BAHRIA UNIVERSITY KARACHI CAMPUSBAHRIA N

OBJECTIVE:TO ESTABLISH SUPPLY CHAIN DEPARTMENT IN A PHARMACEUTICAL

INDUSTRY

INTRODUCTION:The pharmaceutical industry can be defined as a complex of processes, operations and organizations involved in the discovery, development and manufacture of drugs and medications. The pharmaceutical supply chain will have to be redesigned to compete with low priced generic drugs, handle higher complexity of new sales channels, and take advantage of higher margins for critical drugs with low demand. To establish such a supply chain, a new set of capabilities will be needed. R&D, marketing and sales used to be the most important functions for pharmaceutical companies. However, currently, operational capabilities and efficient cost management are the critical skills needed to succeed. 

1. Improve planning capabilities. For example, prepare for the launch of a new product by forecasting

the expected demand and plan the manufacturing capacity accordingly.

2. Reconfigure the supply chain footprint. The average utilization level of assets is below 40%. This

has to be increased by producing accurate forecasts of demand, production and logistics costs and

lead time trade-offs.

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3. Make product design and packaging more flexible.

4. Adopt tailored business streams. Eliminate the one-size-fits-all approach in supply chain

management and design individual supply chains suited for each product, customer group and

market.

5. Create a network of third-party suppliers. By outsourcing their non-core activities and production

of drugs which have low demand, companies are able to adjust to demand fluctuation without

significant losses.

VISION AND MISSION

COMPANY VISION

“To be Premier health care company in Pakistan”

COMPANY MISSION

“To deliver superior products and services that significantly contributes in improving lifestyle and health quality, ensuring interties of all stakeholders and to comply business with local laws and regulations and

to adhere corporate code of business conduct and ethics”

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MODIFIED MISSION STATEMENT:To deliver consistently superior products and services globally through combination of R&D ( advanced

technology) and positive workforce, which contribute significantly to improving the quality of life for consumers.

PLANNINGThe pharmaceutical value chain is dependent on two major demand forecasts:

Very long-term forecast for new pharmaceutical launches and supply chain readiness. This includes making accurate market potential and Launches forecasts which drive the capacity building so that it is ready for FDA approval and c-GMP compliance.

Short to medium term replenishment forecasts that are based truly on demand plans. This is for established products but still driven by patient demand. Consumer drives the demand in any value chain; here the patient drives the ultimate demand. The patients can influence the providers to write a particular choice of a branded prescription based on their knowledge or based on the education from major marketing campaigns.

The patient and the provider jointly create the demand signal for the pharmacies to fill. So the prescriptions filled by the pharmacies act as the ultimate driver of the pharmaceutical demand. These could be some what influenced by marketing activities. Demand lumpiness may occur due to pricing promotions and stocking by pharmaceutical wholesalers. Pharmaceutical companies have traditionally developed forecasts and replenishment plans to ensure ample stock throughout distribution channels. The hurdles to accurate forecasting are numerous, including

lack of or delayed demand visibility, Complex sales channels with established wholesalers, Timely and accurate distribution inherently complicated by global operations and Compliance with the FDA’s Current Good Manufacturing Practices (CGMP).

PRODUCT AND SERVICES OF THE COMPANY:Pharmaceuticals: Localized

Nutrition: Worldwide Leader In Nutrition

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Diagnostics: Pioneering Medical Diagnostic

Animal Health Products

Medical Devices

MAJOR BUSINESS COMPONENTS

PHARMACEUTICALS:Arinac,Bejectal, Burnol, Cecon, Klaricid, Lucrin, Protium, SurbexTrividox, Tronolane

DIAGNOSTICS:Assays (AIDS, hepatitis,cancer, thyroid,fertility, Clinical Chemistry, Hematology, etc.)& instruments (e.g, AxSYM)Glucose monitoring

HOSPITAL PRODUCTS: Anesthetics, delivery systems, injectablesgenerics, IV solutions, imaging, blood vesselsurgical closure devices

NUTRITIONALS:Similac, Isomil, Ensure, Glucerna, Pedialyte

TARGET MARKET

Diabetic patient220 million people

Advances and Revolutionary technologiesTreatment coronary artery disease (CAD)

Heart diseaseDrug-eluting stent (DES)

Designed to improve deliverability andaccess to long lesions in the artery

PARTICIPANTS INVOLVED1. Supplier2. Agent

3. Distributor4. Wholesaler

5. Retailer6. Customer

ORGANIZATIONS PRODUCT LINE:

Established Pharmaceutical ProductsDiagnostic Products,Nutritional Products,

Vascular Products

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SUPPLIER:

Chishti packaging supply cartonsICI supply chemical for medicine

MANUFACTURINGLandhi KarachiKorangi KarachiOut Source Lahore.

