Manufacturing capability networks: A case study on production allocation decision in the pharmaceutical industry

Abstract

This study aims to identify and understand the key factors that need to be considered when deciding production allocation in the pharmaceutical industry as well as to develop a managerial framework to guide the location decision in the same industry. A total of ten case studies have been performed in an international pharmaceutical company based in Singapore over an 8-month period. The case studies revealed that production allocation decisions are largely driven by the desire to maximize benefits through the exploitation as well as the development of manufacturing capabilities at both the plant and network level. The study also identified and detailed the influence of legislation requirements, market, and product specifications on these decisions. It was observed that the degree of influence varies from case to case, resulting in two categories of decision criteria: qualifying (i.e. must meet) and ranking (differentiation) criteria. A framework is created to aid managers to decide the best location, maximizing the overall manufacturing network as well as the single plant capabilities.