Pharmaceutical distribution operations that work

Pharmaceutical distribution demands precision at every handoff. One missed step and someone doesn’t get their medication on time. Here’s how structured compliance workflows help.

Tallyfy Talks is a series of interviews with people running operations in the real world. In our conversations with pharmaceutical and life sciences organizations - from diagnostics firms tracking drug release processes to biotech companies managing clinical trial workflows - we consistently hear about the same tension: how do you coordinate complex, multi-step processes across global operations without dropping the ball?

Dan Howard is the Vice President of Customer Delivery for H.D. Smith LLC in Springfield, Illinois. H.D. Smith was the nation’s largest privately held pharmaceutical wholesaler before its acquisition by AmerisourceBergen in 2018. They provided retail, independent, and hospital pharmacies with prescription drugs, over-the-counter products, and home health care supplies. Dan spent 18 years in pharmaceutical operations, with previous roles at Cardinal Health, American Honda, John Deere, and Dell Computers. He holds a B.B.A. in Management from East Tennessee State University and an M.B.A. from Ashland University.

What H.D. Smith does and why it matters

Please tell us more about yourself and your role.

I’m Dan Howard. I work in pharmaceutical operations at H.D. Smith. We distribute pharmaceuticals to retail pharmacies, independents, hospital pharmacies, and long-term care facilities like nursing homes. I’m responsible for pharmaceutical operations across multiple distribution centers in the US. I’ve been doing something similar for about 20 years now.

Do you distribute on behalf of manufacturers?

That’s correct. A pharmacy might use pharmaceuticals manufactured by hundreds of different vendors. You certainly wouldn’t want hundreds of separate deliveries showing up, right?

As a wholesaler, we’re the focal point. All those materials flow through us. The pharmaceutical operations team handles the reverse logistics the same way - returns come back to us, and we work with vendors on that side of things.

How do you receive an order?

Pharmacies provide us usage data, either directly or through transfers from another wholesaler. They give us a usage history and our purchasing department analyzes that. If we need to add materials, we do. The pharmaceutical operations team also accounts for that demand in our system and buys quantities to support their needs.

Do you get needs in advance or predict them?

It varies. At the highest service level, the more information we have and the more they tell us, the better. Sometimes it’s a new pharmacy though. In that case, we’ll find a model pharmacy and use that usage information. But it’s always ideal to get actual usage data.

The team behind the distribution

Tell us about your pharmaceutical operations team.

Our facilities are run by distribution center managers. They’re responsible for inventory control, transportation, facilities, and general warehousing functions in their pharmaceutical operations. I have 7 of those managers plus another position reporting to me - 8 directs and around 400 indirect reports across pharmaceutical operations.

Under the distribution center managers, there’s a night warehouse manager, a day warehouse manager, possibly inventory managers or supervisors. There may be compliance specialists because we’re heavily regulated - we deal a lot with the FDA.

It’s a general pharmaceutical operations setup: day and night warehouse workers, supervisors, warehouse leads, associates. We’ve centralized most IT functions, so pharmaceutical operations are supported by a shared services model with centralized IT and HR. Those functions don’t reside within the distribution centers - they’re corporate.

What running pharmaceutical operations really looks like

What does running pharmaceutical operations mean to you?

It’s such a broad topic. It encompasses so many different responsibilities and involves interacting with a lot of stakeholders and functional areas. To me, it means understanding our business and the needs of the people we serve. It means ensuring we provide value.

There are various functions - supporting vendors, correct receipt of materials, controlling inventory, managing that expensive asset. Whatever the function, meeting service level needs is most important. Delivering products on time without errors. That’s the goal. And managing expenses to ensure profitability.

We’re continuously working to improve in all these areas. It’s a huge team effort. My job is to ensure everyone understands our company’s vision and has the tools to accomplish it.

In our experience building Tallyfy, we’ve seen the same pattern play out: when operations teams don’t have a clear, trackable process for every handoff, things fall through the cracks. Pharmaceutical distribution amplifies that risk tenfold because lives depend on it.

What does your typical day look like?

My role is rather corporate, so I’m generally not directly involved with floor-level operations at the distribution centers. If someone needs help with a task, assistance with policy logistics, or approval on exceptions, I step in. Much of my time is spent interacting with other areas - sales, finance - and supporting initiatives.

I spend a lot of time with the team looking for ways to improve processes. Increase service, decrease expense. Whenever we can reduce cost without hurting service, our sales team can offer more competitive deals and win more business.

I travel about 35-40% of the time. During that travel, I connect with various people across pharmaceutical operations to stay plugged in. And then there’s reviewing metrics against goals and working on counter-measures for anything we’re falling short on.

The hard problems in pharmaceutical distribution

What are the biggest problems you face?

Like everyone, we’re trying to do more with less. It’s hard to find cost-effective ways to service new geographic areas where we don’t have density in our delivery network.

If we’re not constantly looking for ways to improve that network, our expense structure becomes a disadvantage. The pressure is always there to reduce cost while maintaining or improving service.

Day-to-day at the facilities, one of the big issues is dealing with volume fluctuations. Inbound receiving, outbound orders. We’ve got to ensure we’ve got the right quality and amount of resources to process that inbound and fill those outbound orders without carrying excess capacity. We flex resources quite a bit.

