CONTENTSPage No. Executive Summary......... Introduction. Scope of the study. Methodology... Supply chain management . Brief overview on Renata Ltd. . Supply chain strategy of Renata Limited Supply chain model of Renata Limited .. Demand and supply planning and Renata Limited ... Supply chain drivers and Renata Limited .. Setbacks of supply chain management of Renata Limited. Recommendation . Conclusion... 2 3 3 3 3 4 7 7 8 11 28 29 30

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Executive Summary

This paper is prepared with the aim to illustrate the supply chain management of a business firm, studying a working Supply Chain Management Framework. Renata Limited, a sophisticated pharmaceutical company is taken as the study case. A sincere effort was made to show the supply chain management system that Renata Ltd. has. Some observations and suggestions have been given in the main body of the report regarding the topic. It is believed that these facts will be beneficial for the concerned company. Supply chain concept is extended to the activities started from the raw materials suppliers through the organization to the end consumer. Once thought only as the Physical Distribution Management (PDM), that is the logistics management, has now been the part of Enterprise Resources Planning (ERP). From a set of activities is now considered a part, module, of an integrated system. There has been a change in supply chain management thinking from a push oriented supply chain that emphasizes distribution of a product to passive customers to a pull-oriented supply chain that utilizes the supply chain to deliver value to customers who are actively involved in product and service specifications. Our studied company, Renata Limited, also has got a Distribution Channel Management (DCM) that works in the downstream supply chain arena while upstream one is still managed conventionally with the help of mail or e-commerce solution. Over competition in the industry and the cost leadership approach have been making the pace of change a bit slower and they are still being led by the existing system, we can say legacy system. They still maintain a good amount of safety level that cost time and hazards. But we see some improvement in database management that works in downstream arena is helping them a lot. Since the market driving force is the marketing to doctors and chemist, any sophisticated system, in their words, is only contributing to curtailed profit. But some part of the industry is doing better in quality and excellence in export while others whose market share are inside the boundary are adjusting themselves to the situation. Renata Limited is envisaging to introduce ERP to strengthen their foothold in and outside of the country as they are also a recognized one to enter the EU market. It is now the time and the will to shift themselves from the legacy to a contemporary system, we understand.

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1.0

Introduction: Supply Chain Management (SCM) involves the coordination of all supply activities of an organization from its supplier and delivery of products to its customers. Its essentially the optimization of material flows and the associated information flows involved with an organizations operations. Supply Chain Management (SCM) includes not only supplier and buyer, but also the intermediaries such as the suppliers suppliers and the customers customers. It is the coordination of supply activities of an organization from its suppliers and partners to its customers. Its objective is to maximize the overall value generated. As such a study was done focusing the aforesaid concept. This report highlights the outcomes of this study.

2.0

Scope of the Study: For this study on Supply Chain Management by any company for the Supply Chain Management course at EMBA Renata Ltd., one of the leading pharmaceutical companies of Bangladesh was chosen. This study refers to the following points-

a.b.

Supply chain strategy of Renata.

Supply chain model of Renata. Demand and supply planning of Renata. Supply chain drivers and Renata. Setbacks in supply chain management Recommendation. Methodology: In order to do this study both primary and secondary sources were considered. Primarily the data were collected through observation and conversation with the Officials of Renata Limited. Secondary data sources such as the internet, texts like Supply Chain Management by Sunil Chopra and Peter Meindl were also used to prepare the paper.

c.d. e. f. 3.0

4.0

Supply Chain Management (SCM): Supply chain management systems enable firms to streamline both their internal and external supply chain processes and provide management with more accurate information about what to produce, store, and move. By implementing a networked and integrated supply chain management system, companies can match supply to demand, reduce inventory levels, improve delivery service, speed product time to market and use assets more effectively. Effective supply chain management system enhances organizational performance in the following areas:

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Improved customer service and responsiveness: make the products easily available to thecustomers. Having the right product at the right place at the right time will increase sales.

Cost reduction: supply chain management helps companies contain, and often reduce someor all of the costs associated with moving a product through the supply chain.

Cash utilization: the sooner a company delivers a product, the sooner that company will getpaid. 5.0 Brief Overview on Renata Ltd.:

