Pharma Case Lscm
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Transcript of Pharma Case Lscm
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An insight into the supply chain ofPharmaceutical Industry
By,
S. P. Reddy (TL)
Sphoorthi. I
Rameez. R
Srikanth. L
Teju. G
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What is Supply Chain Supply Chain Management (SCM) is the process of
planning, implementing, and controlling theoperations of the supply chain with the purpose tosatisfy customer requirements as efficiently aspossible.
Supply chain management spans all movement and
storage of raw materials, work-in-process inventory,and finished goods from point-of-origin to point-of-consumption.
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Components of a Supply Chain
Plan
Source
Make
Deliver
Return
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INVENTORY
MANAGEMENT
REVENUE COST
LOGISTICSMUTUAL
CONSIDERATION
OBJECTIVESOF SUPPLY
CHAIN
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Activities/Functions Of SCM The functions can be divided into three main parts:
A) Strategic
B) Tactical
C) Operational
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Supply Chain DecisionsThere are four major decision areas in supply chain
management:
Location
Production
Inventory
Transportation (distribution)
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DISTRIBUTION
NETWORKCONFIGURATION
DISTRIBUTIONSTRATEGY
INFORMATION
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Supply Chain in Pharmaceutical
Industries The pharmaceutical industry
is experiencing unparalleled
change and challenge.
Globalization, treatment
and pricing
economics, government
controls and ever-advancingtechnology are posing
a challenge on the
smooth running
of the industry.
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Key trends in the Pharmaceutical
Industry
Business innovation is restructuring the value chain.
Market share and margins are declining.
Consumers have less access to new drugs.
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Supply Chain Implications in the
Pharmaceutical Industry
Sales and Marketing.
Channel Management.
New Product Development
and Roll-out.
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Case Study on
Matrix Laboratories India Ltd.
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Matrix Laboratories Limited (MLL) is engaged in the manufacture of ActivePharmaceutical Intermediates (APIs) and Solid Oral Dosage Forms withturnover of US$ 261 million.
It is one of the fastest growing API manufacturers in India and focuses on
regulated markets such as U.S. and EU. The company has a wide range ofproducts in CNS, anti-bacterial, anti-AIDS, anti-asthmatic, cardiovascular,gastrointestinal, anti-fungal, pain management and life style relatedtherapeutic segments.
It is not just one of the fastest growing pharmaceutical companies; it isalso one of the strongest proxies of the industrys growth, extensively
vertically integrated from intermediates to APIs to formulations tointernational marketing.
OrganizationBackground:
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19
Matrix Labs
The combined FDA approved capacity of the company is one of the largest in thecountry.
The company's Finished Dosage Forms (FDF) manufacturing facility has a capacity tomanufacture 2 billion tablets and 300 million capsules on two-shift basis.
With about 3,000 employees, including over 300 R&D scientists, Matrix focuses ondeveloping APIs with non-infringing processes to partner with generic players inregulated markets for their early formulation entry.
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ACQUISTIONS:(Smooth flow of drugs through supply chain)
US generic drugmaker Mylan acquired 71% stake in MLLBackward vertical integration
MLL acquired stake in -
1. Concord Biotech specializing in fermentation andbiocatalytic
2. Mchem Group,China- Geographical advantage.
3. Ventures with South Africa's Aspen Pharmacare Costadvantage.
4. Belgium generics company Docpharma Robust Marketingand Distribution platform.
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Key Concerns for the Company:
To reduce inventory level at the BSR and depots.
To improve inventory accuracy at stocking points includingboth BSRs and depots.
To identify the damaged stocks across the chain and
initiate action in a timely manner.
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The company has a supply chain network of 5 factories with bonded stockrooms (BSR) attached for dispatch to the depots and 35 depots for servicing
distributors.
Goods move from the factory to the BSR.
BSR dispatches stocks to Mother CFAs (depot).
Other depots receive stocks from the Mother depot and sell them to
distributors.
Supply chain of MLL:
MANUFACTURING FACILITIES
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API FACILITIES
FACILITY PLANT AREA in Sq.Meter TOTAL CAPACITY in KL
PashamylaramHyderabad. 124687.03 222.74
Jeedimetla 37637 339.1
Kazipally 60713 243
Vizianagaram,Vishakapatnam
276028 600
FINISHED DOSAGE FORM FACILITIES
FACILITY PLANT AREA in Sq.Meter TOTAL CAPACITY in KL
Nashik,Maharastra 47285 2 Billion Tablets & 0.3 BillionCapsules Per Annum on 2shifts basis.