SWOT AnalysisStrengths

Innovation in the marketStrong brand identity

Cost advantages

WeaknessesHigh production cost and lack of rural penetration.Employee re dedication (high field force turnover)

OpportunitiesIncreasing health care awareness

High rate of population increase in Pakistan

ThreatsHigh inflation rate

Low prices local pharmaceutical productsLow prices local pharmaceutical products

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SEASONAL ASPECTS, CUSTOMERS, BACKLOG, AND RENEGOTIATION

        There are no significant seasonal aspects to the business. We have no single customer that, if the customer were lost, would have a material adverse effect on our pharmaceutical. Orders for products are generally filled on a current basis, and order backlog is not material to the business. No material portion of business is subject to renegotiation of profits or termination of contracts at the election of the government.

FORECASTING FORECASTING TECHNIQUE AND TOOLS

QUANTITATIVE TECHNIQUE

Future demand is forecasted on the bases of historical patterns of demand. Marketing department uses ADS and provides two years aggregate demand forecast to the SC

department.

DEMANDROLE OF AGGREGATE PLANNING

Attempt of matching the supply of and demand for a product or service by determining the appropriate quantities and timing of inputs, transformation, and outputs.

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Considering few things at the time of planning such as past statistical figures like what they have achieved in the last 2-3 years.

It is not possible to make an ADS without considering the opinions of 14 Product Managers who are responsible for projecting Aggregate demand for the next 24 month.

PRODUCTION STRATEGY LEVEL STRATEGYAs it maintains stable machine capacity and workforce levels with a constant output rate

Moreover it builds up its inventory based on forecasted demand.

SOURCING:ROLE OF MASTER PRODUCTION SCHEDULING:

Entire production is based on MPS Master production scheduling is done on the based of forecast and some times abnormal demand

as well.

BILL OF MATERIAL

Bill of material is the list of quantities and components needed to make the product. It helps the company to manage its raw material issues effectively and efficiently on the basis of

information provided by MPS. This requirement tells the company what is the quantity required according to the Master

Production Schedule.

OBJECTIVE OF FORECASTINGThe objective of forecasting is clear: To minimize inventory while meeting or exceeding customer needs. Successfully achieving this objective requires consideration of four key components:

Approach, Quality Inputs, Methods and Tools, And Structure

APPROACH

Understanding the dynamics of the pharmaceutical supply chain, how business functions work together, leadership philosophies and skill sets all factors into defining an appropriate approach. Components of the approach can be categorized as building proficiency, leadership support, rewards and incentives (business and personal) and execution.

QUALITY INPUTS

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QUANTITY INPUTS:

“Junk in, junk out” applies to forecasting and planning. A significantly high level of input accuracy (a measure of precision) and reliability (a measure of consistency) is required to ensure quality output. The company considers a mix of quantitative, qualitative, industry-specific and economic factors such as climate and market conditions.

METHODS AND TOOLS

Before technology assessments can begin, the level of sophistication a pharmaceutical can reasonably and successfully execute should be determined. If the current method utilizes spreadsheets with internal data, the likelihood of a complex modeling tool being effective is low. This is not surprising. The speed at which forecasting capability develops depends on skill level, aptitude for advanced technology, readiness and availability of industry information such as distributor and point-of-sale data.

STRUCTURE

An effective structure allows for the highest levels of forecast accuracy and easy identification of dependencies among markets and products. Key components in defining a structure for forecasting and planning require organizational and tactical decisions like:

• Which business functions will be held accountable for forecast accuracy?

• Which business functions will be responsible for replenishment planning?

• Will planning time horizons need to change?

• At what levels will the organization generate forecasts?

PRODUCTION AND MATERIAL PLANNINGThe pharmaceutical company traditionally has been constrained by rigid global manufacturing with specialized production equipment, long lead times for materials and extensive regulatory requirements. This has led to inflexibility and an inability to react quickly to changes and facilities that are either capacity constrained or underutilized.

What will it take to turn production into a supply chain capability worthy of future success; the following three practices will be the defining characteristics of tomorrow’s winners: Rationalized global production networks Changeover competence and smaller batch production Compliance management Questions that require immediate and accurate answers include:

Which sites to continue operating and which to divest, where to manufacture which products and How best to support long-term product strategy. Tactical factors such as compliance, profitability, labor skill and costs, and age of equipment are

key factors in making strategic decisions.

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JIT / LEAN MANUFACTURINGJIT CONCEPT: the company should buy small quantities of raw materials from its suppliers and reduce the amount of materials that it stores as inventory. An efficient approval process must be instituted so that materials can be brought into the production process as close as possible to the start of manufacturing.

JIT is based on pull manufacturing, which manufactures product in response to actual consumer demand. The goal of JIT manufacturing is to create products only when they're needed, and only in the quantities necessary to satisfy the demand. 

