Copy of Project FINAL123

2010

1

SUMMER INTERNSHIP PROGRAM

A REPORT ON

SUPPLY CHAIN MANAGEMENT

OF

ENALTEC LABS Pvt. Ltd.

Submitted To Submitted To

Mr. Dhananjay Phalak Prof. P. C Tungare

General Manager, Enaltec Labs Faculty ITM Navi Mumbai

ACKNOWLEDGEMENT

2

We would like to take this opportunity to acknowledge our gratitude to various people who have

helped us during successful completion of the project. Their systematic guidance has helped us

to complete project in systematic and smooth manner.

With profound sense of gratitude, we would like to acknowledge our sincere thanks to Mr.

Anand Shah, MD and Mr. Dhananjay Phalak, GM of Enaltec Labs for extending their continuous

support and assistance in achieving our project goals. We would also like to thank Mr.

Dhananjay Bhalerao and other staff for providing the best facilities and encouraging me to make

project successful.

We feel highly indebted towards our faculty guide Prof. P.C Tungare, Faculty, ITM Business

School, Navi Mumbai for his constant guidance and support which helped us to make this project

successful.

By:

Bani Dubey (KHR2009PGDMF062)

Pragya Rai (KHR2009PGDMF027)

Institute for Technology and Management,

Navi Mumbai.

Table of Content

3

Sr. No. Particulars Page No.

1. Executive Summary 5

2. Objective of The Project 6

3. Industry Overview 7

4. Introduction of Enaltec Labs Pvt. Ltd. 12

5. About Project 15

6. Process wise Analysis 21

7. Recommendations 40

8

9.

Limitations of project

References

43

44

4

EXECUTIVE SUMMARY

The competitive and global nature of today’s business environment dictates that this direction

and transformation takes place in a way that is efficient and effective as possible. Continuing

emphases on time, cost and quality improvements have sharpened the need to coordinate and

cooperate with trading partners around the world to achieve results that allow customers to be

successful. Thus Supply chain management focuses on the integration of activities across several

companies to manage the flow of products, services, people, equipment, facilities and other

resources.

The report mainly includes the supply chain management in a Pharmaceutical Company (bulk

drug manufacturing). It covers the overview of national and international scenario of

Pharmaceutical Industry. Then a brief overview of the company i.e., Enaltec Labs Pvt. Ltd. The

report covers the existing Supply Chain Management practices at Enaltec Labs., a brief overview

of their major activities which include procurement of raw materials, manufacturing the bulk

drug, packaging & labeling, and finally dispatching the finished product to customers.

The report is divided in six sections:

Part 1- About project consists of an overview and objectives of the project.

Part 2- Industrial Overview consists of International & National Scenario of Pharmaceutical

Industry.

Part 3- Company Overview consists of about Company, List of products they manufacture, type

of market they cater to.

Part 4- Introduction to Supply Chain Management & SCM of Enaltec consists of various major

Supply Chain practices being followed at Enaltec.

Part 5 – Scope of improving SCM consists of various analyses done to show how SCM can be

improved.

Part 6- Recommendations consist of some suggestions on basis of analyses done.

5

PART 1

ABOUT PROJECT

1. About the Project

6

1.1 OVERVIEW OF PROJECT

Our project is aimed at studying and understanding all the current supply chain practices

followed at Enaltec Labs Pvt. Ltd. Once we are done with all the observation part we have done

a detailed analysis of all the factors that may affect the profitability and come in the way of

company attaining full efficiency. If an effort is made to identify all the best practices and think

of a method to implement them right from the procurement stage up to the final product dispatch

a dream of growing to become the most profitable pharmaceutical company can be easily

attained.

1.2 OBJECTIVES OF THE PROJECT

The major objectives of the project are given below: .

1. To understand the existing supply chain of Enaltec Labs.

2. To analyze key components of current supply chain like procurement, manufacturing,

packaging and dispatching.

3. To identify problems in supply chain.

4. To suggest methods to improve the problems in supply chain management.

7

PART 2

INDUSTRIAL OVERVIEW

2.1 GLOBAL SCENARIO OF PHARMACEUTICAL INDUSTRY

8

Globally, pharmaceutical industry grew at a compounded annual growth rate of 9.1 percent in the

last 23 years to $491 billion. Mergers and acquisitions reshaped multinationals. With a slew of

brand name drugs losing patent protection in the next few years and the pressure building for

pharmaceuticals to cut price, these giants find themselves under immense strain to find new

drugs and reduce price. Bringing a new drug into the market costs a company an average of

about $800 to $900 million. Some estimates show that patient recruitment and medical personnel

account for nearly 70 per cent of the clinical costs that are required to bring a drug to market.

The less expensive means to raise research productivity is outsourcing research to low cost

havens such as India and China. The global pharmaceutical outsourcing market stands at $10

billion. Some of the major trends that are expected in the future include mergers and acquisitions

in the industry; new product launches by MNCs and Indian companies; in-licensing of

patented products by Indian companies to launch them in the Indian market and increase

in the number of contract research organizations.

