Alignment of marketing strategies in the pharmaceutical supply chain through a system dynamics simulation modelling

Purpose This study aims to investigate the impact of retailer–supplier partnerships (RSP), a crucial type of supply chain-related strategic alliance, in mitigating the bullwhip effect (BWE) caused by an unintegrated, sales-focused management approach among pharmaceutical supply chain (PSC) partners. It explores how integrated management strategies in PSC, using free-of-charge (FOC) rewards as a marketing promotion tool, can optimise capillary distribution networks. Design/methodology/approach A system dynamics (SD) simulation model is developed to investigate the effectiveness of RSPs in enhancing the overall PSC performance. To do so, a PSC case study is used to conceptualise and develop the simulation model, with FOC used as the primary marketing promotion tool in capillary network sales. The model evaluates the impacts on PSC metrics, including sales loss, income, production costs and raw material purchase costs. Findings Improvement scenarios are proposed to optimise the market promotion policies, achieving sales targets while stabilising production, procurement and financial operations. The simulation results demonstrate significant improvements in decreasing sales loss, production operational costs and raw material purchase costs and increasing income and profitability. In addition, errors in raw material and product stocking decreased, and the market share increased notably, demonstrating the benefits of a coordinated PSC. Originality/value This study extends existing research by presenting an SD model on RSP within PSCs, emphasising the often-overlooked marketing component in integrated PSC planning. It provides insights into how strategic alliances and integrated management approaches can alleviate common PSC challenges, such as BWE.