Short setup times, an even flow of products through the factory, a high level of process control and reliability, and the possibility of continuous improvement are also important JIT principles. These elements help improve process efficiency, ensure product quality, and reduce costs

LEAN MANUFACTURING

Production plan (based on MPS) MPS is made by the supply department which is forwarded to the MMD Arrange the raw material for the production department MMD is using MRP II MRP II to effectively and efficiently handle the Material issues Based on the information’s provided by MPS Transactions are made electronically into Business Planning & Control System Changes are made in MRP if there is an abnormal demand. Plan is initially made during the plan stage Planning production Made on weekly bases as well as monthly bases depending upon the availability of the resources,

which are required to make the required product.

PRODUCTION PLANNING

Made on weekly bases as well as monthly bases depending upon the availability of the resources, which are required to make the required product.

Then Sales & Operations meeting is held, which do two parties one from supply side and the other represent from demand side and production related decisions are made as per the plan.

BUSINESS PLANNING AND CONTROL SYSTEM

It monitors the status of manufacturing department Batch size produced No random manufacturing

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PROCUREMENT LEAD TIME

the lead time of procurement of material of approximately 45days by Air transport and Approximately 75 days by ship transport which a company use to import from different

countries.

GENERAL PURCHASE

Includes the purchase of stationary, office equipment for the Office use, packaging material, transportation trucks for the delivery purpose and different other chemicals.

ROLE OF CAPACITY PLANNING

It is used to measure and manage the resource requirements and where appropriate, the work through put and queue levels.

To manage the capacity control process Abbott Pakistan uses a system known as BPCS which stands for Business Process Control System.

Once they got the ADS than they sub divide that plan into monthly basis and adjust the machines capacity according to it.

DIRECT PRODUCT RELATED PURCHASES:

Direct product Related purchase includes raw material import from different countries. The company import its raw material as classified its products according to its costs.

Grade A Very Costly Products Grade B Moderate Costs Products Grade C Least Cost Products

LOCAL SUPPLIERS & LEAD TIMES

Designing: FP Plastics (Karachi, Korangi)Printing:(Karachi, Malir)Packaging: (Karachi, Korangi)Aluminum foils: (Karachi, Gulshan -e- Iqbal) Cartons:(Karachi,Dalmiya, Lalukhait, S.I.T.E Area) Dextrose: (Dextrose is a sterile solution injected intravenously) (Faisalabad)Chemicals: (Lahore)

SUPPLIERS OF IMPORTED MATERIALS

Dye Red, UKPotassium chloride, GermanySodium Citrate, Taiwan

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Sodium chloride, New Zealand Acid Citric, Austria Aluminum Seals and PV, Holland Artificial bubble gum, Holland Supplier for Sugar, Malaysia Sodium Sulphate, Germany

LEAD TIME FOR IMPORTED MATERIALSBy sea it approximately takes 75 daysBy air it is approximately takes 45 days.

CENTRALIZED PURCHASING Completely centralized Distribution is decentralized Quality of the raw materials and Cost

ROLE OF E-PROCUREMENT MRP II to effectively and efficiently handle the Material issues Based on the information’s provided by MPS Transactions are made electronically into Business Planning & Control System Changes are made in MRP if there is an abnormal demand

QUALITY CONTROL:Quality control is an essential operation of the pharmaceutical industry. Drugs must be marketed as safe and therapeutically active formulations whose performance is consistent and predictable. New and better medicinal agents are being produced at an accelerated rate. At the same time more exacting and sophisticated analytical methods are being developed for their evaluation. Requirements governing the quality control of pharmaceuticals in accordance with the Food and Drug Administration (FDA)

QUALITY MANUAL:Document specifying the quality management system of an organization. (ISO 9000:2005)

The GMP inspectorate should define and document its policy and objectives for, and commitment to, quality in a quality manual. It should ensure that this policy is understood, implemented and maintained at all levels in the organization.

The information contained in the quality manual and procedures should include at least:

(a) a quality policy statement;

(b) a brief description of the legal status of the GMP inspectorate

(c) a code of ethics and conduct relating to GMP inspection activities;

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(d) a description of the organization of the GMP inspectorate, including details of any governing board, its constitution, terms of reference and rules of procedure

(e) the names, qualifications, experience and terms of reference of the senior staff and other GMP inspection personnel, both internal and external

(f) details of training arrangements for inspection personnel

(g) an organizational chart showing the responsibility and reporting structure of the inspectorate and the allocation of functions stemming from the person in charge of the GMP inspectorate

(h) details of the documented procedures for inspecting manufacturers under the WHO guidelines on GMP and/or the national GMP guidelines

(i) details of the documented procedures for recommendations to the authorization holder for the issue, suspension or revocation of marketing authorizations

(j) a list of any subcontractors used for GMP inspections and details of the documented procedures for assessing and monitoring their competence

(k) details of appeals procedures

(l) a procedure for ensuring that complaints made to the GMP inspectorate are investigated so that any shortcomings of the authorization holders are revealed

(m) a list of those staff members responsible for investigating complaints and those with the authority to take remedial action

(n) details of internal quality audits

(o) details of testing of samples

(p) the control of non-conforming products

Recommended procedure

In order to keep the quality manual brief, reference may be made to other documents and/or procedures contained in other manuals.

