Lean Agile Model to Improve the Service Level in Pharmaceutical
Company: Case Study from Peru
Kiara, Gamarra Jorge, Gutierrez
Industrial Engineering Program, Industrial Engineering Program,
Universidad Peruana de Ciencias Universidad Peruana de Ciencias
Aplicadas, Peru Aplicadas, Peru
u201510834@upc.edu.pe u201616176@upc.edu.pe
ABSTRACT
The service level is a critical factor that affects pharmaceutical
enterprises because its focuses on taking care of people’s lives.
An important factor is fulfilling orders on time to customers (doc-
tors and patients), which requires the availability of products and
the highest service level in the health system. The proposal of
this study is based on developing a model that integrates supply
chain processes at operational level to improve the service level.
The model is carried out with the integration of Lean and Agile
methodologies that seek to streamline and make the supply chain
processes more flexible to fulfill orders. This study was simulated
using Arena software, who helps to quantify the operational pro-
cesses and improvement in the supply chain performance. Lean
Agile model achieves the service level required for the industry,
as well as improves the performance of the supply chain in the
company.
CCS CONCEPTS
• Supply Chain; • Pharmaceutical Supply Chain; • Lean; •
Agile; • Service Level;
KEYWORDS
Leagile, JIT Purchasing, Work Standardization, Process Standard-
ization, Order Fulfillment
ACM Reference Format:
Kiara, Gamarra, Jorge, Gutierrez, and Edgar, Ramos*. 2022. Lean Agile Model
to Improve the Service Level in Pharmaceutical Company: Case Study from
Peru. In 2022 The 8th International Conference on Industrial and Business
Engineering (ICIBE 2022), September 27–29, 2022, Macau, China. ACM, New
York, NY, USA, 5 pages. https://doi.org/10.1145/3568834.3568882
1 INTRODUCTION
In the pharmaceutical sector there are many companies dedicated to
the manufacture and marketing of medical devices, medical equip-
ment and medicines. In Peru, there are a total of 360 companies in
the pharmaceutical industry, 31,751 companies for the pharmaceu-
tical trade, and 32,111 companies in the pharmaceutical sector [1].
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ICIBE 2022, September 27–29, 2022, Macau, China
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ACM ISBN 978-1-4503-9758-2/22/09. . . $15.00
https://doi.org/10.1145/3568834.3568882
Edgar, Ramos*
Industrial Engineering Program,
Universidad Peruana de Ciencias
Aplicadas, Peru
pcineram@upc.edu.pe
It is observed that there is an increasing demand for pharmaceu-
tical products and an increase in exports. In the year 2019, sales
were maintained with respect to the previous year, with a slight
decrease by 0.12% [2]. In the pharmaceutical sector, companies that
manufacture medical supplies have been involved in a race against
time to meet the demand for such products that are needed in pub-
lic and private health facilities. As a problem in the sector, most
pharmaceutical companies have problems fulfilling orders on time,
which incur costs due to penalties.
In the pharmaceutical supply chain, unlike other conventional
chains, the service level is of great importance due to the require-
ments that must be met in terms of quality and time [3]. The impact
of the supply chain on the economic field shows that the coordi-
nation of agents improves the performance of the pharmaceutical
supply chain. Meanwhile, in the social field, the service level to the
patient is improved, which in the health sector should be above 90%
[4]. Supply chain performance can be drastically affected from an
internal (operational) as well as an external (customer-centric) per-
spective [5]. The application of an optimal supply policy increases
the profitability of the company and the performance of the supply
chain [6]. For a supply chain to increase its performance, Agile
Manufacturing has the ability to quickly adapt to unpredictable
events and quickly meet changing customer demand [7].
The main motivation of this research is to achieve a level of ful-
fillment in the delivery of orders greater than 90% in the company
under study. The Lean Agile methodology, it seeks to streamline
and make each of the processes of the supply chain more flexible to
increase its performance and reduce the costs of penalties incurred
for the delivery of orders after the established deadline. Also, pro-
vide customers (health personnel) with products tailored to quality
and time. The main objective of the paper is to increase the ser-
vice level, through improvements in the performance of the supply
chain, in the processes of supply, production and distribution of
the focal company.
The article is organized as follows: Section two consists of an
overview of the concepts of supply chain management and phar-
maceutical supply chain. The third section presents the proposed
model based on Lean and Agile methodologies. Next, the case study
is presented at a pharmaceutical company in Peru along with the
results of the research. Finally, future limitations, conclusions and
recommendations are discussed.
2 LITERATURE REVIEW
2.1 Supply Chain
The supply chain (SC) is a network composed of all those parts of
a value chain that are oriented to meet the needs of customers [8].
ICIBE 2022, September 27–29, 2022, Macau, China
The supply chain is a system comprising raw material suppliers,
production plants, warehouses, distribution centers, retailers, and
consumers, which are generally connected through a forward flow
of physical products and a backward flow of information [9].
