02 David SAP at Ranbaxy

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Privileged and Confidential Global IT Global IT “We Deliver Value Everyday” © Copyright 2008 – Ranbaxy Laboratories Limited 1 Ranbaxy Global Information Technology SAP at Ranbaxy “The Good, The Bad and The Ugly” SAP Summit Mumbai June 6, 2007 David Briskman VP and CIO 1

Transcript of 02 David SAP at Ranbaxy

Page 1: 02 David SAP at Ranbaxy

Privileged and Confidential

Global ITGlobal IT “We Deliver Value Everyday”© Copyright 2008 – Ranbaxy Laboratories Limited 1

Ranbaxy Global InformationTechnology

SAP at Ranbaxy“The Good, The Bad and The Ugly”

SAP SummitMumbai

June 6, 2007David Briskman

VP and CIO

1

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Global ITGlobal IT “We Deliver Value Everyday”© Copyright 2008 – Ranbaxy Laboratories Limited 2

• About Ranbaxy• IT at Ranbaxy• The Good, The Bad and The Ugly

– R/3– APO

• Q & A

Agenda

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Ranbaxy Mission Statement

“ To become a Research based InternationalPharmaceutical Company ”

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About Ranbaxy

London,Europe

Gurgaon ,India

SingaporeAsia

Sao Paulo, BrazilSouth America

Princeton NJ,North America

Sales in 125 CountriesOver 12,000 Workforce

India’s Largest pharmaceutical company 2007 Sales ~ US$ 1.6+ bn

Ground Presence in 49 Countries

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Global ITGlobal IT “We Deliver Value Everyday”© Copyright 2008 – Ranbaxy Laboratories Limited

Business Model

Global Reach

• Developed Markets

North America, EU, Japan

• Emerging markets

India, Romania, CIS, Africa

Manufacturing

Product Portfolio

Research & Dev.

• Generics

• Branded Generics

• Branded & OTC

• Dosage Form

• API* - Vertical Integration

• In-house / Outsource

• The India advantage

• New Chemical Entities

• Generics / NDDS*

• Complex / Niche/ FTF*

• The India advantage

* NDDS - Novel Drug Delivery System, API – Active Pharmaceutical Ingredients, FTF – First to File5

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Global Presence

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Global Manufacturing Presence

China

Malaysia

Ireland

Nigeria

USA

Vietnam

IndiaActive Pharmaceuticals Ingredients (APIs)Facility, Mohali Dosage Forms Facility, Paonta Sahib]

25 Plants in 11 Countries

+South Africa, Japan, Brazil

Romania

• Plants approved by all key regulatory bodies• Ability to manufacture complex molecules• Quality Engineering Cells operational at all locations• High degree of backward integration• Stringent quality control and cost leadership• Successful partnership with vendors for quality compliance

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Global Supply Chain of Ranbaxy

MarketsPlantsFormulationAPISuppliers

Direct- to-distributor

API customers

RW(India) C&FA

(India)

Regional Plants(USA/EUROPE)

Global Plants(Dewas, PaontaSahib,Goa, Jejuri)

Own Plants (Mohali,Poanta Sahib,Toansa, Dewas)

API ContractManufacturers

API RM / AdvancedIntermediate suppliers

API suppliers

OtherRM suppliers

PM Suppliers

Stockists

In-country stockingpoints (JAX)

Contract Manufacturer /Third Party / FG Imported

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Supply Chain ComplexityMarketsPlants

FormulationAPISuppliers

Direct- to-distributor

API customers

RW(India) C&FA

(India)

Regional Plants(USA/EUROPE)

Global Plants(Dewas, PaontaSahib,Goa, Jejuri)

Own Plants (Mohali,Poanta Sahib,Toansa, Dewas)

API ContractManufacturers

API RM / AdvancedIntermediate suppliers

API suppliers

OtherRM suppliers

PM Suppliers

Stockists

In-country stockingpoints (JAX)

Contract Manufacturer /Third Party / FG Imported

Demand SideComplexity

• Customers in125 countries

• 6 Distributionmodels

• ~7000 SKUs• 3 new product

introductionsper day

Supply SideComplexity

• BackwardIntegrated (21 DF

& API plants)• 40+ ContractManufacturers

• 30+ Third PartySuppliers

• ~ 1000+ RawMaterials• 15000+PackagingMaterials

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Global ITGlobal IT “We Deliver Value Everyday”© Copyright 2008 – Ranbaxy Laboratories Limited

Research & DevelopmentDedicated Facilities for Innovative & Generics Research

> 1400 R&D Personnel ( ~ 250 PhD’s)