We’re not distributing widgets.

We’re providing often lifesaving drugs for people who have procedures and surgeries scheduled around their anticipated receipt. Everyone understands the importance of what we do. We’re used to working longer hours, weekends, whatever it takes.

This is where the mega trend hits hard. If your distribution workflow has gaps - unclear handoffs, missing checks, undefined escalation paths - throwing AI at it won’t help. It’ll just make the gaps bigger, faster. You need the process nailed down first. That’s actually the entire reason Tallyfy exists - to give teams a way to define and track every step before anyone dreams of automating it.

What do you worry about?

I worry about something in our operations interrupting our ability to deliver. Systems issues - if an accident somewhere cuts your T1 line, we can’t communicate. Weather can disrupt things too. Hurricanes in Florida, snow storms in the Northeast.

Internally, if something goes wrong in our IoT infrastructure, or a table fills up in our ERP system and clogs bandwidth. We’d be unable to stream orders through to our warehouse management system. The order just wouldn’t get filled.

People showing up and being engaged isn’t really the concern. We can’t just throw temps in whenever we want because everyone’s got to be highly trained and sign off on all the SOPs. We’ve got a very able workforce - professionals who’ve been doing this for a long time.

What would you improve with no resource constraints?

If I had a magic wand, I’d make usage information more accurate. One of the things that causes inefficiency is slow-moving inventory. We’ve got to handle, store, and dispose of it.

In an ideal situation, we’d buy only what was ordered, in the amount needed, on the timeline required. Complete visibility to needs - that would eliminate excess inventory and excess handling.

Some pharmacies have systems that give us automatic feedback, which is great. As soon as someone picks up a prescription and the pharmacy sells that quantity of that drug, the system can message ours and create demand. It’s all about getting that transparency. Same with our vendors - the more information we share, the less waste in their supply chain.

Feedback we’ve received from operations leaders across industries echoes this same frustration. The underlying theme is always the same: if you can’t see the status of every step in real time, you’re guessing. And guessing in pharmaceutical distribution isn’t an option.

Systems, competition, and regulatory pressure

What tools and systems do you use?

We use an ERP system for finance, materials management, credit, and operations. We interface it with a WMS for handling transactions on the warehouse floor. We also connect to smart conveyors, ASRS systems, automated pick modules.

Everything in wholesale distribution is fiercely competitive. A pharmacy will have multiple ordering portals open on one screen. If I don’t have something available, they toggle to a competitor’s website and order it there. Everything ordered today arrives tomorrow. There are no long lead times, so our systems need sub-second responses.

Whether it’s the person waiting for the shipping manifest or someone waiting for their order confirmation, it’s got to be fast. Our systems have to be flexible and able to scale for volume changes. They’ve got to maximize the efficiency of our processes.

This is something I think about a lot. Tallyfy was built around the idea that tracking work between people matters more than just moving data between apps. In pharmaceutical distribution, the handoffs between teams - receiving, picking, shipping, compliance checks - are where things break. A system that only manages data without tracking who’s doing what, and when, misses the point entirely.

What’s your competitive advantage?

We’re very lean. That creates some challenges, but we’re nimble. If an account has an issue or a request, we don’t have to go through several committee meetings to get it done. We can go directly to decision makers. Our pharmaceutical operations are more nimble than the competition.

In terms of profitability - there are real market pressures. Wholesalers make money on generics, and there aren’t as many new generic drugs coming out as there were a few years ago. And we just saw Amazon buy PillPack, so they’re going to be a disruptor.

We’re also concerned with the legislative environment. Because we’re in pharmaceutical operations, we’re heavily regulated. The Drug Supply Chain Security Act mandates how we identify and track drugs through the supply chain. Based on discussions we’ve had with pharma companies, organizations are increasingly focused on vendor cybersecurity reviews and audit trails for compliance - one specialty pharmaceutical company had a 13-step workflow just for evaluating third-party vendor security.

The level at which the act is enforced will impact our processes. Are we going to have to open every case and scan every piece inside? There’s a lot of external forces at play.

Career reflections and what drives Dan

Who’s your hero in your profession?

That’s tough. I can’t think of one person, but I’ve had several mentors. My heroes are those folks who are all about getting their job done but always find a way to put people first. Even if they’ve got to reduce headcount, they do it in a way that reduces the negative impact on people as much as possible. They treat people with respect.

Where do you feel you’re underrated?

Due to the nature of my role, I’ve got to make a lot of tough decisions - headcount related, expense related. People probably don’t realize the amount of empathy I have for the people involved, or the fact that I’m taking people into consideration when making those decisions. The folks who know me well understand that. I hope I show it through my actions.

Any final thoughts?

My first job in operations was driving a forklift in a million-square-foot warehouse for Rubbermaid Office Products. That’s how I got exposed to distribution.

It struck me that there’d be a lot of opportunity, so I’ve stayed with it. I worked my way from other industries into pharmaceutical operations, and I really enjoy being in healthcare. You have a feeling of really accomplishing something and helping others. What you’re distributing has an impact on people’s health.

I’d highly recommend a career in pharmaceutical operations. The work matters. And honestly, that feeling of knowing your process kept someone’s surgery on schedule? That’s hard to beat.