2.2 FACTORS AFFECTING PHARMA INDUSTRY

1. Government Regulations-drug prices, FDA regulations, sales & marketing practices

2. Loss of Patent Protection - patent expiration, bio-generics, legal attack of patent validity, patent law reform, health crises. Patent expiration is no longer the only threat

to patent protection.

3. Industry Player Environment -outsourcing, M&A, spin-outs, future industrystructure. A churning of Pharma Industry players will continue as both large and small companies fight for survival .

4. New Product Development - R&D, poor quality drug candidates, slow production ofnovel drug discovery technology5. Socio-economic Trends -- greater end-user involvement, threat of bioterrorism, epidemiology, DTC advertising & customer confidence, employment, stock market performance, worldwide market

2.3 GLOBAL SCENARIO OF BULK DRUG

9

Bulk Drug Industry is the backbone of the self-reliant Pharma industry in India, playing a

significant role in improving the health standards of the people. The industry consists of Large,

Medium and many small-scale units providing tremendous employment opportunities. Today

90% of the domestic bulk drugs requirement is met by the Indian industry itself. United States is

the largest contributor to world market with about 26% of market share followed by Japan with

9%. India’s contribution to the world market is insignificant. The growth and achievement of the

Indian Drug Industry during the last five decades has been phenomenal and has been rated as one

of the highest among the developing countries. India’s bulk drug and pharmaceutical industry

today has grown into a highly sophisticated one, meeting the international standards of

production, technology and quality control. R&D plays a very important role in Drug and

Pharmaceutical Sector. This sector has to fulfill the various regulatory norms right from the pre-

production stage until the product reaches the final consumer.

2.4 THE NATIONAL SCENARIO

10

World Sales Projections

The Indian Pharmaceutical Industry today is in the front rank of India’s science-based industries

with wide ranging capabilities in the complex field of drug manufacture and technology. A

highly organized sector, the Indian Pharma Industry is estimated to be worth US $ 4.5 billion,

growing at about 8 to 9 percent annually. From simple headache pills to sophisticated antibiotics

and complex cardiac compounds, almost every type of medicine is now made indigenously.

Playing a key role in promoting and sustaining development in the vital field of medicines,Indian

Pharma Industry boasts of quality producers and many units approved by regulatory authorities

in USA and UK. International companies associated with this sector have stimulated, assisted

and spearheaded this dynamic development in the past 53 years and helped to put India on the

pharmaceutical map of the world. Following the de-licensing of the pharmaceutical industry,

industrial licensing for most of the drugs and pharmaceutical products has been done away with.

Manufacturers are free to produce any drug duly approved by the Drug Control Authority.

Technologically strong and totally self-reliant, the pharmaceutical industry in India has low costs

of production, low R&D costs, innovative scientific manpower, strength of national laboratories

and an increasing balance of trade. The Pharmaceutical Industry, with its rich scientific talents

and research capabilities, supported by Intellectual Property Protection regime is well set to take

on the international market.

Estimated Indian Potential Market :

11

PART 3

COMPANY OVERVIEW

3.1 INTRODUCTION TO ENALTEC LABS

12

Enaltec Labs is a fast emerging API (Active Pharmaceutical Ingredients) manufacturer & supplier in India set up by a group of young professionals with the specific objective of providing the critical India advantage to generic formulators across the world.

The paradigm shift of leading Indian pharmaceutical companies to target high volume and blockbuster products for regulated markets has been the inspiration behind the launch of Enaltec labs. We undertake both contract research and manufacturing to meet the API needs of pharmaceutical and bulk drugs manufacturers.

As a leading pharmaceutical API manufacturer and supplier, Enaltec Labs is one of the few independent Indian API suppliers with world class infrastructure, having no intention of competing with its customers in their home market. Enaltec Labs has been set up to support the customers to compete against the on slaught of integrated Indian pharmaceutical companies and act as partner of choice for providing them a competitive advantage in their home market.

Enaltec Labs has evolved a region based business strategy based on its core competence technology.

3.2 VISION & MISSION OF ENALTEC

Enaltec Labs' mission is to develop and produce complex, small volume, technology driven products required by the generic industry, thus filling in the gap left by the large Indian pharma companies.

3.3 PRODUCTS LIST

Products of less regulated market:

Anti Acne - Adapalene, Tazarotene

Anti Asthmatic - Montelukast Sodium

Anti Biotic - Lymecycline, Moxifloxacin Hydrochloride

Anti Convulsant - Lacosamide, Safinamide

Anti Depressants - Duloxetine Hydrochloride, Escitalopram Oxalate, Reboxetine Mesylate

Anti Diabetics - Glimepiride

13

Anti Epileptic - Pregabalin, Topiramate

Anti Histamine - Desloratadine, Olopatadine Hydrochloride

Anti Hypertensive - Olmesartan Medoxomil, Telmisartan

Anti Hyperuricemic - Febuxostat

 Anti Migraine Agent - Almotriptan, Eletriptan, Rizatriptan, Sumatriptan, Zolmitriptan

Anti Osteoporosis - Strontium Ranelate

Anti Parkinson - Pramipexole Dihydrochloride

Anti Platelet - Prasugrel Hydrochloride

 Anti Protozoal - Nitazoxanide

 Anti Psychotic - Olanzapine

 Anti Spasmodic - Darifenacin Hydrobromide, Trospium Chloride

Lipid Lowering Agents - Atorvastatin Calcium, Ezetimibe, Rosuvastatin Calcium

Opthalmic - Brimonidine Tartrate, Bromfenac Sodi

3.4 MARKET SCENARIO

Enaltech is at the moment having presence in both the Regulated and Non Regulated market.

