions and minimize YAP’s risk, Crandall decided to hold a brainstorming session with his logistics team before signing any carrier contracts. The discussion of key risks produced the following list of concerns:
- “If shipments are late or incomplete, retailers will penalize us with vendor chargeback. You know they will small fines for delivery mistakes,”
- I’m worried about shipment delays or freight loss from hurricanes in the Atlantic Ocean,”
- “You’ve got to consider temperature sensitivity issues. If the product freezes, we won’t be able to sell it.”
- “I’ve been reading about all the piracy problems experienced by ocean carriers. You know, a 20-foot container