Type of Company: Listed Public Limited (Dhaka Stock Exchange) Main Business: Manufacture and Marketing of Human Pharmaceuticals and Animal Therapeutics. It has two production sites. The Mirpur Site is 12 Acres and Rajendrapur Site is 17 Acres. History: The Company started its operations as Pfizer (Bangladesh) Limited in 1972. For the next two decades it continued as a highly successful subsidiary of Pfizer Corporation. However, by the late 1990s the focus of Pfizer had shifted from formulations to research. In accordance with this transformation, Pfizer divested its interests in many countries, including Bangladesh. Specifically, in 1993 Pfizer transferred the ownership of its Bangladesh operations to local shareholders, and the name of the company was changed to Renata Limited. Renata Limited is a public limited company incorporated in Bangladesh, with more than Tk. 2.3 billion in assets. The company manufactures and sells various pharmaceutical products, animal health, animal nutritional, oral saline, hormone products and other medical products in the local and foreign markets. The company has two subsidiary companies; Renata Agro Industries Limited and Purnava Limited. They have manufacturing contract with Eskayef for Cephalosporins, with UNICEF and SMC for Sprinkles. The trademark of Renata is assigned from Pfizer and Hoechst with manufacturing technology. In 2007 Renata has received a Certificate of GMP Compliance for its Potent Products Facility from MHRA2, UK and it is the only Bangladeshi company to receive it. The companys largest subsidiary, Renata Agro Industries Limited, is a private company limited by shares incorporated in 1997. The principal activities of the company are to carry on business for producing and sale of various agro based products, and poultry breeding and hatching and sale of poultry products. The company commenced its commercial operation from October 1998. Since then it has been operating as successful company. Renata Agro is now financially strong and declared a dividend of 30% on paid-up capital in the last year.

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Another subsidiary, Purnava Limited, was incorporated as a private limited company in 2004 to explore the prospects of entering into Fast Moving Consumer Goods (FMCG). The principal activities of the company are to carry on the business of manufacturing, marketing and distribution of all kinds of consumer goods, consumer durables, food items, sugar confectioneries, edible oils, beverages etc, raw materials, semi-finished items, producers, goods and various other products of local or foreign origin and to engage in the business as traders, importers, exporters, commission agents of all kinds of goods and services including pharmaceutical drugs and medicines. But the company has not started production yet. Renata has a relatively flat management structure. S. H. Kabir is the Chairman of the board and Syed S. Kaiser Kabir is the Managing Director of the company. Renata Limited is well known for its corporate social responsibility. Institutional shareholders own as much as 15% of total share of the company. No. of Employees: 2,213 employees. Distributors and Affiliations: Its Alliance-Partners are as follows: Novartis Vaccines (Rabipur, Vaxem HiB, and Agrippal) BASF, Germany (Animal Nutrition Products) InterVax, Canada (Meningococcal Vaccine) Evans Vanodine, UK (Disinfectant) Zinpro, USA (Metal Amino Acid Complexes) Biomin Laboratories, Singapore (Mycotoxin Binders and Nutraceuticals)

International Presence: Guyana, Jordan, Hong Kong, Kenya, Myanmar, Philippines, Sri Lanka, Vietnam, and United Kingdom. Investment: 100% Shareholding in Renata Agro Industries Limited Bankers: Agrani Bank, Standard Chartered Bank, Eastern Bank, HSBC, Sonali Bank, City Bank, and Mutual Trust Bank Renata Ltd.s Vision: To establish Renata permanently among the best of innovative branded generic companies. Renata Ltd.s Mission: To provide maximum value to our customers, shareholders, colleagues, and communities where we live and work.

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Production Facilities: Renata has five manufacturing facilities on two separate sites. The original 12-acre site is located in Mirpur, Dhaka, while the new 17-acre site located in Rajendrapur, Gazipur began operations in 2009. General Facility (Mirpur, Dhaka) Area: 196,730 SFT or 18,277 m2 Manufacturing Capabilities: Tablet, Capsule, Soft Gel, Effervescent Tablet, Dry Syrup, Sterile Dry Fill, Sterile Liquid Fill, Large Volume Parenteral (Pilot), Lyophilisation (Pilot), and Premix Packaging Capabilities: Blister pack, bottle dry-fill, pot-fill, and strip packaging Potent Product Facility (Mirpur, Dhaka) Area: 22,500 SFT or 2,090 m2 Manufacturing Capabilities: Tablet Packaging Capabilities: Blister pack and pot-fill Cephalosporin Facility (Rajendrapur, Gazipur) Area: 50,500 SFT or 4,692 m2 Manufacturing Capabilities: Tablet, Capsule, Dry Syrup, and Sterile Dry Fill Packaging Capabilities: Blister pack Penicillin Facility (Rajendrapur, Gazipur) Area: 27,500 SFT or 2,555 m2 Manufacturing Capabilities: Tablet, Capsule, Dry Syrup, and Sterile Dry Fill Packaging Capabilities: Blister pack Sachet Filling Facility (Mirpur, Dhaka) Area: 11,300 SFT or 1,090 m2 Manufacturing Capabilities: Powder Packaging Capabilities: Sachet (Dry Fill) Description of the surrounding: The immediate neighboring environment consists of small-scale industries engaged mainly in manufacturing garment and dairy products. Properties nearby are used as residential homes, pharmaceuticals, dairy, garments and some other small scale industries.

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6.0

Supply Chain Strategy of Renata Ltd.: Supply chain strategy of Renata is avoiding stock out situation as much as possible and retaining zero stock out condition for high demand materials along with maintaining adequate level of efficiency.