3.4.A  Regulated Market

A regulated market or controlled market, is the provision of goods or services that is regulated by a government appointed body. The regulation covers the terms and conditions of supplying the bulk drugs and in particular the price allowed to be charged. Countries included in this category are: Mexico, Turkey, S. Korea, Brazil Argentina, China, Iran etc. Since such markets require cost competitiveness and price advantage available here are not as huge as regulated markets. Enaltec has dedicated plant with focus on these markets complying to the regulatory requirements of these countries, and which supports cost effective way for production of products with focus and it has successfully filed various process patents in some of these markets.

Enaltec follows various strategies to cater to regulated market. These are as under :

14

Focus on small volume APIs, which could be of no commercial interest for large API

manufacturing companies as their plant scale will not make it economically feasible to

manufacture such small volume products at competitive price like Nepafenac,

Bromefenac etc.

Develop APIs where there are no active DMFs operating in US or EU.

To develop specific technology based APIs, like prostaglandins etc.

To develop products close to approval dates of brands, so that Enaltec would be the lone

supplier initially to work at R&D stage with generic companies fairly early so that the

relationship is locked. This will also enable Enaltec to be a new product premium

supplier and better relationships with generic companies.

To develop IP strategy for molecules which are yet to be approved and file process

patents, polymorph/salt patents encompassing the product which would provide a unique

platform for the company to partner with generic companies.

For various integrated companies these markets are more attractive on launching generic

formulations as these markets also have faster registration process.

3.4.B Less Regulated Market

Less Regulated markets include countries like India, Syria, Egypt, Pakistan, Bangladesh etc.

Enaltec adopts a completely different strategies for these markets:

New products - which are first time in these countries (not yet off patent in regulated

markets). Generic companies in such markets are continuously looking for new products

launched and approved in regulated markets.

Develop cost competitive products - Products which are already existing in markets with

few restricted manufacturers; Enaltec with its chemistry capabilities would pick up such

products work on cost competitiveness and tie up with generic companies to offer such

products.

15

3.5 SWOT ANALYSES ENALTEC LABS

STRENGTHS

No inventory pile up

Supplier of small as well as large orders of APIs

Low cost manufacturing

Availability of Trained Scientific Personnel

Well developed Infrastructural facilities

WEAKNESS

No proper model followed, random planning

Low margins

Low investment in R & D

Finance available at high rate of interest

Poor coordination with Govt. bodies and other related Organizations

Small storage capacity

OPPORTUNITIES

Export segment good

Increasing requirement

Expansion (both regulated and unregulated market)

Large untapped domestic market

THREATS

Counterfeit drugs being sold in competition with legitimate products

China threat – capacity to deliver huge quantity at low price

Competition is increasing

Burden of Taxes increasing day by day

Product Patent Law will be made compulsory

16

PART 4

INTRODUCTION TO SCM

&

SCM OF ENALTEC

4.1 INTRODUCTION TO SUPPLY CHAIN MANAGEMENT

17

The movement of a product or a service from supplier to customer takes place with the help of

organizations, people, technology and resources. According to Terry Harrison “a supply chain is

a network of facilities and distribution options that perform the functions of procurement of

materials, transformation of materials into intermediate and finished products and the distribution

of the finished products to customers”. Supply chain finds its place in both services as well and

manufacturing industry. Supply chain can also be explained as the association of the retailers,

distributors, transporters and suppliers who come together and share the process of sale, delivery

and production of a particular product or service.

Supply chain management is an efficient way of managing the above mentioned activities.

According to Jessie Chinami Supply chain management can be defined as “an oversight of

materials, information and finances as they move in a process from supplier to manufacturer to

wholesaler to retailer and finally to the consumer”. The basic aim of supply chain management is

coordinating and integrating the flow which takes place within and among companies.

The basic three types of supply chain management flows are:

The product flow

The information flow

The finances flow

The product flow deals with the goods and services that are subjected to movement from a

supplier to a customer and vice-versa. The information flow manages the upgrading as well as

management relating to the status of the delivery process while the financial flow manages all

the finances related to the delivery process.

18

A schematic diagram of the Supply chain management process is as shown. The various

processes in Supply chain management are:

Supply chain strategy

Logistics

Procurement

Asset management

Enterprise applications

Supply chain planning

.

