Read the case study below and answer the following questions:

Pharmaniaga open new distribution centre in Penang to increase distribution capacity.

Pharmaniaga Bhd's wholly-owned unit, Pharmaniaga Logistics Sdn Bhd (PLSB), has officially opened its new distribution centre in Penang to increase the group's distribution capacity coverage and buffer stock readiness. The new distribution centre is also part of PLSB's management office relocation and warehouse expansion which have been initiated since April 2021. Pharmaniaga group managing director Datuk Zulkarnain Md Eusope said this new centre is also targeted to cater to the increasing demand from the northern region clientele, especially amongst the Ministry of Health facilities in Perlis, Kedah, Penang and Perak. "We target to increase our current distribution capacity significantly, which is in line with our business growth, whilst improving PLSB's existing logistics services level and fulfilling customers' orders on time across the northern region. "The new distribution centre boasts a total of 3,500 pallets of warehouse space for controlled medicine and medical device," he said in a statement. He said PLSB is currently adopting the Oracle Transport Management System (OTM) to maneuver the company's logistics services, and it is also part of strategic growth towards the automation and digitalisation strategy for continuous improvement in operations. "Moving forward, we intend to increase our storage capacity to cater to the demand from more private hospitals and clinics in addition to the government's healthcare facilities in the northern region. "We are conducting a feasibility study to develop our warehouse in Sungai Petani, Kedah, with a higher capacity to cater to the current and future business expansion needs. "With this new expansion, our northern region distribution centre capacity for the year 2021 has significantly increased to 180 per cent as compared to 2020. "For the year 2022, the growth has risen by 32 per cent compared to the year 2021 and 270 per cent compared to 2020," he added. Pharmaniaga has five distribution centres strategically located throughout the country in Selangor, Penang, Sabah and Sarawak, with a fleet size of more than 200 transporters that deliver via air, water and land to ensure efficient and timely door-todoor delivery of our products. On the international front, the company has established its footprint in Indonesia via PT Millennium Pharmacon International Tbk (MPI), the public listed logistics and distribution arm in Jakarta.

(a) Elaborate Pharmaniagas approach to expand their business via distribution. [30 marks]

(b) Explain the challenges Pharmaniaga may face from the expansion plan. [20 marks]