ORGANIZATIONAL MANUAL:The manual provides and supplements additional details to the information supplied by organization chart. It provides information on pertinent matters about each position. The members of organization will find it to be a readily available reference defining the scope of authorities and responsibilities of management positions and the channels to be used in obtaining decisions or approvals of proposals. Every manager will see clearly the responsibilities of his job and his relationship with other persons in the organization.

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DEPARTMENTS IN PHARMACEUTICAL COMPANIESInformation Technology Department

The Information Technology (IT) Department aims to conduct the establishment’s information management in the best possible manner by utilizing advanced data processing technologies and to meet the information technology needs of all other departments. The goal is to use technology correctly and efficiently and to gain a competitive advantage in accord with company strategies.

Finance Department

Finance Departments, plays a vitally important role in the growth of all establishments as well as the achievement of business goals, is generally consists of the divisions of Collection and Client Credit, Payments, Accounting, Production Costs, Financial Process Development, Reporting and Budgeting. 

Human Resources

The Department of Human Resources focuses on such issues as planning the human resource within companies, its hiring, development, compensation, measurement and management of its performance, planning of careers, steady improvement of training, development and work conditions as well as rendering said conditions more productive. 

Corporate Affairs Department

In a rapidly changing world, managing an institution’s relations with all its internal and external stakeholders in an effective and accurate manner plays an important role in achieving its business goals and creates value for the institution. It is extremely challenging to properly manage relations under shifting and dynamic global and business conditions and requires a specialized division within the institution that is capable of handling such a challenge. In the pharmaceutical sector, departments of Corporate Affairs elevate the standing of the institution via a public regulatory bodies and other stakeholders and carry out planning and implementation in order to achieve the institution’s communication goals as well as handle media relations and institutional social responsibility projects. 

Medical Departments

The medical departments of pharmaceutical companies employ individuals with roots in the health sciences such as medical doctors and pharmacists. Medical departments handle the coordination of clinical studies, procedures involving the Ministry of Health, registration and pricing activities, reporting of product effect notifications, monitoring of drug safety as well as handling relations within the medical world and scientific studies. Medical departments are also responsible for providing basic medical and product training to field workers of pharmaceutical companies. In addition, medical departments are responsible for ensuring that promotional activities are carried out in compliance with the Regulations of the Ministry of Health and the Association of Research-Based Pharmaceutical Companies (AİFD) Booklet on the Code of Good Promotional Practice of Medicinal Products for Human Use to Members of the Healthcare Profession.

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Sales Department

The goal of sales departments is to provide information to physicians and pharmacists who inform and guide patients and families of patients with regard to drugs and patients in an accurate and scientifically-based manner and to share information regarding drugs and treatments based upon scientific research with physicians and pharmacists.

Marketing

The goal of marketing departments is to promote new products and treatments, to present updated information in these areas to the Turkish medical world and to raise public awareness regarding health issues. 

Corporate Strategy and Business Development

Departments of Corporate Strategy and Business Development assist in the strategic planning of their institution for the short-, intermediate- and long-term, in the identification of business goals, evaluation of performance and evaluation of new business areas.

Technical Department

The Technical Department is responsible for ensuring that all equipments, tools and machinery within the establishment function accurately and efficiently.

Imports/ Exports: Foreign Trade government office of the country is responsible to issue such authorization to become an importer. IEC number (Import Export Code Number) must be obtained from the office of Director General of Foreign Trade office to operate as an importer and exporter, the information on such registration for importer – exporter is linked with customs location and reserve bank, as process of imports and exports are online digitalized. So the importers of Pharmaceutical products is also required to contact concerned government agencies of their importing country to verify whether such onetime registration is necessary or not

ORDERING:Performance criteriaThe company must be able to

accurately identify requirements for pharmaceutical stock confirm the order contains the correct: item, formulation, strength ,amount required allow for seasonal variations in use of stock when placing the order check the order with an appropriate person, when necessary

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process the order with the correct supplier/location using the documentation/method required in accordance with Standard Operating Procedures

ensure that particular attention is paid to any special orders and the progress of any outstanding orders

report any issues or concerns to the appropriate person complete all documentation correctly correctly store/file all documentation in accordance with Standard Operating Procedures

Knowledge and understandingThe company must know and understand:

how to work within the limits of own authority and when to refer to an appropriate person current legislation that applies to the ordering of pharmaceutical stock your responsibilities under current legislation when ordering pharmaceutical stock the importance of following ordering Standard Operating Procedures the health and safety requirements related to ordering of pharmaceutical stock local or regional pharmaceutical contracts the different formulation of drugs and why it is important to order sufficient quantities of the

correct formulation and strength the difference between branded and generic drugs the importance of referring to current drug alerts and company recalls when ordering

pharmaceutical stock the sources and suppliers of stock the procedures for responding to urgent requests the importance of taking account of seasonal variations when ordering pharmaceutical stock the action to be taken if stock is unavailable the input and retrieval of stock data the parameters set for the computer ordering system the importance of maintaining correct, accurate documentation, including back up systems to IT

failure where appropriate

BANKS:

Cash Credit

Working capital as cash-credit facility (with charge on current assets) Facility for a period of 12 months Floating interest rate. Interest levied only on amount utilized. Flexibility of paying a minimum amount every month.