The decisions associated with supply chain management cover both the long-term and short-

term. Strategic decisions deal with corporate policies, and look at overall design and supply

chain structure. Operational decisions are those dealing with every day activities and problems of

an organization. These decisions must take into account the strategic decisions already in place.

19

Supply chain management

Therefore, an organization must structure the supply chain through long-term analysis and at the

same time focus on the day-to-day activities.

Furthermore, market demands, customer service, transport considerations, and pricing

constraints all must be understood in order to structure the supply chain effectively. These are all

factors, which change constantly and sometimes unexpectedly, and an organization must realize

this fact and be prepared to structure the supply chain accordingly.

Structuring the supply chain requires an understanding of the demand patterns, service level

requirements, distance considerations, cost elements and other related factors. It is easy to see

that these factors are highly variable in nature and this variability needs to be considered during

the supply chain analysis process. Moreover, the interplay of these complex considerations could

have a significant bearing on the outcome of the supply chain analysis process.

There are six key elements to a supply chain:

1 . Production 4..Transportation

2 . Supply 5. Information

3 . Inventory 6.Location

Integrated supply chain module which involves many channel partners in every junction of

supply chain operations as follows:

20

4.2 SUPPLY CHAIN MODEL OF ENALTEC

21

The customer submits an order in sales department from where the order entry is been made and

the production department is informed about it. Also in the accounts department the price

specifications are been given for making the bills. The production department prepares the

material requisition slip which is been sent to the purchase department. The procurement

department sends the purchase order to the raw material suppliers. After the procurement the

quality is been checked and then the production of API starts. After completion its goes to the

quality assurance department for assuring the quality of the drug according to the norms. Then

the drug is been dispatched to the customer besides this the accounts department sends the

customer bills invoice which the customer pays as per terms

4.3 MAJOR SUPPLY CHAIN ACTIVITIES

Following is a block diagram depicting the activities done by Enaltec

The Support Activities are further divided like the procurement has two parts i.e procurement of critical items and procurement of non- critical items.

Now we will do a process wise analysis of the company to do our analysis and come out with

some findings and suggestions that can be adopted.

22

SUPPLY CHAIN ACTIVITIES

MAJOR ACTIVITIE

S

Manufacturing,

R&D

SUPPORTACTIVITIE

S

Finance,HR

Packaging,Dispatching

4.3A PROCUREMENT

At present there are three subdivisions of procurement – Raw Material Procurement (Domestic), Raw Material Procurement (Imported) and procurement of Revenue Items (Non Critical Items).

Purchasing process at Enaltec

4.3B MANUFACTURING

1) GOOD MANUFACTURING PRACTICES

Enaltec Labs Pvt. Ltd. has implemented current Good Manufacturing Practices in its

system. Good manufacturing practice is part of a quality system covering the

manufacture and testing of active pharmaceutical ingredients. GMPs are guidelines, and

in some countries such as the USA regulations, that outline the aspects of production and

testing that can impact the quality of a product. Many countries have legislated that

pharmaceutical and medical device companies must follow GMP procedures, and have

created their own GMP guidelines that correspond with their legislation..

23

2) GMP PROCESS FLOW

.

3) CONTRACT MANUFACTURING IN ENALTEC

Enaltec has a pre-existing long-term relationship with other small API manufacturers for

contract manufacturing of a patented API and intermediates. As the patents for the active

pharmaceutical ingredients expire and competition is hotting up with several new players

entering the arena, Enaltec is increasingly focusing on low cost manufacture of APIs and thus

believes in contract manufacturing.

Apart from reducing the cost of manufacturing of APIs , Enaltec is able to increase the reach

and speed of response reducing the cost of customer without compromising the basic strength

of company.

24

Quarantine Sampling Testing Review/release GMP storage

Batch record In-process controls Operations Intermediate

release Deviation/ per SOP

Batch records

Testing per spec

Generation of COA

Release by quality unit

Deviation / per SOP

Raw Material Receiving GMP Production Release Testing

Process Development Analytical Development Generation Of MPR’s Generation Of Specs (RM,

Intermediates, FP)

Development Runs

Package /batch record Label generation by

QA Inspection of the

packed material by QA

GMP Storage Ship Material

Package/Ship

5) JUST IN TIME

The core logic of JIT is one of the elimination of wastes in a manufacturing system using a

deliberate method. It means to have a method by which the buffer is withdrawn from the system.

Implementation of JIT requires that the manufacturing architecture is converted into chain of

internal customers. Each element in the chain will have customer-supplier relationship with the

adjacent element

At Enaltec Just In Time manufacturing is done, i.e., a customer order triggers the production.

Main elements of JIT system are:

Lot size reduction

Use of standard containers

By implementing JIT manufacturing system Enaltec is not only able to do proper planning

and scheduling but also it is able to reduce its inventory cost.

6) PRODUCTS OF LAST QUARTER

% Of Products Produced in Last Quarter

154 139

864

159

RosuvastatinMontelukastMoxifloxacinothers

Moxifloxacin is the major drug that constitutes more than 65% of the total production. So in order to get better insight of Manufacturing we chose Moxifloxacin as the main drug.

