A leading pharmaceutical company dealing with Animal Health products was facing difficulties in meeting  on time deliveries. In addition, the company was growing with a lower percentage as compared to the growth rate of the overall pharmaceutical industry.

Therefore, the  Management of the company assigned the  professional work to improve the performance of supply chain management.

The task  include :

• Identify the causes for not meeting on-time deliveries of products.
• Review the process of planning and forecasting.
• To reduce the overall cost incurred in supply chain management

a) Deficient process of planning :

1. Production planning : The person engaged with giving the menu for the production, was told to add 10% quantities over the  previous year’s sales quantities  and  communicate such demand to toll manufacturers two months in advance. Such practice was going on for several years and no one challenged such a method of planning . This means the company would grow only at 10% in all types  of products irrespective of the real potential in the market and the process of forecasting was not in place. Due to any reason, ​if ​supply of certain products were not made in the previous year​,​ shortfall for such products in the subsequent year was inevitable​ as the production planning is based on the quantities sold in the previous year.​

2. Distribution planning : The company was sourcing the goods from Tarapur near Mumbai and transporting ​such​ goods to Pune ​and storing it in a​​ large warehouse from where the goods were transported across 17 locations in India. The distribution manager used to wait till month​-​end to know the exact quantities of each product available at each location for planning purposes. The time to deliver the products at each ​such ​location​s​ was around 2 to 3 weeks, resulting in shortages and loss of sales which never surfaced​ during the first 2 to 3 weeks of the month​. The data analysis revealed that such a ​stock out ​situation​ had​ occurred in about 100 cases in a quarter. This way of working was also causing the higher  transport cost due to small quantities being frequently demanded​ on urgent basis  by such location inch-charge. Therefore it was ​recommended​ to introduce the inventory levels​ so to address the issue of product shortages​  worked out on a scientific basis.

b) Mapping the supply chain activities : After mapping of the activities, it was observed that  by improving the planning process ,  the goods can be directly dispatched to 17 locations from the place of toll manufacturers ​placed ​ near Mumbai,​ to 17 locations​ across India. This can result in elimination of transportation of the entire goods from Tarapur ( near Mumbai) to Pune and ​cost incurred in managing ​ 20k sq. feet warehouse.

c) Involvement of field force in sales forecasting: In order to improve improving the availability of the products ​ for​ sales​, it was recommended ​to introduce the inventory planning based on the potential market demand.

​Therefore, it was proposed to introduce sales forecasting in the inventory planning process with the help of field force, ​instead of ​inventory​ planning  based on previous year’s sales quantities​. In order to make the process of forecasting more effective, management of the company included ​forecasting requirements  ​in the​ ​ KRA.​of field force.​

The results include the following :

• Significant improvement in product deliveries resulting improvement in sales by  about 25% plus.
• Complete elimination of transportation cost from Tarapur to Pune as well as elimination of warehouse cost resulting total saving around INR 30 millions
• Complete elimination of inventory held at Pune warehouse.
• Significant reduction in stock-out situation.

• supply chain

• BI & Analytics

• Pharmaceutical and Life Sciences