7.0

Supply chain model of Renata Ltd.: Two prominent models are very widely used. They are illustrated below Push supply chain The push model is illustrated by a manufacturer who perhaps develops an innovative product and then identifies a suitable target market. A distribution channel is then created to push the product to the market. Push to Customer Supplier Manufacture r Pull supply chain This model emphasizes on using the supply chain to deliver the value to customers who are actively involved in product and service specifications. Here the supply chain is constructed to deliver value to the customer by reducing costs and increasing service quality. Distributor Retailer Customer

Supplier

Manufacture

Distributor

Retailer

Customer

Renata Limited is following the pull model of supply chain as they are demand oriented and this model has been the strategy for many organizations. In a pull based model which is also known as demanddriven model or build- to- order, actual customer orders or purchases trigger events in the

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supply chain. Transactions to produce and deliver only what customers have ordered move up the supply chain from retailers to distributors to manufacturers and eventually to suppliers. Only products to fulfill these orders move back down the supply chain to the retailer. Manufacturers would use only actual order demand information to drive their production schedules and the procurement of components or raw materials.

8.0 8.1

Demand and Supply planning and Renata Ltd.: Concept: Demand planners are kind of like weather forecasters -- they rarely get credit for doing their job correctly, and they're only noticed when they get it wrong. Nevertheless, it's vitally important that they get it right, or else severe -- and potentially disastrous -- supply chain glitches can occur. "The bullwhip effect is as true today as it ever was in modern, elongated global supply chains where small errors at the front are magnified throughout the process," observes Andrew Kinder, director of product marketing for supply chain management at Infor, an enterprise software provider. Kinder offers these 10 tips to gauge your company's demand planning preparedness, and help guide you to getting the forecasts right. 1. Get the process right. Demand planning is a sub-process within sales and operations planning or integrated business planning, not a stand-alone activity. Create an integrated business plan that is a cross-company activity and drives the rest of the business forward for profitably meeting customer demand. 2. Decide what levels you need to plan demand at that make sense for your business. Some companies analyze and plan demand at the product family level, customer level or geographic level. The way you forecast and plan demand is unique to your business. Don't be dictated by limitations of your IT technologies -- and be prepared to change how you plan demand according to changes in your business.

3. Demand planning is a collaborative process, not a test of statistical algorithms. The statistics provide a solid foundation to work with, but the real value comes from over-laying knowledge that systems cannot possibly know. Deploy internal collaboration before external collaboration, recognizing that the closer you get to the true demand signal, the better the forecast will be.

4. Demand planning is not just forecasting. Forecasting is a component of demand planning andrelates to your best estimate of future demand. Companies that excel in this area will challenge

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5. the forecast (and the integrated business plan) and seek opportunities to influence demand through marketing events and promotions to bring the forecast more in line with the company plan. 6. You can't control what you can't measure. Put the right set of linked key performance indicators in place and measure regularly against these. 7. Educate before training. Because the demand planning process is cross-functional, many people input to the forecast without realizing the importance of their contributions. As a result, the quality of their contributions may suffer. A good educational program will help everyone understand their contribution and impact on the performance of the demand plan. 8. Cleanse the data so you don't spend all your time questioning it and losing confidence in the process, which can create a breeding ground for others to second-guess the demand plan and produce their own version. Demand planning deals with huge quantities of data and robust processes are required to keep the data cleansed. 9. Trust the numbers and manage by exception. 80% of your return can be achieved by reviewing 20% of the items. 10. Use the error in your forecast to positive effect. A good statistical forecast will have an appropriate error which drives an appropriate safety stock target. This leads to good inventory management and delivers higher service with lower total inventory. 11. Deploy a proven best-in-class solution. A recent Aberdeen study shows that companies that excel in demand management -- reporting higher forecast accuracies and lower inventories -- are two-and-ahalf times as likely to have implemented a best-in-class demand planning system. 8.2 The demand planning Since the supply chain management of Renata Limited is a pull model supply chain, they aim at their product quality. This is done at the commencement of every year and absorbs the amendment as needed throughout the year. They term it as block list based on which suppliers from in and outside of the country are ordered to provide raw materials on time. Following are the steps the tread when set the demand. Response from the field force: They have got an efficient field force that visits their customers, doctors and chemist, in particular make a demand plan that would survive for the coming period based on their findings.

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Make regional demand schedule: As not every region of their market need the same product in same quantity, they make a regional demand schedule based on the data coming from the field force that indicate different trends for territory.

Adjustment with the forecasted trend: Once they got the regional demand schedule they adjust it with the forecasting based on the sales of previous years and quantity the total needs for that year.

Adjustment with the stock in hand: The finished goods in hand and the returned goods form the market is subtracted from the total demanded amount for that year. Company normally holds 8 weeks inventory level in end, front and back, of finished goods and raw materials.