2.2 Pharmaceutical Supply Chain
The pharmaceutical supply chain is an important component of the
healthcare system in the supply of medicines and pharmaceuticals.
A small disruption in pharmaceutical supply chains can have a
detrimental effect on people’s health, so it is important to properly
identify suppliers and produce high-quality medicines [10], [11].
The four main aspects valued by consumers in a pharmaceutical
supply chain are the availability, accessibility, affordability, and
safety of medicines [12]. For this reason, managing supply chain
uncertainty and risk has become an absolute priority in many phar-
maceutical organizations, including the public and private sectors
[11].
2.3 Supply Chain Management
SCM comprises an effective and efficient management of the flow of
information, financial and materials between all components of the
network in order to maximize total profit and customer satisfaction
[13],[14].
SCM requires making decisions related to the different flows of
goods between suppliers and customers, which are broadly clas-
sified into decisions: strategic, planning and operational [14]. A
key factor for the performance of organizations is the integration
and flexibility of the supply chain which improves quality, delivery,
flexibility, and costs [15]. In supply chain management, operational
performance improves when it adapts and responds to disruptions,
which improves its cost-effectiveness and time recovery [37].
2.4 Lean and Agile
Lean production is a process improvement methodology that is
used to maximize customer value, while eliminating waste and non-
value-added (NVA) activities throughout the organization [16],[17].
The reduction of waste and activities without added value directly
impacts production costs, so it is sought to reduce material, labor,
space, time, etc. [22], [23]. The management concept based on the
Lean principle allows the organization to obtain a higher level
of efficiency, productivity, greater speed of delivery, and optimal
quality, while getting closer and closer to providing customers with
exactly what they want [20].
Agile manufacturing refers to the infusion of agility features
into companies to enable them to react quickly according to contin-
uously and unpredictably changing customer demands [21]; [22].
[23] Studied agile methods for a management system in SMEs,
which conclude that individuals and knowledge are critical elements
to improve performance, flexibility, speed [24], and adaptability to
turbulent markets. Then, it’s important to have a flexible response
strategy as an ability to make decisions in an unpredictable situation
[38]. Also, the personnel plays an important role in the formation of
an agile organization, so companies must promoted training, staff
empowerment, reward systems, work systems, human relations
and performance management [39].
Kiara Gamarra et al.
2.5 Leagile
The combination of lean and agile is considered one of the key
capabilities to reducing supply chain risk [25]. In empirical studies
it was considered that although a strategy is dominant, for example
lean, executives can adopt other concepts of an agile supply chain,
to stay competitive [26], [27].
Leagile Manufacturing is the combination of lean and agile man-
ufacturing, both are separated by a decoupling point, that is, if
demand is stable and predictable it is upstream, while downstream
an agile system is adopted to meet fluctuating customer demands
[18]. A supplier selection model is proposed using the Lean and
Agile (Leagile) technique applied to a textile industry, which helps
local companies to make their supply chain operations more flexible
[28], [29].
2.6 Service level
[30] In their research, they include four metrics of lean chains
and flexible chains [31]: cost, quality, delivery time, and level of
service. [32] demonstrated that an increase in delivery times shows
a decrease in customer satisfaction, therefore, greater availability
is required to provide the highest level of service.
[33]They propose an integrated supply chain policy, in the stages
of replenishment, production, and distribution to protect the nega-
tive impact of inventory inaccuracy, achieve the reduction of logis-
tics costs and increase the level of service. [34] Proposes a lean-pull
strategy in the semiconductor industry is pursued by placing fac-
tories close to the material source if they are material-oriented or
close to customers if the product is customer-oriented, resulting in
reduced production costs and increased service levels.
In a pharmaceutical supply chain, unlike other chains, the level
of service is of great importance, so very few have developed stud-
ies in this scenario [4]. A low level of service increases the risk
of shortages of pharmaceuticals, which adversely affects health
systems and the patient [3].
3 PROPOSED MODEL
The proposed model was taken as a reference of [24], in which Lean
and Agile strategies can coexist in a single system [35], to improve
the operational performance of the supply chain [36]. Likewise, it
was taken as a reference of [6] in which it focuses on increasing
the level of service in the pharmaceutical sector, which has been
developed to properly manage the supply chain in a pharmaceutical
company.
The development of the model aims to increase the level of
service to fulfill the delivery of orders in a pharmaceutical company.
In the first phase of the model, the lean concept is used from the
stage of the supply of the raw material to a point of decoupling in
production to eliminate all kinds of waste, while manufacturing
quality products efficiently. In the second phase of the model, the
agile concept is applied until the final delivery of the customer, to
respond to unpredictable demand and adequately meet the needs
of the customer. Figure 1 shows the model which has been based
on the integration of Lean and Agile methodologies, to achieve the
efficiency and effectiveness of the supply chain.