Date entry process at import section under Ministry of Commerce Documents required

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Import application documentSelf commitment for import price confirmationUsage of MedicineProforma InvoiceSale ContractMarket price record for respective medicine

Bank Credit inspection and online data entry at import section under Ministry of CommerceDocuments required for Bank credit inspection Application letterOriginal bank credit slip and two copiesBank original passport and one copyProcess running time for bank credit inspection: One day if all documents are correct

LETTER OF CREDIT:

A letter of credit is a written commitment by a bank to make payment at sight of a defined amount of money to a beneficiary (exporter) according to the terms and conditions specified by the importer (applicant). The letter of credit should set a time limit for completion and specify which documents are needed to confirm the transaction's fulfillment. • More properly called a documentary letter of credit, it is important to remember that a letter of credit is an additional contract dealing with credit between the applicant (importer) and the issuing bank and separate from the original grain contract.

Issuing Bank (Opening Bank) :

Applicant (Opener): Applicant which is also referred to as account party is normally a buyer or customer of the goods, who has to make payment to beneficiary. LC is initiated and issued at his request and on the basis of his instructions.  

Issuing Bank (Opening Bank) : The issuing bank is the one which create a letter of credit and takes the responsibility to make the payments on receipt of the documents from the beneficiary or through their banker. 

Beneficiary : Beneficiary is normally stands for a seller of the goods, who has to receive payment from the applicant. A credit is issued in his favour to enable him or his agent to obtain payment on surrender of stipulated document and comply with the term and conditions of the L/c. If L/c is a transferable one and he transfers the credit to another party, then he is referred to as the first or original beneficiary.

VENDOR MANAGED INVENTORY

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Pharmaceutical supply chains are strictly regulated and require an extraordinary degree of oversight. These necessary controls can obscure supply chain visibility, thus making it difficult to anticipate inventory levels, and also lessens a customer’s ability to respond to fluctuating order volume. VMI solutions offer the ability to anticipate demand in real-time and adjust supply levels accordingly. This presents an opportunity for the pharmaceutical area, since many products are either costly or out-date quickly.

VENDORS

Designing –FP Plastics, Al-Ahad Plastics, Thermoplas (Korangi)

Printing–Ammara Commercial Printing (Memon Goth, Malir)

Packaging – Saima Packaging (Korangi Industrial Area)

Slicing Aluminum foils - Muhammad Corporations, Gulshan -e- Iqbal

Cartons – Sultan Packages (Dalmiya, Karachi) Cartons – King Packages (Lalukhait, Karachi)

Cartons - Decent packages (S.I.T.E Area)

Dextrose – Rafhan Industries (Faisalabad)

Pseudo - Alpha Chemicals – (Lahore)

Essential Chemicals – (Lahore)

Bid sheet (low cost effective sheet )

VENDOR SELECTION CRITERIA

IT INCLUDES

Vendor specification

Testing method

Signature of vendor

MFG date expiry date/shelf life

Stability data to support shelf life

Vendor evaluation check list

Material safety data sheet (MSDS)

Full range of raw material

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Vendors’ certificate of analysis

Recommended storage condition

Technical bulletin

List of solvent if used & other residual levels

Is your vendor already approved in other affiliate?

TSE/BSE statement. Transmissible Spongiform Encephalopathy’s/Bovine Spongiform Encephalopathy

Vendor capacity.

APPROVAL OF VENDORS

Material Sample and vendor provides Certificate of Analysis & Form 7

Quality Assurance test in own laboratory

Number is assigned with a Yellow Sticker

Quality Assurance department do the Stability Testing

Issues a Green Sticker

Materials are sent for Batch Manufactured and then End Product is made

Supply chain executives struggle with five primary challenges: inventory visibility; risk (such as contaminated or expired inventory); cost containment (such as paying only for consumed inventory and not for supplied/expired inventory); internal customer demands; and globalization. In order to address these challenges, the pharmaceuticals industry needs a supply chain with the following attributes: • Transparency:

The latest technologies (e.g., RFID) are used to digitally track and gain greater visibility into goods across the supply chain.

• INTEGRATION : All supply chain actors (such as vendors and customers, either internal or external) can share information and make decisions collaboratively.