Technology and time lag: The technology used here is intranet that helps every field force unit to update the present demand condition at the end of the day, every working day. Since the downstream supply chain is more updated and automated the time lag is least, 12 hours. This can be checked at any moment.

Field Force

District Sales Manager (DSM)

Regional Sales Manager

Sales Manager

National Sales Manager

8.3

The supply planning The supply planning starts when the demand schedule is finalized for the upcoming year. As supply comes from outside of the country, there are regulatory measurements to be followed. The total demand is placed in a block list that is presented to the related government agency for approval. So following are the steps, we can say, are treaded in supply planning.

Block list and approval: Once the demand schedule is ready, it is formatted into a block list and seeks the permission for import. This is done for supplies from outside. For inside oriented supply no such steps need to be maintained.

Tender float: According to the approved block list the company calls the eligible agents who can purchase the raw materials in favor of the company. There is a communication maintained between these agents and company to supply the materials on time. This is manual.

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Segregating into lots: Then suppliers are asked to supply the raw material needed in each month. The forecasted demand of each month is communicated to the suppliers and they perform their job.

Monthly production: According to the demand the company goes for monthly production target. This may vary as per demand.

Distribution: The Company has got 15 sales depots across the country which supplies the finished product to each district according to their monthly need. There is a central inventory that keeps connection with the depots and upcoming supply needs.

Technology used: The technology used here to keep connection with suppliers is mail communication. Since they maintain a safety stocks in both front and back end and production is segregated into months, this mail communication serves their purpose well.

9.0Supply chain drivers and Renata Ltd.: The performance of a supply chain is determined by decisions in the areas of facility ,inventory, transportation, information, sourcing and pricing. Hence these six areas are identified as drivers of supply chain performance. In which first three are called logistic drivers and the rest called cross functional drivers.

Facilities places where inventory is stored, assembled, or fabricated production sites and storage sites

Inventory raw materials, WIP, finished goods within a supply chain inventory policies

Transportation moving inventory from point to point in a supply chain combinations of transportation modes and routes

Information data and analysis regarding inventory, transportation, facilities throughout the supply chain potentially the biggest driver of supply chain performance

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Sourcing functions a firm performs and functions that are outsourced

Pricing Price associated with goods and services provided by a firm to the supply chain 9.1 Facility and Renata Ltd.: Concept: Facilities are a key driver of supply chain performance in terms of responsiveness and facility. For example a company can achieve economies of scale when a product is manufactured in one location. Components of facility decision:

Production facilities - flexible, dedicated or combination of the two. Design product focused or function focused Location o o centralization (efficiency) vs. decentralization (responsiveness) other factors to consider (e.g., proximity to customers)

Capacity (flexibility versus efficiency) Manufacturing methodology (product focused versus process focused) Warehousing methodology (SKU storage, job lot storage, cross-docking).

Practice in Renata Ltd.:

1. In Renata, their manufacturing plants are centralised but depots are decentralised.They have got 15 sales depots across the country which supplies the finished product to each district according to their monthly need. There are 5 central inventories that keep connection with the depots and upcoming supply needs. A basic trade-off has been made by centralizing the manufacturing site and de centralizing the warehousing to gain economies of scale and at the same time to become responsive by being little closer to the customer.

2. Capacity of the facility is neither excess nor high utilization. They have little excesscapacity that can be helpful responding to demand fluctuation. That is how they are managing economies of scale and at the same time a level of responsiveness. 3. They do not have retail stores and that helped them to reduce the facility cost a bit.Page 12 of 32

9.2

Inventory and Renata Ltd.:

Concept Inventory exists in the supply chain because of a mismatch between supply and demand.

Types of Inventory: o Raw materials & purchased parts

o Partially completed goods called work in progresso Finished-goods inventories

o (manufacturing firms) or merchandise (retail stores)o o Replacement parts, tools, & supplies Goods-in-transit to warehouses or customers

Functions of Inventory: o o o o o o o o To meet anticipated demand To smooth production requirements To decouple operations To protect against stock-outs To take advantage of order cycles To help hedge against price increases To permit operations To take advantage of quantity discounts

Objective of Inventory Control: o To achieve satisfactory levels of customer service while keeping inventory costs within reasonable bounds Level of customer service Costs of ordering and carrying inventory

Effective Inventory Management: o o o o A system to keep track of inventory A reliable forecast of demand Knowledge of lead times Reasonable estimates of Holding costs Ordering costsPage 13 of 32

o

Shortage costs

A classification system

Inventory Counting Systems:

o Periodic System : Physical count of items made at periodic intervals. o Perpetual Inventory System : System that keeps track of removals frominventory continuously, thus monitoring .

o Two-Bin System - Two containers of inventory; reorder when the first is empty. o Universal Bar Code - Bar code printed on a label that has information about theitem to which it is attached current levels of each item. ABC Classification System: o Classifying inventory according to some measure of importance and allocating control efforts accordingly.

