In Hilton Pharma supply chain is a customer satisfaction operation which starts with customer and end with customer. In Hilton Pharma supply chain concept is customer oriented; customer has need that need generate demand and against that demand material management derives in which they do forecasting than after that operation starts with planning than procurement and then quality assurance because whatever they procure it must meet as per required standard. Then it transfers to warehouse and once they got clearance after quality assurance than the process of manufacturing starts and then manufactured finish goods again goes to warehouse. In between warehousing and manufacturing quality assurance again comes, after when the finish good is placed in the warehouse it goes through the process of final distribution and then final operation i.e. sales and marketing, after sales and marketing they got customer feedback when customer consume the medicine. This whole chain and flow of information, product and services form a supply chain.
INTRODUCTION
Hilton Pharma Company is one of leading company in pharmaceutical industry. Basically, Hilton Pharma is the member of Progressive group of companies. Hilton Pharma is renowned as largest national pharmaceutical company in Pakistan. Hilton Pharma is valued for its entrepreneurship and strong ethical standards. Since the beginning of Hilton Pharma, they are recognized as highly focused on the research for their products. They always launched products under licensed from the verification of world famous pharmaceutical research centres. Hilton Pharma constantly comes up with innovative market strategies to sustain for long time period in the market and positioned their products in related therapeutic areas.
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Hilton Pharma has spectacular position in market due to its continuous focus on research and development department, innovative marketing strategies, human resource management, team work and new production facilities. Their ultimate goal is to produce healthy products for the nation. They have been collaborated with multinational companies for research of their products which indicates that they produce highly innovative products for the consumers.
Hilton Pharma is also committed to strictly devoted with international standards of quality products and current Good Manufacturing Practices – GMP. Hilton Pharma miles stones are that they have been awarded for ISO 14001 and another biggest achievement is ISO 9001:2000 certifications.
DEMAND
CUSTOMER NEED
Pharma is not catering customer need directly but in generic they know that in the respective geographical region they have specific disease and for that specific disease they have certain solutions. So pharma after analysing their capability and resources captures their target area where they can best serve their customer up to their potential. For specific disease they perform external analysis through market survey to watch out the potential in the market, how many patients and how many companies are operating in that area, based on that available information they plan how much percentage of market shares they can achieve. After that they perform internal analysis, in which they analyse their potentiality of marketing competency and strength of sales team on that basis demand forecast is generated by sales and marketing experts.
Hilton forecasts its demand on 12 month rolling bases. There are two types of demand:
Seasonal Requirement: In seasonal requirement demand is based on seasonal variations, like now day malaria and typhoid is wide spread so they emphasise their production planning on that products which caters those diseases, likewise in summer diarrhoea and loose motion is common so the product catering to that disease will must be in the pipeline.
Common Sales Trend: These are those common medicines which are not catering any seasonal diseases.
Generally Hilton pharma is performing annually; 12 months forecast on both these basis.
ABNORMAL DEMAND
There are two types of sources of abnormal demand in Hilton pharma:
Institutional orders: institutions like Pakistan army any time give their demand and they have to supply it in limited time frame
Uncertain conditions: this demands comes due to uncertain situations like flood or epidemic disease in which they have to fulfil the demand in restricted time period
Hilton pharma has generally calculated its capacities on 1 shift operation basis and respective production planning is done according to this capacities. But due to abnormal demand and emergency cases they have to run 2nd shift and 3rd shift operations after the permission of top management to cater the additional demand. They will not make it is as practice because it can hamper their GMP (good manufacturing practices). They do not unnecessarily use the capacities more than the need. To solve this issue they go for over time plus new hiring of labours because fresh employees give more output than that employee who worked from morning till night. New fresh employees are blend with experienced employees on the production floor to make a team of equivalent capable of producing.