25

7) ABOUT MOXIFLOXACIN

Moxifloxacin is a fourth generation synthetic fluoroquinolone chemotherapeutic agent developed by Bayer AG. It is marketed worldwide (as the hydrochloride) under the brand names Avelox, Avalox and Avelon for oral treatment. In most countries the drug is also available in parenteral form for intravenous infusion. Moxifloxacin is also sold in an ophthalmic solution (eye drops) under the brand name Vigamox for the treatment of conjunctivitis

8) RAW MATERIALS REQUIRED FOR MANUFACTURING MOXIFLOXACIN AND ITS SUPPLIERS

Nonane – Zhejiang Chemical (imported from china)

Triethyl Amine – Neha Enterprises

Hcl – Unique Fine Chimicals

MDC - Neha Enterprises

IPA - Neha Enterprises

Methonol – Urmi Chemicals

Active Charcoal – Vimal Enterprises

Hyflow – Gem Corporation

Acetone - Urmi Chemicals

Gati Easter - Zhejiang Chemical (imported from china)

Zinc Chloride – Meru Chemicals

Boric Powder – R R Enterprises

Acetic Anhydride - Urmi Chemicals

26

9) MOXIFLOXACIN HYDROCHLORIDE PROCESS VALIDATION PROTOCOL

Stage A

Reaction

Isolation

Centrifuge

Stage A

Stage B

Reaction and Distilation

IPA Ph adjustment

Conc HCL(CP) Centrifuge

Stage B

27

Gati Easter

Zinc Chloride

Boric Power

Acetic

Nonane

MDC

TEA

Stage C

Dissolution

Hyflow Filtration

Conc HCL(CP) Crystallization

Acetone,Iso propyl alcohol Centrifuge

Final Product

Machine capacity Customer demand Actual output0

1

2

3

4

5

6

28

Stage B

Methonol

Activated Charcoal

4.3C QUALITY:

As the pharmaceutical industry has traditionally focused upon the application of Good

Manufacturing Practice (GMP), it has been slow to consider the potential benefits to be gained

by implementing an EN ISO 9001 Quality Management System (QMS).

Over the last few years the global pharmaceutical market has undergone significant change,

forcing pharmaceutical companies, more than ever before, to focus on customer needs and upon

their own internal efficiency in order to continue to compete effectively.

1) QUALITY ASSURANCE

In order to assure quality Enaltec uses following strategies :-

Audit of Manufacturing facilities: To ensure compliance to ICH Q7A and assure product

integrity.

Audit of suppliers of critical raw materials: To ensure that input raw materials have the

desired purity.

Technology Transfer activity: To ensure that the development work at R&D are in

compliance to c GMP requirements and the manufacturing units receive an accurate

process package.

Documentation and data control – To ensure data and document control and trace ability.

Qualifications and Process Validation – To ensure that all equipments/instruments are

qualified and all operations are validated.

Change Control, Customer Complaint and Corrective action – To ensure compliance.

2) QUALITY CONTROL ACTIVITIES

Following are the major activities followed by Enaltec in order to control the quality of finished

products.

Raw material and Packing material testing.

In process testing.

Finished product testing.

Microbiological monitoring of Water system, Finished product and Clean areas.

OOS Investigation

Control sample management.

29

Stability Studies and Hold time studies of Intermediates.

Trend analysis of Intermediates and Finished Products.

Qualifications and Validations.

4.3D PACKAGING AND LABELLING

There is a written procedure in Enaltec in which describing the receipt, identification, quarantine,

sampling, examination and/or testing and release, and handling of packaging and labeling

materials.

Packaging and labeling materials are conformed to established specifications. The Company

maintains records for each shipment of labels and packaging materials showing receipt,

examination, or testing, and whether accepted or rejected.

PACKAGING SYSTEM

The API is been packed in 3 steps before dispatch:

Inner bag (Twist –tied)

HDPE

Middle bag

LDPE

Outer bag

HDPE Drums

4.3E TRANSPORTATION

APIs are released for distribution to third parties after they have been released by the quality

unit. They are transported in a manner that does not adversely affect their quality. Special

transport or storage conditions for an API or intermediate is stated on the label.

The company ensures that the contract acceptor (contractor) for transportation of the API or

intermediate knows and follows the appropriate transport and storage conditions. Goods

movement options for Enaltec are Trucking, Railways , Airfreight, Waterways.

30

The operating characteristics of different transportation modes are given below:

Transportation Modes: Characteristics Comparison

CHARACTERISTICS ROAD RAIL WATER AIR

Speed 2 3 4 1

Investment 1 2 3 4

Freight Cost 4 3 1 5

Reliability 2 3 4 5

Frequency 2 3 4 5

Capability 4 3 2 5

The table shows the operating characteristics of different transportation modes where the lowest

rank is the best.