A - very important B - moderately important C - least important

Determinants of the Reorder Point:

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The rate of demand The lead time Demand and/or lead time variability Stock out risk (safety stock)

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Practice in Renata Ltd.:

1. Renata Limited has got a Distribution Channel Management (DCM) thatprimarily works for the downstream supply chain that we can relate to Physical Distribution Management (PDM), the earliest phase of supply chain management. This is responding to the need of the market from the front end, the distribution channel, and back end, the procurement of raw materials

2. The Block list, total procurement needed for a year, is usually made at thebeginning of a year with minor adjustment afterwards. This is determined by a forecasting based on previous years sale with adjustment for the micro factors, every single response from the field force who visit doctors and chemists. After analyzing all the required micro and macro factors, and reviewing all those, generally a plan is given to the Distribution Chain Channel. 3. Based on the condition of 15 sales outlet of Renata, and inventory kept in the central warehouse, the total planning is determined. After initiating the plan, goods are moved to the outlets for sale, from the central inventory warehouse.

4. In Renata, cycle inventory is done as per following manner Group A (that incurs 70% of the total cost) - ordered in every two months.

Group b (that incurs 20% of the total cost) - ordered in every three to fourmonths. Group A (that incurs 10% of the total cost) - ordered in every six months.

5. They maintain high level of safety and seasonal inventory as they do not haveexcess production capacity. 6. They have all together five centrally located warehouses in the manufacturing site with capacity on an average of 2500 pallets. The largest warehouse has capacity of 3850 pallets. There are also 15 sales depots to store the finished goods. 7. Renata has got higher level of inventory that helped them to reduce their production and transportation cost because of improved economies of scale in both functions.

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9.3

Transportation and Renata Ltd.: Concept: Transportation moves the product between stages in the supply chain. It has impact on responsiveness and efficiency. Faster transportation allows greater responsiveness but lower efficiency. It also affects inventory and facilities. If responsiveness is a strategic competitive priority, then faster transportation modes can provide greater responsiveness to customers who are willing to pay for it .A firm can also use slower transportation modes for customers whose priority is price (cost). It can also consider both inventory and transportation to find the right balance. Components of Transportation Decisions Mode of transportation air, truck, rail, ship, pipeline, electronic transportation vary in cost, speed, size of shipment, flexibility

Route and network selection route: path along which a product is shipped network: collection of locations and routes

In-house or outsource

Practice in Renata Ltd.: 1. Renata uses third party logistic. Cargo bangla and Sundorbon are the two parties with whom Renata has strategic alliance with. 2. In case of transportation they have emphasised on efficiency rather than responsiveness. They are also getting better service. Renata is spending more money in inventory but reducing money in transportation as to them, carrying cost is lower than transportation cost of their own.

9.4

Information and Renata Ltd.: Concept:

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Information technology can be used to improve supply chain management in a number of ways. In those cases challenges were

Reduce order-to delivery time. Reduce costs of manufacturing. Manage inventory more efficiently. Improve demand forecasting. Reduce time to introduce new products. Improve aftermarket/ post-sales operations.

The typical benefits that B2B companies have from e-SCM are as following

1. Increased efficiency of individual processes: Here the cycles time to complete aprocess and the resources needed to execute it are reduced. If the B2B Company adopts eprocurement this will result in a faster cycle time and lower cost per order. Benefits: Reduced cycle time and cost per order.

2. Reduced complexity of supply chain: This is the process of disintegration. Here B2BCompany will offer the facility to sell direct from its e-commerce site rather than through distributors or retailers. Benefits: Reduced cost of channel distribution and sale. 3. Improved data integration between elements of the supply chain: The B2B Company can share information with its suppliers on the demand for its products to optimize the supply process. Benefits: Reduced cost of paper processing.

4. Reduced cost through outsourcing: The company can outsource or use virtualintegration to transfer assets and costs such as inventory holding costs to third companies. Technology is also enabler in forming value networks, and in making it faster to change suppliers on the basis of cost and quality. Benefits: Lower costs through price competition and reduced spend on manufacturing capacity and holding capacity. Better service quality through contractual arrangement.

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5. Innovation: E-SCM should make it possible to be more flexible in delivering a more diverserange of products and to reduce time to market. For example, the B2B company may use ecommerce to enable its customers to specify the mixture of chemical compounds and additives used to formulate their plastics and refer to a history of previous formulations. Benefits: Better customer responsiveness. Flexibility in adapting to new business requirements is a key capability of e-SCM systems. For example, in 2006, e-business system supplier and integrator SAP explained the three key capabilities of its SCM solution as Synchronize supply to demand: Balance push and pull network planning processes. Replenish inventory and execute production based on actual demand. Sense and respond with an adaptive supply chain network: Drive distribution, transportation, and logistics processes that are integrated with real-time planning processes. Provide network wide visibility, collaboration, and analytics- Monitor and analyze your extended supply chain. An alternative perspective on the benefits is to look at the benefits that technology can deliver to customers at the end of the supply chain. For the B2B company these could include: Increased convenience through 24 hours a day, 7 days a week, 365 days a year ordering. Increased choice of supplier leading to lower costs. Faster lead times and lower costs through reduced inventory holding. The facility to tailor product more readily. Increased information about products and transactions such as technical data sheets and order histories.