8-10 NCE molecules in pipeline

4 NDDS platform technologies

~ $ 100 Mn total spend (6.4% to sales)

Collaboration in DrugDiscovery Research(DDR)

Out-licensingin Novel DrugDelivery Systems

Out-licensingin DDR

R&D I

R&DIII

R&D II

R&D IV

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Global ITGlobal IT “We Deliver Value Everyday”© Copyright 2008 – Ranbaxy Laboratories Limited

Global Sales (2005 - 2008e)

$ MnCAGR* ~ 19%

~ 1900 e

e - estimate

400

800

1200

1600

2000

2005 2006 2007 2008

11781339

1607

* 3 year CAGR on like-to-like basis .i.e. excluding allied businesses divested in 2005 11

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Recent Acquisitions & Alliances

Terapia (Romania)

Be-Tabs (South Africa)

Allen (Italy)

Ethimed (Belgium)

Mundogen (Spain)

Derma Brands (BMS)

Zenotech (India)

Krebs (India)

Jupiter Biosciences(Ind.)

Cardinal Drugs (India)

Orchid Pharma (India)

Auto-injector Tech.(USA)

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Global ITGlobal IT “We Deliver Value Everyday”© Copyright 2008 – Ranbaxy Laboratories Limited 13

IT Top Priorities

• PeopleRetention, Development and Recruitment

• Accelerate Product to Market Time• Enable Supply Chain Excellence• Deliver Business Intelligence

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Global ITGlobal IT “We Deliver Value Everyday”© Copyright 2008 – Ranbaxy Laboratories Limited

IT Overview at RanbaxyMix of enterprise applications like SAP R/3, APO, BW,

Pharma-co-vigilance, Document Management, Sales Force

Automation and host of local applications including

workflows based applications and a strong web presence

A highly scalable and fault-tolerant Infrastructure across the

globe – MS Exchange as global communication platform

Major thrust on Information Security

Business Continuity Plans for key systems

Disaster Recovery setup for SAP R/3 environment.

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Global Infrastructure Foot print

11-Jun-08

Cambodia

Vietnam

Singapore

Thailand

China

KazakhstanItaly

Peru

US

RussiaLithuani

a

UkrainePortugal

UK

Germany

Brazil

PolandFrance

SouthAfrica

India

Locations With RPC \ Httpfrom Corporate - 12

Overseas Locations withExchange Server - 10

Ireland

Spain

Malaysia

Australia

Nigeria

Japan

Romania

Myanmar

Morocco

Sweden

Senegal

Uganda

UAE

Zimbabwe

Namibia

Mexico

Mauritius

Latvia

Kenya

Austria

Bulgaria

Cameroon

Egypt

Ranbaxy Locations - 49

Belarus

Belgium

IvoryCoast

Hungary

Guatemala

Canada

Nepal

SriLanka

SAP R3 Locations - 19

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2007 Operating Statistics –“Keeping the Lights On”

IT HelpdeskHandles Approx

110, 000 callsannually and

resolve 99% withinSLA period

Global Data Centershaving > 425 Serversacross enterprise with

averaged uptime 99.5% -Keeping the Business

Connected

10000 Userid’s &Mailboxes managed

globally

Typical month has 15 millionexternal attacks and 3500 VirusAttacks – IT Firewall Protects

the business

2000 SAP users doing > 3,000,000transactions in SAP annually

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Some Certifications

Focus on ITSecurity &Processes

First majorPharmaorganization inIndia to getcertification

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Some Certifications

Focus on SAP SupportProcesses andDocumentation

First company in Asia pacificto get certified by SOCAroute

First company in India to getrecertified 3rd time

SAP CCC

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SAP R/3 is our Transactional Backbone

• ~ 75% of global turnover and more than 100 sites world-wide run SAP

• One System - Global Single Instance

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RANBAXY: SAP Overview

SAP R/3 FootprintAll the modules of SAP R/3 are implemented and used.Single R/3 instance used globally.17 Company Codes and 12 Representative Offices12 Manufacturing Plants; Various C&F and WarehousingLocations and Logistics Partners

SAP R/3 System Metrics2.3 TB in a single central R/3 database.Live in > 100 locations across globe with 1900+ users.8,50,000+ dialog steps / day0.8 seconds average dialog response time.99.9% Uptime.