4.3F REVERSE LOGISTICS

WASTE WATER RECYCLING (ETP PLANT):

Effluent Treatment Plant or ETP is used by in the plant to purify water and remove any toxic and

non toxic materials or chemicals from it. During the manufacturing process of drugs, varied

effluents and contaminants are produced. The effluent treatment plants are used in the removal of

high amount of organics, debris, dirt, grit, pollution, toxic, non toxic materials, polymers etc.

from drugs and other medicated stuff. The ETP plant uses evaporation and drying methods, and

other auxiliary techniques such as centrifuging, filtration, incineration for chemical processing

and effluent treatment.

31

PART 5

SCOPE OF IMPROVING SCM

SCOPE OF IMPROVEMENT IN EXISTING SCM OF ENALTEC

32

After doing thorough study about SCM practices at Enaltec, we found several scope of

improvement in existing SCM, mainly in Procurement, Manufacturing and Reverse Logistics.

5.1 PROCUREMENT

At present Enaltec does not follow any strategies for procuring raw materials. It procures

everything as and when demand arises, which leads to many problems like procuring at higher

rate, late delivery, poor quality and so on. So, we recommended them to follow understated

strategies.

PURCHASING TECHNIQUES & STRATEGIES

1) VENDOR SELECTION

Vendor selection steps:

1. Vendor evaluation

Identifying & selecting potential vendors

2. Vendor development

Integrating buyer & supplier

Example: Electronic data exchange

3 Negotiations

The negotiation strategy followed by Enaltec is cost-based price model in which it

specifies period of agreement, price, delivery terms etc.

2) VENDOR RATING OF MOXIFLOXACIN SUPPLIERS

At present Enaltec does not follow vendor rating strategy, as it procures materials on adhoc basis

in order to meet demand. So, we tried to find out who is the best supplier out of all by doing

Vendor Rating for the suppliers of Moxifloxacin, as it is the most important drug on basis of

sales of last quarter.

33

In the following table we have done a comparison between 7 different vendors. For our study we

have given delivery a weight age of 60% and Quality a weight age of 40%. Based on the actual

data obtained from the procurement department we have got the following figures.

For example: Out of 26 times Vimal Enterprises has delivered raw materials 26 times on time,

and for 25 times the quality of the materials supplied by them was up to the mark.

Recommendations:

a) Enaltec should prefer buying the raw material from Vimal Enterprises, Gem Corporation

and Unique Fine Chemicals.

b) Neha Enterprises and R. R Enterprises should be informed for their late deliveries.

c) Procurement of urgent raw material should not be done from Meru Chemicals and it

should be warned for its late delivery.

3) PROCUREMENT OF NON-CRITICAL ITEMS

34

SUPPLIER DELIVERY(60%) QUALITY(40%) TOTAL RATING

Neha Enterprises 0.60X29/35X100 0.40X34/35X100 88.57

Unique Fine Chemicals

0.60X40/42X100 0.40X42/42X100 97.14

Urmi Chemicals 0.60X27/31X100 0.40X28/31X100 88.38

Vimal Enterprises 0.60X26/26X100 0.40X25/26X100 98.46

Gem Corporation 0.60X31/32X100 0.40X32/32X100 98.12

Meru Chemicals 0.60X17/27X100 0.40X26/27X100 76.29

R .R Enterprises 0.60X34/38X100 0.40X38/38X100 93.68

As today Enaltec gives equal importance to critical (Raw Materials) and non critical (revenue)

items, and spends a lot of effort and time in procuring them.

We propose Enaltec Labs to go for outsourcing of the procurement of Non critical (Revenue)

Items. As a lot of time is consumed in procuring the items. Since it is a manufacturing unit, The

Company's main focus should be on procuring the raw materials. In which three factors are more

important i.e., Quality, Timely Delivery and Price. Thus instead of wasting time in procuring non

critical items, the Company should go for its outsourcing.

Here we have taken the help of a simple mathematical equation to make our point more clear.

Due to lack of data we have assumed the costs.

Cost involved in purchasing (Rs)

Wages of purchase department employees aInward cost bPaperwork cFollow up dStorage eTotal X

Cost involved in procurement outsourcing:

Fees of the procurement outsourcing firm = Rs. Y (Let)

Amount saved = Rs. Y-X

Recommendation:

Enaltec should do procurement outsourcing for non – critical items after calculating it with actual

data.

5.2 MANUFACTURING

35

In order to find out the key products of Enaltec we did their ABC classification on the basis sales data for last 10 months. So, that company can lay more emphasis on type A products and pay less concentration towards type C products. It will also help the Company to transfer their resources from Type-C products to Type-A products in case of emergency.