IS infrastructure for supply chain management Information systems need to deliver supply chain visibility to different parties who need to access the supply chain information of an organization, whether they be employees within the organization, suppliers, logistics service providers or customers. Information systems have a key role in providing this visibility. Since a huge volume of information defines supply chain processes for each organization, users of this information need to be able to personalize their

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view of information according to their need- customers want to see the status of their order, suppliers want to access the organizations database to know when their customer is next

likely to place major order. Security is also important of a company has differential pricing, it will not want customers to see price differences. FIG

These requirements for delivering supply chain information imply the need for an integrated supply chain database with different personalized views for different parties. A typical integrated information systems infrastructure for delivering supply chain management is illustrated in above figure. It can be seen that applications can be divided into those for planning the chain and those to execute the supply chain process. A key feature of modern supply chain infrastructure is the use of a central operational database that enables information to be shared between supply chain process and applications. This operational database is usually part of an enterprise resources planning system such as SAP, Baan or Prism and is usually purchased with the applications for supply chain planning and

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execution. Some of the planning applications such as network simulation and optimization are more likely to be supplied by separate software suppliers. The use of internet technologies to deliver information over a TCP/IP protocol is becoming standard to reduce the costs of proprietary leased line networks. Information needed by managers to intervene in supply chain process when problems occur is delivered as alerts or through continuous monitoring across secure private intranets of extranets used to link to partners.

Supply chain process: Many process and sub processes are involved in managing the supply chain to expedite flow of information and materials. The Supply Chain Council developed a Supply Chain Operations Reference Model which identifies five major supply chain processes: Plan, Sources, Make, Deliver and Return Plan: consist of processes that balance aggregate demand and supply to develop a course of action to meet sourcing, production, and delivery requirements. Source: consist of processes that procure goods and services needed to create a specific product or service. Make: consists of processes that transform a product into a finished state to meet planned or actual demand. Deliver: consists of processes that provide finished goods and services to meet actual or planned demand, including order management, transportation management and distribution management. Return: consists of processes associated with returning products or receiving returned products, including post delivery customers support. Logistics plays an important role in these processes, dealing with the planning and control of all factors that will have an impact on transporting the correct product or service to where it is needed on time and at the least cost.

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Plan: Balance resources with requirement Align supply chain plan with business and financial plan

Sources: Identify suppliers Schedule deliveries Manage inventory

Make: Schedule production Evaluate quality & performance Manage work in process

Deliver: Select carrier Route shipment Manage warehouse Invoice customers

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Return: Automatic return Schedule return Receive return Issue return credit

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Manager A

Manager B

Manager C

Manager C

Aggregate + analyze Individual CSFs

Develop agreement on company CFSs

Define company CFSs

Define DSS and database

Use CFSs to develop information systems priorities

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Information and supply chain management Inefficiencies in supply chain such as parts shortages, underutilization of plant capacity, excessive finished goods inventory are caused by inaccurate or untimely information. These supply chain inefficiencies can waste as much as 25% of companys operating costs. If a manufacturing had perfect information about exactly how many units of product customers wanted, when they could be produced, it would be possible to implement a highly efficient justin-time strategy. In supply chain uncertainties arise because many events cannot be foreseen- uncertain product demand, late shipments from suppliers, defective parts of raw material, or product process breakdowns. One recurring problem in supply chain management is the bullwhip effect, in which information about demand for a product gets distorted as it passes from one entity to the next across the supply chain. These changes ripple throughout the supply chain, magnifying what started out as a small change from planned orders, creating excess inventory, production, warehousing, and shipping costs. The bullwhip can be tamed by reducing uncertainties about demand and supply when all members of the supply chain have accurate and up-to-date information members of the supply chain could share dynamic information about inventory levels, schedules, forecasts and shipments, they would have a more precise idea of how to adjust their sourcing, manufacturing and distribution plans. Supply chain management system provides the kind of information that can help members of the supply chain make better purchasing and scheduling decisions. Supply Chain Management Application The central objective of supply chain management systems is information visibility- open and rapid communication and information sharing between members of the supply chain. Supply chain management systems automate the flow of information between a company and its supply chain partners so they can make better decisions to optimize their performance. The supply chain software can be classified as either software to help businesses plan their supply chains (supply chain planning) or software to help them execute the supply chain steps (supply chain execution). Supply chain planning system enables the firm to generate demand forecasts for a product and develop sourcing and manufacturing plans for that product. Such system help companies make better operating decisions such as determining how much of a specific product to manufacture in a given time period. Supply chain execution system