2020

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Current Ranbaxy Locations usingSAP R/3

• Company Codes (21)India(1), USA(6), UK(1), Ireland(1), France(2), Germany(1), Russia(1),Malaysia(1), Canada (1), Belgium(1) Sweden (1) China (1), SouthAfrica (3)

• Representative Offices (12)Asia(3), Africa(3), CIS(6)

• Manufacturing Plants (14)India(8), US(2), Ireland(1), Malaysia(1) China (1), South Africa (1)

• C&F Locations (44)India (C&F 39, RWH 3, IDWH 2)

• Logistics Partners

Germany (caremaxx), UK (CPD

Logistics)

France (CSP - batch process)

• Subcontractors & Loan Licensees

India(4)

59 LLs and 25 Subcontractors

through Back Office

• Shared Service for Accounts

Payable

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SAP Components – Used / UnderImplementation

R/3 4.6c

MS Windows

2003

MS SQL 2000

~ 1900 Users

~ 100 Locations

~ All Modules

SCM 4.0

HP-UX /

Oracle

~ SNP

~ PPDS

~ DP

BW 7.0

CRM 4.0

XI – 3.0

EP – 7.0

SEM – 6.0

HR – 4.6c

SolutionManager – 4.0

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SAP R/3 Journey in RanbaxyRussia, Romania, Poland, Brazil - 2009

ECC Upgrade & Rollouts - 2008,South Africa – 2008

Belgium, Sweden, China- 2007Malaysia – 2006

Germany, Rep Offices– 2005France, Russia (Front Office) – 2004

Ireland, UK, LLs / CMs in India – 20034.6.c Upgrade – 2002

Complete India – 2001US– 2000

First go-live in India – April 1999Project Start – April 1998

DONE

TOTALAROUND100 SITES

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SAP R/3 System Statistics

Number of HR Records 20900

Number of User Exits 103

Number of Z-Programs 3071

Number of Transactions steps per day 920000- 930000

Number of Unique transactions per day 2200- 2300

Number of Sales related Orders Per day 3200

Number Purchase related Orders per day 355

Number of Goods Receipts per day 1350

Number of Material Movements per day 6630

Number of Process Orders per day 580

Number of Plant Maintenance orders per day 200 – 250

Number of Inspection Lots per day 872

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SAP Resourcing

• One global team (CoE) under single head withpeople in India, US and EU (primarily India)

• Day-to-Day Support is “offshored” in India• All Implementations done with internal team• APO – Internal Team with partner for support• New Age Products – Internal Team with spot

expertise• External expertise is used to augment internal

team only when required

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SAP R/3 at Ranbaxy

It is good to knowwhich is which

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• CCC – 3 consecutive times and SAP ACE 2007• System enablement of Shared Services: 2006-07• Electronic Banking and EDI (charge backs etc)• Streamlining and uniformity of processes across

organization• Faster integration with new entities / M&A• Online analysis of Supply Chain performance based on

several Key Performance Indicators• Online reporting of inventory, sales and receivables

resulting into enhanced productivity• Successful handling of Multi Lingual SAP settings• Successful management of Statutory and regulatory

checks and audits by having systematic processes in place

R/3 – “The Good”

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R/3 – “The Good”• Digitization of approval process - use of workflows

• Centralized database for masters and transactional dataresulting into Enhanced visibility and control on Global Spend

• Electronic Banking is used in most of the locations usingautomatic payments

• System based Audits

• Enables selling in regulated markets

• Overall SAP has led to increase in sales, reduction ininventory, increase in productivity etc.

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ROI estimated at 200%

Quantified Savings in Many Areas:

1. Increase in Sales

In US due to integration with customers

In India due to integration with CFAs

2. Reduction in receivables

3. Reduction in inventory

4. Savings due to productivity

SAP Returns – Macro Level

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R/3 – “The Bad”

• R/3 is still cumbersome to use• Perception of value still requires effort• Data rich but information poor• For small sites it is digging a small hole with a

back hoe

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R/3 – “The Ugly”Master Data

Material Codes 235,700

Vendor Codes 77860

Customer Numbers 116960

Total Number of Recipes 59871

User Roles 9000

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SAP R/3 at Ranbaxy – Next Steps

• Complete ECC 6.0 Upgrade• Complete BW & SEM Implementations

– Financial Consolidation– Common and Market Specific KPI Dashboards– Business Planning and Simulation

• Complete R/3 Roll-outs to top markets• Clean-up Master Data• Application consolidation of minor systems• Plan HR ESS Deployment

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Commencement of APO

• Key driver for implementing an APO at Ranbaxywas the increasing complexity of the SupplyChain due to rapid business growth.– FG SKUs: >7000 Active– RM+PM SKUs: >20000 Active– Countries: >100– Manufacturing plants: 16 own DF plants, 5 own API

plants and > 40 Contract Manufacturers and LoanLicensees

– 4 New Products introduced everyday

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Project Objectives and Expectations