MATERIAL MANAGEMENT
The forecasted demand moves toward the material management department. In material management, Hilton pharma look out for how to fulfil this independent demand requirement generated from the forecast. They evaluate the available stocks they have it in the finish good form and semi-finish form in their warehouse. Then they take information from distributors that how many stocks they are holding. After analysing the entire material requirement present in the warehouse and distribution centre, company finally deduces their stock requirement. And when the stock requirement got evaluated they will analyse the requirement of raw material that how much raw material are present in ware house and how much to purchase. To purchase this stock requirement, they then make a purchase plan and go for procurement.
RESOURCE PLANNING
Then to produce all the forecasted demand Hilton Pharma go for resource planning, that how much its production takes the available resources which are time and labour. In resource planning the company plans for all the resources that are required to make the medicine right from beginning of documentation till the completion of documentation. If a single product takes 12hrs to complete than how many days it will take to produce the required batch and how many labour is required to produce it. After resource planning they will do procurement planning and manufacturing planning.
PURCHASE
When marketing and sales department forecast the independent demand and the material management specifies the dependent requirements then company release purchase order. They do not purchase raw material directly from supplier as suppliers are located in different countries so there is a middleman located between them called broker/agent which have different software in respective countries through which purchase order is generated.
It is the practice of GMP not to change suppliers quickly, but companies does it for profitability. Hilton pharma does not change its supplier of raw material because they are well recognized and located globally like in China, Japan, Switzerland, and India. But for packaging material they switch suppliers for low price as it is available within the country. Hilton Pharma does purchase on monthly basis, 3 month prior to the production, like in January they order Raw Material and Packaging material for the month of April. The goods are delivered in March and it will be consume in the month of April for the production.
To purchase the raw material and packaging material they keep a required specification and then they send those specifications to vendor. Hilton pharma get their raw material and packaging material from authorized and reliable suppliers. Vendors are first audited and then they qualify for purchasing. Then from approved vendor they purchase the required product, these vendors are given specifications and when the purchase material comes in to the warehouse it is tested against that standardized specifications and then it goes for manufacturing operation.
SUPPLIER
Quality assurance department is responsible to keep the information of vendors in vendor validation system through which vendors get approved after analysing price and quality standards. Only quality assurance department has the authority to approve or reject the suppliers. If in case a new supplier comes in market, Quality Assurance Department will get the samples from them and after the standardized test they approval.
Hilton pharma keeps three certified suppliers in hand as an alternative as per the level of priority as they multi source supplier. They closely keep in touch with their suppliers through mails as suppliers are located worldwide There is no risk of information being exposed to suppliers or other pharma companies as the basic formula are same as it is written in different pharmacopoeias and doctors/ professionals/ chemists who are in this field knows about the formula therefore there is no confidential information regarding raw material and formulas.
ABC ANALYSIS
They do ABC analysis of inventory management because of the price of raw material. Materials which are very expensive in price they keep it in “A” type. For “A” type material they have a policy to procure it in low amount in less periodic basis because keeping its safety stock will be very expensive for them and their working capital will tied up with it. For “A” type raw material they maintain a good relationship with the respective suppliers. Supplier does negotiation with them about replenishment and tracking of inventory. Similarly for C type material they can procure in it any amount due to its low cost. They feed this information in their ERP software which includes classification of material with its respective order time. This will automatically generate the order.
ORDERING
For inventory management they use generally EOQ model but with the policy of 1+1+1 formula. It is not compulsory that if EOQ is 100 units then they mandatorily purchase it, if they found that 150 units are costing in lower rate than they can purchase it because excess inventory is not their problem, Hilton has its own warehouses and carrying cost is not a big issue. So in that way they can save ordering cost and transportation cost. And the excess amount will be compensated in next order.
PACKAGING
Packaging materials are purchased from different reliable suppliers like ampoules are purchased from Friend Glass and glass bottles are purchased from Ghani Glass. Labelling and printing service is provided by Pakistan packaging bottles.