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manage the flow of products through distributing centers and warehouses to ensure that products are delivered to the right location in the most efficient manner. Supply chain performance measurement Companies need to be able to measure the performance of their supply chain management efforts using objective performance information. A metric is a standard measurement of performance. Important metric for measuring supply chain performance include the fill rate, the average time from order to delivery, the number of days of supply in inventory, forecast accuracy, and the cycle time for sourcing and making a product. Supply chain management and the internet: In the pre-internet environment, supply chain coordination was hampered by difficulties of making information flow smoothly among disparate internal supply chain systems as well as external supply chain partners because the systems of suppliers, distributors or logistics providers were based on incompatible technology platforms and standards. Some supply chain integration can be supplied inexpensively using internet technology. Firms can use intranets to improve coordination among their internal supply chain processes, and they can use extranets to coordinate supply chain processes shared with their business partners. Demand driven supply chain: from push to pull manufacturing and efficient customer response Earlier supply chain management systems were driven by a push based model (also known as build-to-stock). In push based model, production master schedules are based on forecasts or best guesses of demand for products, and products are pushed to customers. With new flows of information made possible by web- based tools, supply chain management can more easily follow a pull based model. In a pull based model which is also known as demand-driven model or build- to- order, actual customer orders or purchases trigger events in the supply chain. Transactions to produce and deliver only what customers have ordered move up the supply chain from retailers to distributors to manufacturers and eventually to suppliers. Only products to fulfill these orders move back down the supply chain to the retailer. Manufacturers would use only actual order demand information to drive their production schedules and the procurement of components or raw materials. Practice in Renata: The software currently used in the organization is called Bridging Technology. That means, they are connected to the each of the department through their home made connecting technology. At this moment, they are not fully automated, but in near future, hopefully, they will be fully automated.

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In Renata, their Front End Distribution System is 100% computerized, and Back End Distribution System is 20% computerized. Renata Ltd. has Intranet facilities for the inter connection of total organization. For this, they use World Client software. For accounts purposes, Renata uses renowned software, which is called Troyee. Troyee is effective for accounts purpose because, it records all the entries in a structured format. Renata uses both the manual and computer based information system. Manual systems serve important needs in Renata but they are not the main focal point of our analysis. In the computer based information system Renata uses an array of information technologies including bar-code scanning systems, handheld computers, intranet network, the internet, and many different pieces of software for tracking packages, calculating fees, maintaining customer accounts and managing logistics. There are three dimensions of information Systems in Renata - Organizations, Management, & Information Technology.

Organizations

The organizational structure of Renata is composed of different levels and specialties. Their structure reveals clear-cut division of labor. Experts are employed and trained for different functions consisting of sales and marketing, manufacturing and production, finance and accounting, and human resources. They coordinate work through a structured hierarchy and through its business process. The hierarchy of Renata arranges people in a pyramid structure of rising authority and responsibility. The upper level consists of managerial, professional, and technical employees whereas the lower levels consist of operational personnel. Business process includes formal rules that have been developed over a long time for accomplishing tasks. This rules guides employees in a variety of procedures, from writing an invoice to responding to customer complaints.

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Management:

Managers perceive business challenges in the environment; they set the organizational strategy for responding to those challenges; and they allocate the human and financial resources to coordinate the work and achieve success. Managerial roles and decisions vary at different levels of Renata. Senior managers make long-range strategic decisions about what products and services to produce. Middle managers carry out the programs and plans of senior management. Operational managers are responsible for monitoring the firms daily activities. Information Technology

Information technology is one of many tools managers use to cope with change. Renata uses Computer hardware, software, and storage and communication technology for IT purpose. Computer hardware is the physical equipment used for input, processing and output activities in an information system. Computer software consists of the detailed, preprogrammed instructions that control and coordinate the computer hardware components in an information system. Storage technology includes both the physical media for storing data, such as magnetic disk, optical disc, or tape and the software governing the organization of data on these physical media. Communication technology, consists of both physical devices and software, links the various piece of hardware and transfers data from one physical location to another. Network links two or more computers to share data or resources such as printer. 9.5 Concept: Sourcing is the set of business processes required to purchase goods and services. Sourcing processes include: Sourcing and Renata Ltd.:

Supplier scoring and assessment: It is the process used to rate supplier performance. Supplier performance should be compared on the basis of the suppliers impact on total cost.

Supplier selection and contract negotiation: Supplier selection can be performed through competitive bids, reverse auctions, and direct negotiations. A supply contract is then negotiated with the supplier. A good contract should account for all factors that affect supply chain performance and should be designed to increase the supply chain profit in a way that benefits both the supplier and buyer.