“Transform the supply chain to substantially improve customer service levels in theshort term whilst maintaining optimal inventory levels”

Immediate Objectives

Medium Term Objectives

“Build Ranbaxy’s supply chain capability to be a source of competitive advantagethe global generics market”

Supply chain Planning for Enhancing Customer service To Ranbaxy’s Universal Markets

•Provide End to end Supply Chain Visibility

•Increase flexibility and responsiveness ofsupply chain

•Support Ranbaxy’s vision and growth plan

Spectrum

APO

Implem

entation

•Provide integrated planning capability

•Improve analytical capabilities such asWhat-If analysis

•Provide automation of planning tasks

•Sustain/enhance Spectrum benefits

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SPECTRUM+ : Implementation of APO

• Project Spectrum+ started in April 2004 to implementSAP APO at 5 markets and six manufacturing plants tocover:– Forecasting– Distribution Requirement Planning– Deployment Planning– Production Planning and Detailed Scheduling

• APO Modules to be implemented:– DP (Demand Planning)– SNP (Supply Network Planning)– PPDS (Production Planning and Detailed Scheduling)

• Overall project duration– Spectrum : 12 months (starting April 2003)– Spectrum+ : 30 months (starting April 2004)

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Transaction System Non R\3Transaction System

Integration Layer

BW

SAP-SCM(APO)DemandPlanning

ProductionPlanning/

Detailed Sch.Scheduling

SupplyNetworkPlanning

AvailableTo

PromiseTransportation

Planning

APO (Advanced Planner and Optimizer) is an integrated suite of modules covering all keyfunctional areas within Supply Chain Planning area.

Source: SAP

Overview of APO Architecture at Ranbaxy

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Current APO Planning Statistics

Demand Planning• Product Locations Planned: >90000• Locations Planned: >150• SKUs Planned: >10000• Number of Jobs run – >500 pm

Supply Planning• FG SKUs Planned: > 7000• RM SKUs Planned: > 20000• Work Centers Planned: >1500

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APO at Ranbaxy - “The Good”

• First Market rollout took place in March 2005.• Rollouts happened at the following markets and

plants till December 2006:– Markets: India, US, UK Germany, Russia &

CIS– Plants: DF – Dewas; API – Mohali, Dewas,

Toansa• Measurable results being realized in Forecast

Accuracy and Improved Customer Service• Project continues to deliver results as it is

deployed to more markets

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APO at Ranbaxy - “The Bad”

• Project has taken much longer than expected• Significant issues with maintaining both internal

and external expertise base• Early “customizations” causing on-going support

requirements• After 2 years, project team lost focus

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APO at Ranbaxy – “The Ugly”

• Original Implementation Partner Fall-Out• Project got “Lost” for 12 months• PPDS was over-engineered to solve everything

and did not deliver workable schedules• Steering Teams focused on technical issues• Project was perceived as failure

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“For a Few Dollars More”…..

• Called in SAP Value Engineering

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API Mfg.RM & PKGSuppliers DF Mfg. BSR Logistics

Reg’l W/HCFA’s

Reg’l Office/Customers

SupplyChain

Process

KPI’s &Org.

Demand ForecastNDR –GlobalNDR-Plant

DF Schedule

NDR - API

BSRInvent.

GIT Reg’lInvent.

Mfg. Commits

DIFOTF’castAccuracy

FG InventoryTurns

Requirement Vs.Commit

Commit Vs.Actual

InventoryTurns

MarketsMarketingSCSCSC/MFG

Mat’lsInvent.

RM/PKG – Purch.WIP - MFG

1. Improve visibility and velocity of information on a singleplatform for a flexible and responsive SCM system.

2. Increase type and detail of data needed for exceptionmgmt (e.g. opport.. demand) and prioritization (e.g. MTO)

3. Early S&OP process to minimize surprises and achievemore efficient supply-demand mismatch

4. Longer/detailed planning horizon to improve optimizationopportunities (e.g. Mode mix, mode selection, procurement)

1. Standard process across the enterprise for improvedaccountability/ownership, structured/timely planning, andcoordination/communication across the supply chain

2. Cross functional SC organization for processmanagement, monitoring and KPI reporting

3. S&OP Process to resolve as many discrepancies andmismatches as possible early in planning

4. Initial improvements and business benefits, but systemwide benefits not fully realized

Opportunities for Improvement in Spectrum+Benefits from Spectrum1. Improve visibility and velocity of information on a single

platform for a flexible and responsive SCM system.