MANUFACTURING FACILITIES
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Suppliers to Matrix laboratories
Brand Description
GlasscoGlassware / Jointed-ware, include UPS Standard Volumetric Flask,
Measuring Cylinder, Burette, Separating Funnel etc
Molymod Educational Molecular Model Set
Scientific Lab SupplyGeneral Laboratory Supplier, eg Suba Seal Stopper, Pipette Filler,
Sintered Crucible, Quartz Cell , Countdown Timer etc
Elga Deioninser Set and Resin Cartridge Refill MCDS, C114
Atago Refractometer
Beatson Sampling / Specimen Bottle
Brother Labeling Machines, Tape, Ink Cartridge
China Products Glassware & Porcelain-ware
Electrothermal Heating Mantle, Temperature Controller
Endecott Sieves
Hanna / Eutech pH Meter, Conductivity Meter, Thermometer
Memmert Oven / Incubator / Water Bath
Nalgene Plastic-ware
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MAJOR CHEMICAL SUPPLIERS:
-Transchem Limited-Alkali Metals
-Benzochem- Borealis
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Push system : Acute therapy systemPull system : Chronic therapy system
PUSH VS PULL STRATEGY OF MLL
Action Steps Undertaken:
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Action Steps Undertaken:
Bin card system was implemented for each rack at the CFAs and the delivery staff wastrained in relevant bin card maintenance practices.
A process to regularly reconcile physical and book stocks using the cycle-count processwas implemented.
An IT solution was identified and implemented for: Accounting the Cycle count process, providing MIS on deviations and accounting the adjustment
notes. Computing the forecast using consolidated orders, with factoring for promotions and seasonality. Calculating safety stock level based on number of weeks of sales target. Facilitating communication of closing stock data from BSR and depots to logistics department. Facilitating communication of damaged and un-saleable stock quantity to commercial department. Automatically allocating stocks using FIFO principle at the depots.
Demand planning and forecasting were made a periodic activity using the above IT solution to alignforecasting with market orders and actual sales. The process of setting safety stocks at depots was madeperiodic and dynamic, based on updated sales data.
Norms were set to act on damaged /old and other dead stocks. Clear action steps were laid down toliquidate or destroy these stocks.
Responsibility and accountability were set to in the organisation to monitor and authorise activities inthis regard based on visibility provided by the IT solution.
Benefits:
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Benefits:
Due to above steps were implemented properly the results were fascinating and this increased the profitsof the company by 20%.
The organization achieved an inventory record accuracy (book stocks correctly reflecting physical stocks)
of 95% within 2 months .
The company achieved (Within 2Planning cycles i.e. 2 Months)
Stock level reduction From 8.2 weeks to 5.5 weeks at the BSR. From 6.5 weeks to 4 weeks at the depots which included damaged inventory. Reduction in stock value holding across the supply chain.
Transparency of saleable and damaged stocks quantities across the supply chain resulting in moreaccurate demand planning, stock allocation and production.
Better management of damaged and un-saleable stocks: Sales realization on salvaging and selling damaged stocks at a discounted price. Timely destruction of unusable and potentially harmful products. Timely action on transport, handling, stock management and product development fronts to reduce
damages. Reduction in proportion of old and damaged stocks; Facilitation of ensuring fresher stocks in the market.
This was achieved mainly by reducing inventory levels across the chain and also by better stockmanagement at the depots.
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Matrix Principles for Responsible Supply Chain Management
ETHICS
ANIMAL
WELFARE
IDENTIFICATION OFCONCERNS
PRIVACY
BUSINESSINTEGRITYAND FAIRCOMPETITION
ENVIRONMENT
PROPERWASTEDISPOSAL
ENVIRONMENTAL
AUTHORIZATIONS
SPILSS ANDRELEASES
MANAGEMENTSYSTEM
COMMITMENT ANDACCOUNTABILITY
LEGAL ANDCUSTOMER
REQUIREMENTS
CONTINUALIMPROVEMENT
RISK MANAGEMENT
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CONCLUSION MLL must ensure that their drug reaches customers with uncompromised
quality.
Should retain control over the multilayered distribution system and cold
chain management.
Should acquire leading pharma companies in the pharmerging markets to
cut down cost and fasten the delivery to the end customer.
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Thank you