Lean Agile Model to Improve the Service Level in Pharmaceutical Company: Case Study from Peru ICIBE 2022, September 27–29, 2022, Macau, China

Figure 1: Proposed Model

Figure 2: Supply Chain under study

For the model, it has been proposed to use Lean tools and agile
practices to mitigate the problems encountered at the operational
level.
• JIT Purchasing focuses on improving the receipt of orders
on time by the supplier to ensure the availability of raw
materials and avoid delays in the production process.
• The standardization of work seeks to reduce the percentage
of reprocesses and times that do not add value, as well as
establish more efficient methods for each process.
• Process standardization establishes standardized flows in the
development of the activities of a good or service.
4 CASE STUDY
The case study is carried out in a pharmaceutical company in Peru,
which is dedicated to the manufacture and marketing of pharma-
ceutical products and medical equipment. The company complies
with the legal requirements of DIGEMID and has the certification
of Good Manufacturing Practices (GMP). Its main clients are public
and private health entities. Among its main products are medical
equipment and surgical material. The main product is the dispos-
able sterile surgical apron, representing the highest percentage of
sales (34%), which will be the subject of research in the present
study.
Figure 2 shows the supply chain of the product under study, in
which the scope of the research is up to distribution to hospitals,
central warehouse and clinics.
As the main problem, there have been delays in the delivery of
orders, which have identified critical problems in the supply, pro-
duction, and distribution processes. To analyze the current situation
in the company, it has been evaluated based on the indicator of the
level of compliance with the orders. Table 1 shows that the level of
compliance is 72% in the case study. Therefore, it seeks to achieve
the objective presented in case studies compared to experts [4], [6]
ICIBE 2022, September 27–29, 2022, Macau, China
Table 1: Order fulfillment metric
Orders fulfilled on time Delayed orders
352 134
Table 2: Metrics for the evaluation of Lean Agile Model
Metrics Current Model
Order Fulfillment 72%
Order Cycle Time 93 days
Production Lead Time 65 days
Non-Value Added Time (%) 44%
Orders Shipped on Time 76%
Orders Fulfilled on Time 352
Delayed Orders 134
in which they define that in a pharmaceutical company a level of
compliance greater than 95% is required.
5 RESULTS
The Lean Agile model has been evaluated by the following metrics
along the supply chain shown in Table 2. The simulation in Arena
presents us with the statistical reports in each improvement pro-
posal to evaluate the performance in the metrics analyzed through-
out the implementation. The results obtained from the metrics are
shown, and the scenarios of the current state and proposed state
are compared.
The compliance level metric in the proposed state increased by
23%, reaching the proposed goal according to the reviewed literature
greater than 95%. This increase in the level of compliance is because
since the number of delayed orders has been reduced from 134 to
24 orders in a year. Also, the cycle time of the order is 74 days,
which was reduced by 19 days compared to the current situation of
the model. For the metrics evaluated in the production process, the
lead time was reduced by 16 days reaching an improved time of 49
days. Concerning for to the percentage the non-added value, it was
reduced to 19%. Meanwhile, for the evaluated metric orders sent on
time in the distribution process, it was increased by 20% and the
proposed goal of 95% was reached.
It is concluded that the proposed goal for each metric analyzed
according to the literature review was exceeded. In this way, it is
validated that the application of the proposed engineering tools
generated a positive impact on operational performance in the case
study.
6 CONCLUSIONS
This article has analyzed the operational processes of a pharma-
ceutical supply chain in a case study in Peru. The proposed model
is based on the combination of Lean and Agile strategies, which
managed to streamline and make flexible the processes of the sup-
ply chain and achieve the desired level of service for the industry.
The model is also associated with increasing supply chain opera-
tional performance and achieving higher company performance to
respond to volatile customer demand.
Kiara Gamarra et al.
Order fulfillment
72%
Lean Agile Model Proposed Goal
95% >=95%
74 days <=76 days
49 days <=52 days
19% <=21%
96% <=95%
478 -
24 -
The presented knowledge of Lean and Agile methodologies pro-
vides managers with information for decision-making at the strate-
gic, tactical, and operational levels. Specifically, it will help guide
them in improving processes in supply chains with delivery issues
allowing them to achieve efficiency and flexibility at all stages of
the supply chain.
The study is limited to a single product, a sterile surgical apron,
as it generates the highest revenue in the company. In addition,
inventories have not been considered, as the focus of the study is
the flow of the order along the supply chain. Another limitation of
the research, occurs in the variation of delivery times generated by
external factors, which alter the level of service.
This research may be the starting point for the application of the
proposed Lean Agile model to other conventional supply chains.
The implementation of the model should be evaluated according
to the type of industry, according to the demand, and the type
of product. Likewise, it has been shown that the level of service
is a critical factor in a pharmaceutical supply chain due to the
requirements that must be met at the level of quality and time.
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