In the case of pharmaceutical and chemical industries a number of considerations are made in the scope of operations. A major consideration is in the matter of product distribution and storage facilities such as warehouses. For instance, in pharmaceutical industry, over night delivery of products is made and high margins are recorded. On the other hand, outbound transportation cost is high compared to inbound transportation. Consequently, in chemical industry low margins are experienced in its operations.
These characteristics have effect in establishing the number of warehouses for both pharmaceutical and chemical industry. The characteristic features of these two industries directly influences the number of warehouses established. In this case, more warehouses are needed in pharmaceutical industry compared to chemical industry. Considering the typical use of overnight delivery method means that more storage space is needed before products are dispatched to the corresponding departments.
It is a considerable reason that provides the management at the pharmaceutical industry to ensure that products are supplied within the stipulated time. This results to a record of high margins which is basically one major reason for establishing the industry. More warehouses are thus required to hold or store high volumes of products delivered overnight. The existence of more warehouses helps to constantly provide a mechanism of continuous supply of products.
Shortage of the products in pharmaceutical industries contributes to low rates of satisfying customer needs but establishment of numerous warehouses will help to curb this problem. In another perspective, the pharmaceutical industry deals with supply of medicines for human health which are distributed throughout the day and night (Javalqi, G. 2001). This calls for establishment of storage space to ensure that there is continuous supply of the medicines. Reference Javalqi, G. (2001). International Logistics Operations of MNCs: An Exploration of the Pharmaceutical Industry, Review of Business, Vol. 22.