2. Increase type and detail of data needed for exceptionmgmt (e.g. opport.. demand) and prioritization (e.g. MTO)

3. Early S&OP process to minimize surprises and achievemore efficient supply-demand mismatch

4. Longer/detailed planning horizon to improve optimizationopportunities (e.g. Mode mix, mode selection, procurement)

1. Standard process across the enterprise for improvedaccountability/ownership, structured/timely planning, andcoordination/communication across the supply chain

2. Cross functional SC organization for processmanagement, monitoring and KPI reporting

3. S&OP Process to resolve as many discrepancies andmismatches as possible early in planning

4. Initial improvements and business benefits, but systemwide benefits not fully realized

Opportunities for Improvement in Spectrum+Benefits from Spectrum

PurchaseOrders

PurchaseOrders

DF API - SCAPI FG – MKTG/MFG

What did Value Engineering Find

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VE Recommendations for Spectrum+:Summary

Area Issues & Concerns Recommendation

SAP APOPPDS

• Functionality gaps and productusage issues

• SAP to assess architecture and recommendresolution to key PPDS issues

ProjectObjectives &Ownership

• Implementation objectives

• Sr. Executive ownership

• Revise objectives from “Spectrum Automation” to“Single SC Platform Across Ranbaxy”

• Senior Ranbaxy Executive to own and driveSpectrum+ implementation and roll out

SAP Support • SAP Executive support

• Subj. Matter Expertise

• SAP Executive support in issue resolution

• Committed project team of SMEs and productexperts for PPDS and SCM

ChangeManagement

• Ranbaxy end user & usage ofsystem

• Adoption across enterprise andcontinuous improvement

• Ensure stakeholder ownership and participationduring development, roll-out and adoption

• Address training requirements and put in place anon-going APO support organization

Implementation Scope &Focus

• Focus within business functions

• Vertical Integration

• Focus on integrating the solution components andthen increasing depth

• Focus on key markets and DF manufacturing

FutureCapabilities

• Order Promising

• Supplier Relationship Management

• Improved order promising and fulfillment

• Manage supplier base and DM purchasing

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Spectrum+ and APO

• At key decision point– Re-invest or Divest

• Critical Issues– Ranbaxy Senior Executive Ownership– SAP Support and APO Capability– Change Management and Project Team Burnout

• Value Engineering Study Conducted– Significant Value Exists– Recommended SAP Proof of Concept with Waldorf

Supply Chain Center of Excellence

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The Cavalry Arrived….

• Engaged the SAP Supply Chain CoE• Evaluated requirements, model, configuration

and results• In 10 weeks, delivered re-engineered model and

configuration changes• Implemented in 2 planning cycles

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Dewas Performance –Post APO PPDS Re-launch in May 07

• Improved C Vs A: Dewas has consistently delivered C (Commits) Vs A(Actual) of above 90% since May 2007

• Increase in Throughput: Number of SKUs delivered by Block B used toaverage between 250-275. Since May, this has gone up to 280-300 with amaximum of 306 in May 2007.

• Reduction in PM Inventory: There has been a reduction in PM inventory inDewas to the tune of Rs. 2.4 Cr over May-July 2007. This can primarily beattributed to APO based planning.

May: 94% June: 90%

July: 90% August: Expected tobe >=90%

Dewas is still in stabilization stage. Results shallimprove further.

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Addressing the Key Issues

• PPDS Functionality / Capability– Proof of Concept with SAP CoE delivered results

• Sponsorship– COO engaged actively to spearhead project

• Change Management– Project Management changed– Once there were demonstrable results, people

wanted to be associated with success– Moved key project team members into operations

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APO – Key Learnings

• Do Not Get Off-Track – “Do Not Boil the Ocean”• When in doubt – Get SAP Involved• Value Engineering should be engaged• Recognize the “White Elephant” in the room• As with all SCM Projects – There is no black box

magic solution, have realistic expectations• Fix R/3 First Where Possible - GIGO• You do not need R/3 implemented everywhere

to roll-out APO and deliver results

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Next Steps with APO

• DP/SNP deployment completion to Rest ofWorld by End 08

• PPDS Deployment to existing Dosage Formfacilities – 1 done, 1 in process

• Upgrade to SCM 7.0 and reduce originalcustomizations in 2008

• Reduce planning cycle time and frequency• Continue to quantify business results

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As in the movie….

• Work with the Ugly• Overcome the Bad• Keep focused on the gold• And you will be the Good

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Ranbaxy Global InformationTechnology

“We Deliver Value Everyday!”Questions ?

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Ranbaxy Global InformationTechnology

“We Deliver Value Everyday!”Thank You!

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