• INTELLIGENCE : Based on the latest advanced analytics, simulation and modeling tools, pharmaceutical companies can evaluate increasingly complex and dynamic risks and constraints and manage the supply chain more scientifically

Pharmaceutical companies are increasingly realizing that VMI is critical and, given the aforementioned attributes, can help them transform their supply chains into lean, efficient and value inducingmachines, Moving from the traditional purchase order process (which offers minimal information exchange) to a full-blown vendor collaboration model that involves digitally transmitting accurate forecast and stock

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information to vendors that then facilitate just-in-time replenishment. To do this, they must arm vendors with the requisite value chain visibility and trust them to flexibly supply inventory within agreed-upon threshold levels.

REDUCE UNNECESSARY OVERSTOCK OR STOCK OUT SITUATIONS

Overages and shortages hurt the bottom line. By constantly monitoring order volume and projecting anticipated demand, supplier can mitigate these costly inefficiencies.

EFFICIENT PRODUCT ROTATION

Careful inventory oversight allows providers to quickly move product that will soon outdate, while keeping stock levels fluid and responsive to demand.

• MINIMIZING RISK

Precision is a key when handling sensitive and expensive pharmaceuticals. Through transparency and careful analytics, providers utilizing VMI maximize order precision, thus preventing unnecessary handling and overstock of these expensive pharmaceuticals.VMI implementation benefits both the pharmaceuticals company and its vendor(s) equally. For pharmaceuticals companies, benefits include increased inventory turnover, decreased liability and improved inventory availability, while their vendors can expect increased customer loyalty, differentiated customer service and better operational performance through inventory forecasts

COMPONENTS OF THE PHARMACEUTICAL INDUSTRY MANUFACTURING

A typical pharmaceutical supply chain will consist of the one or more of the following nodes:

PRIMARY MANUFACTURING (possibly including contractor sites);

The manufacturing process is characterized by long task processing times, often rounded to multiples of shifts. Where multistage processes are operated, considerable inventories are often held between stages. Furthermore, material from an intermediate stage must often pass some form of quality control check before being approved for use downstream in the process. It is not unusual for 1 year’s production of a product to be produced in a single campaign, and the material produced being stored until the next campaign in the following year. Since most complex pharmaceuticals are produced through multistage processes, the same often holds true for the stable intermediates (stage products).Process of outsourcing is a growing one, as research-oriented companies concentrate on the discovery and development activities and rely on third parties’ manufacturing competence. This gives rise to extended supply chain co-ordination problems.

SECONDARY MANUFACTURING (possibly including contractor sites); This is concerned with taking the active ingredient produced at the primary site and adding “excipient” inert materials along with further processing and packaging to produce the final productsWholesalers play a significant role in this sector. They tend to be large and few

For example, a product that is sold in pill form would undergo:

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granulation: with addition of all the materials;

compression: forming the pills;

coating;

quality control; and

Packaging.market warehouses/distribution centers;

wholesalers; and

Retailers/hospitals.

GMP (GOOD MANUFACTURING PRACTICES):

Good manufacturing practice (GMP) ensure that products are consistently produced and controlled according to quality standards. It is designed to minimize the risks involved in pharmaceutical production that cannot be eliminated through testing the final product.

The main risks are: unexpected contamination of products, causing damage to health or even death; incorrect labels on containers, which could mean that patients receive the wrong medicine; insufficient or too much active ingredient, resulting in ineffective treatment or adverse effects. GMP will cover all aspects of production; from the starting materials, premises and equipment to the training and personal hygiene of staff. Detailed, written procedures must be provided for each process that could affect the quality of the finished product. There must be systems to provide documented proof that correct procedures are consistently followed at each step in the manufacturing process - every time a product is made.

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OPERATIONAL ISSUES IN THE PHARMACEUTICAL SUPPLY CHAIN

Although the processes will vary between companies, all major pharmaceutical companies will operate ERP systems and follow a business process along the following lines:

DEMAND MANAGEMENTIn each geographical region, forward forecasts (e.g. 3–24 months) are developed, based on historical data, market intelligence, etc. Tenders for manufacture may also be evaluated and possibly accepted at this stage.

INVENTORY MANAGEMENT and distribution requirements planning the demands determined are aggregated and imposed on the appropriate warehouse/distribution centre. The impact on finished goods inventory is assessed and if necessary, orders are placed on upstream secondary manufacturing sites.

INVENTORY MANAGEMENT TECHNIQUES

DETERMINATION OF SAFETY STOCK:

Safety stock is a buffer to meet some unanticipated increase in usage. Abbott maintains a safety stock of six week dependent and independent demand items in order to minimize the risk of shortage due to any uncertain demand.

RE-ORDER POINT:

When the inventory is depleted to lead time consumption, the order should be placed.

In case of Abbott, Lead time of imported material is 45 to 75 days while local material is 7 to 30 days depending on the nature of the material.