5.2 (A) ABC ANALYSES OF PRODUCTS

ON THE BASIS OF SALES (10 months)

PRODUCTS TOTAL SALES(Qty-Kg)

%

Moxifloxacin Hydrochloride 1833 24Montelukast Sodium 344.9 4Adapalene 5.32 0.06Glimepiride 377.9 5Rosuvastatin 174.6 2Nepafenac 4.55 0.05Ezetimibe 16 0.2Nitazoxanide 2274 29Trospium Chloride 15 0.2Prasugrel Hydrochloride 46.35 0.6Strontium Ranelate 302 4Febuxostat 80.1 1Telmisartan 783 10Tazarotene 2 0.02Olmesartan Medoxomil 66 1Desloratadine 81.6 1Brimonidine Tartrate 4.4 0.05Solifenacin 3 0.03Tenoxicam 12 0.2Risperidone 70 1Topiramate 1273 16

Thus the classification of products as per sales would be: Product A Product B Product CRisperidone Glimepiride Prasugrel HydrochlorideMoxifloxacin Hydrochloride Montelukast Sodium Ezetimibe

Topiramate Strontium Ranelate Trospium ChlorideTelmisartan Rosuvastatin Tenoxicam

Febuxostat AdapaleneOlmesartan Medoxomil NepafenacDesloratadine Brimonidine Tartrate

36

Risperidone SolifenacinTazarotene

Note:

Product A - Most Important (sells more than 10%)

Product B - Less Important (sells more than 1%)

Product C - Least Important (sells below 1%)

5.2(B) ORDER ANALYSIS

It can be seen that the production of moxifloxacin in the company fluctuates greatly. The

maximum amount produced is 364 Kg while the minimum amount is 85 Kg. So, it is difficult to f

forecast the demand. Hence in order to find the minimum amount of Moxifloxacin the company

must produce, we did Order Analysis.

In this we tried to find out what is the fixed demand (green line) which came out to be the mean

of total sales to Getz Pharma (Sister Co.). Then the average of difference of total sales (blue) of

each month and fixed demand came out to be Mean of Variable Demand, which is the minimum

amount of Moxi Enaltec Should produce.

MOXIFLOXACIN SALES (LAST TEN MONTHS)

Aug Sept Oct Nov Dec Jan Feb March April May0

50

100

150

200

250

300

350

400

Total SalesTotal Sales to Getz Pharma Average sales to Getz PharmaMean of The Variable Demand

Recommendation

37

Thus Enaltec should plan to produce the moxifloxacin as per the value of the mean variable

demand and accordingly should raise the quotation to the suppliers of the raw material.

This would help Enaltec in not only scheduling the batches for production but also they can order

for the raw material to their suppliers beforehand and can bargain their suppliers to provides raw

material at the most competitive price.

5.3 REVERSE LOGISTICS

REUSE OF HDPE DRUM :

I. CURRENT SCENARIO

At present the company purchases HDPE drums as a secondary packaging material. These drums after packaging are being dispatched to the respective customers.

II. PROPOSED PLAN

Here we recommend Enaltec, to request their customers to send back the empty drums. The customers can resend the earlier drums which were dispatched by Enaltec at discounted price, at the time of new delivery. This would help Enaltec to offer the products at a lower price to their customers and customers would get the product at lower price. Thus it would be a win- win situation for both the parties.

III. COST ANALYSIS

If we compare the cost of purchasing one drum and supposing we can reuse it thrice at least,(as

the durability of HDPE drums is quite high) with the cost of procuring four drums, we came out

with following results.

PRICE OF PURCHASING 4 DRUMS :

1. Rs.200 x 4 = Rs 800. (Here the cost of one HDPE drum is Rs. 200).

COST INVOLVED IN REUSING A DRUM (Rs)

38

a. Transportation and Labour cost 60

b. Labour Cost in Washing and Vacuum Cleaning 30

c. QC 20

d. Overheads (a.+ b.+ c.)10% 11 (10% of a+b+c)

Total (a. +b.+ c.+ d.) 121

2. Cost Involved In Reusing A Drum Thrice : 121 x 3 = Rs 363

3. Total Cost Involved In Purchasing A Drum and Reusing it thrice = 200 + 363 = Rs 563

4. Amount Saved: Rs 800 – Rs 563 = Rs. 237

This money saved can be either used to offer the product to the customers at lower price, which

will provide Enaltec a competitive edge over its competitors or as profit itself, which will

increase the revenue of the Company.

Discount (%) Profit (%) Price of Prod. (Rs X) Increase in Profit (Rs)

100 0 X-237 0

80 20 X-189.6 47.4

60 40 X-142.2 94.8

50 50 X-118.5 118.5

20 80 X-47.4 189.6

0 100 X 237

5.3 IMPLEMENTING ERP

39

1. NEED OF ERP

At present no ERP is implemented in Enaltec, everything is done manually. There are many limitations that the company has to grope with, including the chances of datacorruption in case of power failure. There are also limitations with regard to how many tables and indexes can be created. Says Mr. Dhananjay Phalak, the company’s General Manager for Production, “Since the system is based on DOS, modifying reports is tedious because even formaking small reports one has to write programs—a time-consuming affair. In addition, thepackage is not integrated with the system running at the other manufacturing plant”.

WHY ERP ?

Stringent Regulations

API manufacturing companies are driven by stringent norms and regulatory standards.From managing critical manufacturing operations to delivering the quality products, solid integration is the need of the hour. ERP would help the company to comply with the stringent norms and standards automatically.

