The document discusses the complexities and challenges of customs clearance in the pharmaceutical supply chain, highlighting issues such as poor planning, bureaucratic processes, and political changes that can impact delivery times and costs. Strategies for improvement include leveraging preshipment inspections, building capacity within consignees, consolidating shipments, and establishing metrics for performance evaluation. It emphasizes the importance of selecting reliable clearing agents and considering alternative ports to enhance efficiency in the supply chain.

1. Security Of The Pharmaceutical Supply Chain
A Series Of Informative Disquisitions
This Installment:
Part Three: Customs & Clearance Issues Related To
The Import Of APIs

2. The
Pharmaceutical
Supply Chain

4. Customs clearance procedures change over time and can be quite
complex Failure by importers to master local customs clearance
procedures may cause long delivery delays and shortages
• Problems include:
 Poor planning and poor communication in the clearance
process
 Bureaucratic processes and Infrastructure (e.g., in cargo
handling)
• These problems can increase costs, increase lead times and
reduce product availability
Appels, Ton, and Henry Struye de Swielande. 1998. Rolling Back the Frontiers: The Customs Clearance Revolution. The International Journal of
Logistics Management. 9:111-18.

5. • Change of policy of new government in each country
 When a new government is elected the policies could
be changed
 Import export policy
 Foreign business relations
 War/cold war
• Internal conflicts affects trade between countries
 Coups
 Rebellions
 Civil wars
Nersessian, Paula. 2007. ITI Supply Management Audit Customs Clearance Tool. Arlington, VA: JSI LogisticsServices

6. • Cargo Risks
 Most of the goods are transported by sea
 Storms, collisions, theft, leakage, explosion, spoilage,
fire, and high sea robbery
• Credit Risks
 Credit Success in international business depends on the
ability of exporters grant favorable terms credit to
importers
Nersessian, Paula. 2007. ITI Supply Management Audit Customs Clearance Tool. Arlington, VA: JSI LogisticsServices

7. Fix known internal problems related to documentation
• Keeping track of documentation requirements and assuring
compliance is an ongoing responsibility because policies
change over time
• Known problems could be addressed without further study
• Of all the problems, this is the one most under control of third-
party agents—and the easiest to address
Subramanian, Uma. Moving Toward Competitiveness: A Value Chain Approach. The Foreign Investment Advisory Service, The World Bank
Group, Washington, DC 2007

8. Take advantage of preshipment inspection processes (where
they exist)
The Central Commodities Management Team on the USAID |
DELIVER PROJECT has noted that where preshipment
inspection processes exist and when they are followed
scrupulously, goods can move quickly through customs
Failure to respect preshipment inspection processes where they
exist leads to delays
Subramanian, Uma. Moving Toward Competitiveness: A Value Chain Approach. The Foreign Investment Advisory Service, The World Bank
Group, Washington, DC 2007

9. Build Capacity Within the Consignee
• For a sustainable supply chain, capacity should be a goal of the
Program
 Develop a technical assistance plan
 Analyzes strengths and weaknesses of customs and
 port clearance
 Provides tools and training for recipient staff
Subramanian, Uma. Moving Toward Competitiveness: A Value Chain Approach. The Foreign Investment Advisory Service, The World Bank
Group, Washington, DC 2007

10. Consolidate shipments where possible
• Consolidating shipments reduces frequency of shipments and the
corresponding effort to process and clear
• Trade-offs of this strategy should be clearly stated and include
 Increased storage space requirements
 Increased opportunity costs of capital for the additional
inventory
 Increased risk of loss and expiry
U.S. Agency for International Development, May 2009

11. Choose a clearing agent based on reliability criteria
• Lowest cost should never be the sole criteria for selecting an in-
country clearing agent
 Presence in more than one country
 Volume of shipments processed
 Size of staff
 Recommendations from other customers
U.S. Agency for International Development, May 2009

12. Establish time & cost metrics for customs & port clearance
• Customers can control contract specifications
• Many aspects of customs clearance performance are outside the
control of most third-party providers
Develop a database or spreadsheet to record and analyze time and
cost data
• Translate into performance-improvement actions
• Track import lead time
• An understanding of lead time should be used to inform inventory
policy
U.S. Agency for International Development, May 2009

13. Find another port
• Alternative ports in-country and trans-shipment may be effective
and efficient options for poorly functioning ports
• Take advantage of available research and discuss with clearance
agents and identify alternative routes for shipments
U.S. Agency for International Development, May 2009

14. Stuart Silverman
CEO & Founder
RyMat Incorporated
(803) 397-8087
stu@rymatinc.com
RyMat Incorporated