MANUFACTURING
After procurement Raw material stored in warehouse and then it is issued to production floor. The percentage of normal loss i.e. 2 – 3 % and if in case it excessed then enquiry is generated against it. In manufacturing operation again the quality assurance performs according to quality parameter and process checking separately of each item and ingredient after different intervals to prevent the further manufacturing losses. Because if there is bad quality material exists in the beginning so it will damage the overall production in process. Then after checking through all quality parameters, product comes in finish forms and then it goes to warehouse for storage and for further distribution.
SCHEDULING
Hilton pharma has ERP software called BPCS (Business Planning and Control Software) which includes MPS and MRP in it. It has got all information in tabulated form that what are the materials that are required for today’s production on floor for step 1, step 2, step 3 etc. Tabulated sheets are kept on the production floor as well and with continuous data entry by checking and monitoring of completion of each processing steps. In this way this production process is going on with step by step intensive controlling so as to avoid delay in each process so in this way when a product goes across from step 1 to step 2 then the next product will take its place for processing.
Similarly for assigning work to labours they took in consideration of 10% absenteeism. If they required 300 workers they go for hiring of 330 workers. They blocked absenteeism factor in hiring as well.
If the breakdown comes during a regular production, Hilton Pharma coup up with the night shifts. They are having three types of scheduling reviews; daily, weekly, and fortnight, to monitor their planning. Large breakdown can also come, say it about 10days due to some logical reason, it will have a drastic impact on planning. Hilton will go for 2 – 3 shifts on daily basis to align the production according to planning. This has an impact on daily scheduling.
Hilton pharma production department can run MPS and MRP anytime in stimulation because of the uncertain environment of Pakistan, due to which they cannot freeze it totally, so they keep room of adjustment for about 5-10%. MPS usually block 3 month before forecast in which 2 month is fluctuating and 1 month is locked totally.
QUALITY CONTROL
Hilton pharma is emphasizing on quality assurance in its entire level of process. Basically pharmaceutical companies are no more talking about quality controls, they are now emphasising on quality assurance. It is a process which involve reviewing of most modern technology and documentation, after which they can say that “Yes, all the operation and material which are produced are as per standard.” As far as quality control is concern each person is a quality controller. There are 5 sections of quality control:
Micro Biology Section- This section which monitors overall environment of pharmaceutical companies.
Lab Testing- Testing done by the conventional and chemical methodology.
Modern Equipment: Testing is done by different computerised equipment like FTIR (Fourier Transform Infrared), HPLC (High Performance Liquid Chromatography) etc.
Physical Testing: In which physical parameter are checked like hardness and thickness of the medicine.
Documentation Cell, Validation Cell, Stability Monitoring Cell etc.
There are many areas in quality assurance which overall assure that the product which Hilton is producing are as per ISO certified standards.
WAREHOUSE
In Hilton pharmaceutical the use of warehouse starts from the process of procurement when purchase orders are placed to the vendors by the company then this raw material is stored in Hilton’s warehouse. Then the process of manufacturing starts and raw material from warehouse are sent to the manufacturing floor, after the completion of work finished goods are again sent back to warehouse for their storage till the time they are distributed at their potential pharmacy stores.
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Hilton Pharma has their own warehouses for finished and semi-finished products to get the better hold and security. In warehouse materials are in different forms like raw material, packaging material, semi-finish, and finish good. Every material has its own requirement in the warehouse, like raw material has its own requirement of temperature and moisture. Likewise packaging material has certain optimum temperature and humidity level of environment. Finish good has its own requirement that it must be protected from light and keeping it in room temperature. Their warehouses have specific areas according to the sensitivity of different products. They have the capacity to store products of 1 month at different stages. They work on 1+1+1 formula means they keep 1 month finished goods, 1 month raw material or packing material, 1 month work in process or semi-finished goods. So all these inventories are store in warehouse.