Latest Compliance Guidelines

In the API Industry new regulations and guidelines are continuously published. ERP continuously issues updates that keep the system current and compliant.

2. BENEFITS OF ERP FOR ENALTEC

Enaltec will be able to gain better insights into its manufacturing processes through an ERPdeployment. Tighter control on costing will be a big benefit. As the Company is a Medium scale Company, it will be too costly to go for many ERP Modules. It is recommended that it should go for Phase-wise Implementation of ERP modules. In current scenario production is major activity at Enaltec, Where each task like- Capacity Planning, Batch Scheduling, etc. is done manually. Which consumes a lot of Time and Effort.

3. SELECTION OF ERP PACKAGE

A standardized package requires a large investment. It needs a solution which would gel with the existing systems and is customizable.The choice of ERP Package should not come easily, and many packages vendors should be evaluated before reaching to a decision. There should be a thorough research about number of ERP installations at different companies, and find a package to be the best as far as meeting their requirements is concerned.

4. TOP TEN VENDORS OF ERP

i. SAP

40

ii. Oracle iii. PeopleSoftiv. invensys v. ABB Automation

vi. i2vii. SSA Global Technologies

viii. Intentia Internationalix. Epicor x. Lawson Software

We tried to find out whether other such companies have implemented ERP or not & if yes, then which one. We found out the successful running of SAP ERP at companies such as Kemwell Balsara Home Products, Dystar India and Bilag Industries. mySAP has a proven track record in the pharma industry, and complies with good manufacturing practice. It is also compliant with the US Food & Drug Administration standards.

5. PERFECT INTEGRATION

Once the ERP package is implemented perfectly, It will bring several benefits to the Company. Once the system will go live then the production module will be running online in real-time. The system, which has been extended to both manufacturing plants, will be integrated perfectly. The major benefit has been that as everything will be done automatically, and it will be easier for them to churn out the requisite information.

The new system will act as a boon for Enaltech’s customers as they can find out the production status online in real-time. In the pharma industry, being able to track production and control quality is everything. Since the parameters for quality control have been incorporated in the system, it will sound an alert in case a finished product is not up to pre-set norms. As far as manufacturing is concerned, the system can lead to better production planning. It is easier to drill down to specifics of raw material as to when it arrived, how much was used, etc.

41

6. ERP PRODUCTION MODULE

Demand figure from sales department and bills of materials of every product, decide

Master Production Schedule.

Master Production Schedule includes production schedule for each and every product.

Which product to produce? When to produce? In what quantities to be produces? What

are the raw materials required? On what machines to be produced? Etc.

Based on the Master Production Schedule, raw materials requirement details are going to

be sent to Purchase department and Production Schedule is going to be sent to Production

Department.

42

Purchase department purchase the required materials and send those to Production

department and remaining quantities are going to be sent to warehouse for future

requirement.

Finished Products produced are going to be stored in warehouse again. And from

warehouse finished products are going to be supplied to clients based on the demand

figures from sales department. The remaining finished goods are sent to distributors.

Finally the invoice is generated from the system.

43

RECOMMENDATIONS

1. WASTE MANAGEMENT

Enaltec Labs can keep lab and office equipment out of landfills by donating it to local primary

and secondary schools, universities, and science centers. The company can also reduce incoming

junk mail by providing employees with postcards that request removal from mailing lists.

2. VENDORS AND VENDOR RATING

Enaltec should develop long-term “partnering” arrangements with a few suppliers who work

with the company to satisfy the end customer i.e it should follow few suppliers purchasing

strategy.

3. PROCUREMENT OUTSOURCING

Enaltec should go for procurement outsourcing of Non- Critical items or revenue items. It will help it to concentrate more on core activities like manufacturing and R&D. Also it will save lot of time and effort of employees.

4. IMPLEMENTING ERP MODULES

Enaltec should go for phase wise implementation of ERP starting from Manufacturing module, as it is it’s the primary activity. This would also be more cost efficient.

It will help Enaltec to gain better insights into its manufacturing processes through an ERPdeployment. Tighter control on costing will be a big benefit. As the Company is a Medium scale Company, it will be too costly to go for many ERP Modules. It is recommended that it should go for Phase-wise Implementation of ERP modules. In current scenario production is major activity at Enaltec, Where each task like- Capacity Planning, Batch Scheduling, etc. is done manually, This consumes a lot of Time and Effort.

44

LIMITATIONS OF PROJECT

This project has the following limitations:

1. Detailed data regarding working of Enaltec Labs may not be obtained because in the

company view they are considered sensitive.

2. Secondary data means that some of the information will be subject to verification.

3. The project issues/suggestions will be specific to the Dombivili Plant, where the project

is executed.

4. The project will have constraint on the learning because of shortage of time.

45

REFERENCES

1. http://www.enalteclabs.com

2. http://en.wikipedia.org/wiki/enaltec_labs

3. Supply Chain Management by Sunil Chopra, Peter Meindl and D. V. Kalra

4. Principles of Supply Chain Management by Joel D. Wisner, G. Keong Leong and Keach Choon Tan

46