A.B.C ANALYSIS

They classifies its materials according to the values or the cost of materials; basically they have allotted three grades or types to their materials:

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* Grade A (very costly materials, e.g. erythromycin)

* Grade B (moderate cost, e.g. clathromycin)

* Grade C (least cost, e.g. bubble gum and artificial flavors like mint)

PARETO MANAGEMENT:

SECONDARY PRODUCTION PLANNING AND SCHEDULING

The orders placed on the secondary sites are planned (typically using MRP-II type tools) and then scheduled in detail (typically using APS tools). The impact of production plans on active ingredient raw material stocks is evaluated and if necessary, orders are placed on the upstream.

AGING SCHEDULE OF INVENTORY:

This technique helps to classify the inventory according to the life of material.

Abbott categorizes the inventory of a particular material/Finished product according to its expiry date.

LOT SIZING TECHNIQUES

Abbott Pakistan uses POS (periods of supply) technique for its dependent and independent demand items.

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In POS technique, Lot size will be equal to the net requirements for a given number of periods (e.g. weeks) into the future.

Abbott maintains six weeks stock in warehouses of dependent demand items and independent items which named as FO and MO respectively.

PRIMARY MANUFACTURING CAMPAIGN PLANNING

The demands placed by secondary manufacturing are satisfied by careful management of inventory and production planning. An interesting feature of this process is that the customer-facing end is effectively a “pull” process (driven by orders) but the primary manufacturing stage has long cycle times which make it difficult to ensure end-to-end responsiveness. This means that primary production is effectively a “push” process, driven by medium- and long-term forecasts.

LOGISTICS TRANSPORTATION NETWORK

Lahore Naulakkah Transport

Bashir SiddiqueTrasport

Fast Track Cargo Service

Leopard Courier Services

Courier Per emergency They also have their own vans with Abbott monogram and they are generally used for distributing to local customers (distributors and institutions) within Karachi and nearby areas.

TYPES OF TRANSPORTS

Cold refrigerated vans

INBOUND LOGISTICS: Inbounding logistics is one of the primary processes of logistics and it concentrates on purchasing and arranging the inbound movement of materials, parts, and/or finished inventory from suppliers to manufacturing or assembly plants, warehouses, or retail stores.

OUTBOUND LOGISTICS: Outbound logistics focuses to the storage and movement of the final product and the related information flows from the end of the production line to the end user.

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WAREHOUSINGOwn warehouse with their manufacturing plants Depos at major cities of the country. Like Lahore Multan and Islamabad.Distribution

DISTRIBUTION:DISTRIBUTION OF PRODUCTS

Outsource

Depots in various cities

6% commission scenario for distributors

Linking distributors to Abbott through satellite systems.

DISTRIBUTORS OF THE COMPANY

Premier Agency Muslimabad, Karachi.

Babar Medicine, Lahore.

Nadeem Traders, Peshawar.

Baloch Enterprise, Multan.

D.S Pharma, Rawalpindi.

DISTRIBUTION STRATEGY

Since in majority of the cases drugs are not purchased by choice of the consumers- the distribution is to some extent selective.

Most pharmaceuticals products require special storage conditions to be maintained at manufacturer’s warehouses, channels of distribution, and the point of sale.

Many products need not supply at the pharmacies but to the hospitals only like cancer medications.

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DISTRIBUTION CHANNEL

Abbott Pak Abbott truck Hospital Distributor Cent. Depot Abbott truckWholesaler

RESTRICTIONS

Distributors can’t go out of their area for sale.

Discountpolicy should be followed according to company’s instructions.

Distributors should carry 6 weeks inventory at their side.

RETURNSProduct Returns

Controlling temperatureHumidity: When product labels say “protect from moisture,” store the product in a space with no more than 60% relative humidity. To reduce the effects of humidity consider-

Ventilation: Open the windows or air vents of the storeroom to allow air circulation. Ensure all windows have screens to keep out insects and birds, and either have bars or are not open wide enough for anyone to climb in. Put boxes on pallets and ensure there is space between pallets and the walls of the storeroom.

Packaging: Secure all lids. Never open a new container unless necessary.

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Circulation: Use a fan to circulate fresh (outside) air. In bigger storerooms you may need a ceiling fan. Standing fans are more useful in smaller storerooms. This requires electricity and some maintenance.

Air conditioners: If possible, use an air conditioner. This is costly, depends on a constant supply of electricity, and requires regular maintenance. Depending on climatic conditions, a dehumidifier may be a less costly option. However, they also need a constant supply of electricity and require regular attention to empty the water containers.

Sunlight: Some health products are photosensitive and will be damaged if exposed to light. These include multiple vitamins, furosemide, chloropheniramine maleate, hydrocortisone, latex products (such as male condoms), and x-ray film.