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Design collaboration: Design collaboration allows the manufacturer and supplier to work together when designing components for the final product. Design collaboration with suppliers can result in reduced cost, improved quality, and decreased time to market.

Procurement: It is the process in which the supplier sends product in response to orders placed by the buyer. The goal is to enable orders to be placed and delivered on schedule at the lowest possible overall cost.

Sourcing planning and analysis: The role of sourcing planning and analysis is to analyze procurement spending and supplier performance and use this analysis as an input for future sourcing decisions.

Practice in Renata Ltd.:

1.

The Organization Service Department of Renata Ltd. includes Purchase Department and Distribution Department.

2.

The raw materials procurement system of Renata Ltd. is called Purchase Management System. From the beginning of coming raw materials, and to the reach of end customers, everything is computerized.

3.

The technology used here are simple mail communication for the overall supply chain while keeping track of every movement of inbound and outbound logistics are kept in custom database. Since the procurement is designed for once in a year there are tenders to bid by the suppliers, the management is simple and largely done by the suppliers. For the local supplier the complication is less and supply can happen as per order at any time.On downstream supply chain the communication is web. Every performance on delivery of goods is communicated through web to update database. So present stock level, the delivered lot and present demand from the customer can be traced at every moment.

4. 5.

Renata outsources its raw material, packing material and liquid finished product. Liquid finished products are contract manufactured in Ziska pharma for cost reduction.

6.

For raw and packing materials, suppliers are selected by B2B process. The suppliers then send sample with relevant documents and internal quality control department checks the quality. If it meets the specification then purchase price is considered. Here to maintain the economies of scale is the main goal with maintain

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the minimum reliable quality. If everything matches then negotiation and design collaboration begins and procurement is started. For high demand products, supply lead time considered with great importance. 9.6 Pricing and Renata Ltd.: Concept: Pricing determines the amount to charge customers in a supply chain. Pricing strategies can be used to match demand and supply. Firms can utilize optimal pricing strategies to improve efficiency and responsiveness. Low price and low product availability; vary prices by response times. Components of pricing decision: Pricing and economies of scale Everyday low pricing versus high-low pricing Fixed price versus menu pricing Overall trade-off: Increase the firm profits

Practice in Renata:

1.

Pricing of drug products in Renata are done as per rule set by local drug administration. Renata first calculates the standard cost of the finished product and then adds maximum of 40% profit margin to it. Then they send it to local drug administration for their approval.

2.

They encourage less change overs which support to be efficient. They also get economies of scale by keeping the loading and unloading cot to minimum.

3.

Renata offers its retailers 10% discount on every product every day. Its pricing results relatively stable demand.

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Setbacks in supply chain management of Renata Limited:

The practice by Renata Limited for its supply chain, the Goods Distribution Process (GDP), has been suffering from many problems that a future participant in pharmaceuticals arena should have been eliminated. We can list the shortcomings as following. The system is comparable to the earliest model of supply chain management like Physical Distribution Management (PDM). Here the information management and coordination is least and it is integrated within the organization.

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They need to maintain a safety level of inventory in front end for a period of 8 weeks and in the back end for a period of 8 weeks. This signals more investment done for the working capital. Once a safety level of inventory is maintained, it cost more for storage and management. Just In Time (JIT) eliminated this problem that they are yet to introduce.

Their supply chain is dependent on some intermediaries in back end and their ownmultistage distribution channel in front end. So they arent able to order directly for inputs and supply directly to customers. They havent yet employed any high performing supply chain management software like ERP system. They only rely on the database for the performance judgment and forecasting the future needs based on it. The time lag in back is high as it needs several steps for ordering the new materials and coordination with different agencies.

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Recommendation:

In near future, they have the plan to use Planning Based Improvement process to strengthen their Information System & Supply Chain Management, as per their opinion. Nevertheless we can forward some recommendation based on our understanding of the current position of supply chain management. They are They need to acknowledge the pressure from the competitors and should understand the leaders of their sector that how they are managing the IS and Supply chain. As long as the other related parties in their supply chain network are not concerned B2B e-

commerce and as long as there are legacy system in the regulatory framework, a not integrated supply chain network isnt possible. So there should be a pressure from the industry people to have it done. In future business arena there should be an industrial practice of IS and Supply chain network so that downstream supply chain can be more extended and reaches to consumers. They need to utilize their inventory system more efficiently and warehousing methodology needs to be more organized to save time. Needs to be less conservative about safety inventory.Page 31 of 32

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Conclusion

To conclude, we say it is very vital for a player in pharmaceuticals industry to concentrate on the Supply Chain Management. The strategic fit they have achieved is quite appreciable but the value addition in each stage would be more precise and quantifiable and achieving the strategic fit will be much easier once they started to use a sophisticated supply chain management. The investment and proper aggregated planning in this task will surely be beneficial and it is much waited for those who are entering into the foreign territory.

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