After manufacturing process, finished goods are delivered to warehouse, where it goes to quality assurance checking and after final release from the quality assurance than it goes to distribution channel from the warehouse. Then distribution channel ensures the in-market availability that every potential chemist has got the required product.
LOGISTICS
DISTRIBUTION
Hilton Pharma has outsourced it distribution to qualified 40 distributors located all over Pakistan. They signed an agreement with their distributors to hold certain amount of stocks all time. Their sales are directly monitored through Marketing Intelligent name IMS Health (Index of Medical Statics). Based on the report generated by software, Hilton replenish department perform stock replenishment of their distributors.
All around the world, sale of all the pharmaceutical companies are monitor through IMS Health. It generates quarterly report of in-market sales of all pharmaceutical companies, according to which ranking of sales and market shares is performed.
They have to maintain 2-8 degree temperature when it reaches in to customers’ hand. Courier services are also hired for the purpose of distribution and normally dispatching of shipment are performed at in nights only, so that the medicines are safe from sun light as temperature is high during day light. Hilton cold chain sustain temperature for about 18 hours, places like Sibbi where it takes normally 8 hours to deliver the products can easily be deliver at stable temperature.
REVERSE LOGISTIC
Hilton pharma does reverse logistics in a very formalized and organized way. For reverse logistic it is the responsibility of distributor to send their stock report 6 month prior to expiry date. For the near to expiry medicines, sales team got message and they activated to enhance the sales through doctors by generating prescription to consume it early. If they are not able to sell those products within the 3 month prior to expiry date, then company lift that stock from distributor and destroy it. Distributors receive their payment or replenishment of new stock in place of it and then the expired product got incinerated by the Government of Pakistan and Hilton Pharma receives Certification of Incinerate. This is the policy of Hilton to lift up the near expiry product(s) before 3 month to control the miss use of the product(s).
CUSTOMER FEEDBACK
Doctors and chemist are the main source of feedback. They don’t take it from end user/consumer as their customers are chemists. Marketing team will see that what is the share of a particular product in the overall market? Why are we getting small piece from a large cake? They will also see what is the marketing strategy of the competitor who is getting a large piece of cake?
TECHNOLOGICAL IMPLEMENTATION
SOFTWARE
Hilton Pharma successfully implemented ERP software in mid 90s, operating on BPCS (Business Planning and Control System) designed by System Software Associates (SSA).Hilton Pharma is going through final stages of implementation of SAP (System Analysis and Program development). SAP is very strong ERP software, user friendly, easy to use and give better result. It has many modules compare to BPCS and its version is now Sarbanes Oxley compliance, which reduce the possibility of financial fraud.
By 1st January 2011 Hilton Pharma will get their SAP implemented. For that they planned to move out their stock 10 days before in December and in these 10 days they are in a transition phase of implementation of SAP. If after 1st January 2011 any demand fluctuates or abnormal demand comes than it will not be cater by the company itself, it will be catered by SAP. Customer will enter their demand in SAP and then this demand is forwarded to Hilton Pharma through SAP. So Sap itself will inform the company about where additional labour and hours can consumed and if the company is not authorized to increase the capacity then it will tell which product to drop and which product to continue.
IMS HEALTH
IMS Health stands for Index of Medical Statics, is a marketing intelligent organisation, which provides all the marketing assistance to worldwide pharmaceutical companies. Facts and figures provided by this company are authenticated, cannot be challenged. Hilton Pharma is a member of IMS Health who can easily monitor their and other pharmaceutical companies’ sales. Through login to the server through website, companies can monitor their real time sales.
TRACKING TECHNOLOGY
Bar code scanner is being used for identification of different products on production floor not in warehouses to locate the products.
GREEN SUPPLY CHAIN
As far as pharmaceutical companies are concern they are environmental friendly. Hilton Pharma is now installing water treatment plant in their production area which will make water useful again by treating it and making it hazard free. All the air which came out from the Hilton Production Area is treated and made healthy for the environment.
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