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To protect products from sunlight-

 Shade the windows or use curtains, if they are in direct sunlight.

 Keep products in cartons.

 Do not store or pack products in sunlight.

 Use opaque plastic or dark glass bottles for products that require them.

 Maintain trees on the premises around the facility to help provide shade, but check them regularly to ensure that there aren’t any branches that can damage the facilities.

Heat

Remember that heat will affect many products. It melts ointments and creams and causes other products to become useless. Following the guidelines listed earlier for protecting products from humidity and sunlight will also help protect products from heat.

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It is important to have thermometers in various parts of the storeroom to monitor temperature (see section on monitoring temperature). But, even if you do not have thermometers, you can still monitor the heat. If you feel hot, your products are probably hot, too.

Monitoring

Consistently monitor the temperature of the different areas within the storeroom.

 Keep thermometers in various places for monitoring.

 Keep the storeroom well ventilated (see section on humidity). For better ventilation, store boxes on pallets and leave room between rows of stacked boxes (see section on arranging products).

 Keep direct sunlight out of the storeroom.

Refrigerators and freezers

 Refrigerators that open on the top are more efficient than vertical ones, because hot air rises while cold air falls.

 The coldest part of vertical refrigerators is at the bottom.

 Store products that are sensitive to freezing or very low temperatures on the upper shelves.

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 Always have enough frozen icepacks to transport items requiring cold storage in cold boxes and/or vaccine carriers. Use only icepacks filled with water. Do not use icepacks prefilled with other liquids, which are usually blue or green. When ordering cold chain equipment, larger facilities should reassess the needs for icepacks and icepack freezer space.

 If there is enough space, place a few plastic bottles of water in the refrigerator. This will help maintain the temperature for a longer period of time if the power is cut off.

 Place refrigerators and freezers with space between and about an arm’s length away from the wall. This will increase the air circulation.

 Under ideal conditions, rooms with multiple refrigerators and/or freezers should have air conditioning. Refrigerators and freezers generate large amounts of heat, which can damage the equipment over time.

 If it is not possible to have air conditioning, install fans around the equipment to increase airflow. If installing fans, remember to place the fans so the air also flows in the spaces behind the refrigerators.

 Ideally, larger facilities should have a cold room rather than numerous refrigerators.

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Power supply

Arrange for a solar panel generator or alternative supply of electricity for cold rooms and refrigerators if the main source of electricity is not reliable. If the generator is not solar-powered, maintain a stock of fuel sufficient to run the generator for at least a few days (see section on storing flammables). Run the generator on a regular basis (at least once a month) to ensure the system is working properly. Larger facilities may want to contract out the maintenance of the generator and electrical system.

If your electricity supply is unreliable, use kerosene or solar-powered refrigerators. Kerosene appliances require frequent maintenance. Trim the wick regularly so the flame is not too high, clean the chimney monthly, and keep a backup supply of kerosene (see section on storing flammables). Place the refrigerator away from the wall on a balanced and level surface. The appliance must be placed on a level surface or it will not function properly. Monitor the temperature regularly. The flame on a kerosene appliance should always be blue; if it is yellow, trim the wick.

Common termsThe following terms relate to temperature and medical supplies. It is important to follow the manufacturer’s recommended storage conditions for all products.

Store frozen: Some products, such as certain vaccines, need to be transported within a cold chain and stored at -20°C (4°F). Frozen storage is normally for longer-term storage at higher-level facilities.

Store at 2°-8°C (36°-46°F): Some products are very heat sensitive but must not be frozen. These are usually kept in the first and second part of the refrigerator (never the freezer). This temperature is appropriate for storing vaccines for a short period of time.

Keep cool: Store between 8°-15°C (45°-59°F).

Store at room temperature: Store at 15°-25°C (59°-77°F).

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Store at ambient temperature: Store at the surrounding temperature. This term is not widely used due to significant variation in ambient temperatures. It means “room temperature” or normal storage conditions, which means storage in a dry, clean, well ventilated area at room temperatures between 15° to 25°C (59°-77°F) or up to 30°C, depending on climatic conditions.

Medicines with stability problems under tropical conditions:

Oral solids (tablets)

acetylsalicylic acidamoxicillinampicillinpenicillin Vretinol

Oral liquids (syrups)

paracetamol

Injections/injectables

ergometrinemethylergometrineadrenalinereconstituted antibiotics

CONCLUSIONThe pharmaceutical supply chain used to be seen as a tool to supply products to market in an effective way, where the emphasis was on security of supply. Recent changes in the operating environment mean that companies are revisiting the components of their supply chains and identifying ways of extracting additional benefits from them. In this sector in particular, the supply chain of interest is not simply the physical processes of conversion and distribution of materials. Equally important is the “value-chain” perspective of managing the innovation and development processes through to capacity and production planning. There are still several exciting research challenges in this value chain, many of which the process engineering/process systems engineering community are well placed to address.

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