Glaxo Smith Kline India Ltd.

Glaxo Smith Kline India Ltd. is one of the most important and growing parts of the pharmaceutical manufacturing giant Glaxo Smith Kline, UK (known as GSK, worldwide). Glaxo Smith Kline India Ltd. manufactures medicines and vaccines for Indian domestic market. It has more than 20% of the market share of pharmaceutical products in India. Glaxo Smith Kline India Ltd. has its own 4 manufacturing units and rest of its manufacturing is out sourced to 23 partner pharmaceutical manufacturing companies throughout India. It has 5 warehouses strategically located to cater to distributors (CFAs) who are located in widely scattered geography of India. The total number of distributors (CFAs) is 31. Almost all of the sales of GSK India is done indirectly through these CFAs. Primarily there are 2 groups of products: Product1: Medicine ü Fast moving Medicine ü Slow moving Medicine Product2: Vaccines In all Glaxo Smith Kline India Ltd. produces more than 550 different pharmaceutical products. Transportation part of the whole distribution system is outsourced to many independent private goods carriers. These carriers are grouped as trucking (with varying carrying capacities of 32 Ton, 17 Ton, 9 Ton, 3.5 Ton); railroad, surface couriers and air couriers. The lead-time varies from 15 days for a railroad connection from the western part of India to the far eastern part of India to 5 – 7 days for most road connections for trucks to 2 days for air courier. Glaxo Smith Kline India Ltd. had implemented ERP system from vendor JD Edwards. While this system has been proving very useful for there manufacturing processes, they did not had a satisfactory solution for their product transportation and distribution processes.

The Challenge
1. Planning used to take at least 2 weeks and required input from many people. A lot of effort was required to make these plans. 2. By the time the plan was made, it became obsolete as initial requirements got changed. When any change in plan was required, it was impossible to incorporate these changes in the plan. 3. The whole product distribution system was inefficient. 4. Service levels were very low. 5. Stock outs were occurring. 6. There were many under fill movements of trucks. 7. No visibility across the whole distribution system. 8. Very difficult to Control distribution system. 9. Late orders were creating a lot of problems. 10. Solution should be able to consolidate orders, regional forecasts, and additional orders.

The Solution

1. When Optimization Engine is implemented in an organization where there is already an implementation of any ERP system, Optimization Engine works as the brains behind the business operations whereas the ERP system works as the business enabler. 2. Our Optimization Engine software takes care of all sales orders and sale s forecasts. It consolidates all sales demand forecasts made by different sales units as well as the purchase orders; the company receives. Based on this consolidated figure, the company can do any supply chain related planning. 3. Our Optimization Engine Software is based on Genetic Algorithm based computation. The plan it generates is the most optimal solution for the given scenario and no other solution can easily beat it. 4. Optimization Engine software takes into account stock out cost (loss of order due to unavailability of stock), inventory cost and transportation cost, raw material costs, human resources costs, inventory costs, machine change over costs and it generates a plan to minimize all of these costs. User has a choice to assign weight age and the software generates the most optimal plan accordingly. 5. Optimization Engine software takes into account lead time and other constraints. It takes them into account completely when it generates the most optimal plan. 6. Optimization Engine takes into account service levels for items, business units, clients and orders. User has a choice to give weight age to these services levels individually and the software generates the most optimal plan accordingly. 7. Our experience shows that even at places like big and reputed multinational companies; the efficiency of their business processes is not optimal even after good implementation of ERP systems. In most cases our software can improve their business processes by at least 10% and it can go even to 300%. This translates to corresponding cost savings for the company.

Overall Logistics Process

Overall Requisition for Logistics CFA Cfa1 Cfa2 SKU A A DATE Date Date QTY 200 200 Status 1 0

Create a Plan for a specific Period (Start Date – End Date)

Logistics Plan - Supplier to CFA - Shipping Plan - Truck Loading Report - Requisitions to be fulfilled Update Sales Requisitions (Status), which are fulfilled. Update the Forecast Data (Total Shipped Data)

Factory FG Stock Level

Create New Requisitions for Partially Fulfilled Orders, Damaged Goods

Delivery Note Entered and New Requisitions created for Damaged Goods

Benefits of the solution:
1. When the company is experiencing inefficiencies even after successful implementation of ERP systems and supply chain systems. 2. When a company is looking to cut its operational costs to be competitive. 3. When a company is looking to expand and wants to make capacity planning for the new facilities. 4. When a company wants to revise the capacities for the merged facilities after acquisitions.

Highlights of implementations:
All costs components of distribution costs got reduced (Stock out Costs, Transportation Costs, and Inventory Costs). The total distribution cost savings experienced by the company stood at more than 150% compared to their earlier distribution costs. The service levels were achieved more than 95% for all products. 1. Creating distribution planning for all regions at national level takes only half an hour. 2. The planning process is now always current as the input data taken for planning is most current. 3. Changes in orders, forecasts, production or any unforeseen event are taken care of easily and are incorporated in the plan. 4. Product distribution system has become very efficient. 5. Service levels are being achieved at more than 95% for all categories of products (from the slowest moving to the fastest moving). 6. No stock outs are occurring. 7. Now trucks are always loaded to the most optimized way. 8. Clear visibility into the whole distribution system. 9. Very easy to control the whole distribution system. 10. Even orders coming minutes before the planning are taken care of. 11. Costs savings in distribution are to the tune of 150%.

Conclusion

1. To update the JD Extracts which need to be in a format that is specified as per the system requirements, a specified naming convention needs to be follo wed for e.g. Purchases should be named as PO, Transfers as TO, Sales as SL, stocks as csi, and receipts as RTD. All these files need to be stored in the Integrate folder on D: drive of the machine. To start replication user needs to select replicate option from the Optimization Icon in the Start button Programs list. The application can either use the current stock as the opening stock for the whole month if the stocks are updated at the start of the month or just let the daily update run as per the regular routine. 2. After running the Replication model, user can create a new plan.

3.

To create a new plan, user can select the Optimization Engine icon and login into the application. Planning for some selected products or all the products depends upon the users choice, he may also select the option of medicines or vaccines before creating the plan and accordingly the product, source and destination lists are handled. Planner also has the option of setting the objectives of the plan by selecting the Advanced button where the constraints like optimizing on high or low stock out costs, what percent of excess quantity of products at various locations should be considered for movement on the basis of availability, and the kind of weekly distribution pattern that needs to be followed for logistics of goods. Week wise distribution describes the shipment of products over the month.

For enquiries please contact: GoldenEmbryo Technologies Pvt. Ltd. Phone: +91-2056213633 /+91-2025533923 / +91-9890492152 Fax: +91-2025893182 Email: sales@goldenembryo.net

About the company: GoldenEmbryo Technologies (www.goldenembryo.net) is a software solutions company with a mission to provide customers with software tools to “Do More With Less”. Major area of concentration at GoldenEmbryo Technologies is to make and implement world class manufacturing planning & scheduling software for all types of industries. We have successfully catered to the needs of clients in automotive parts, textiles, steel, CPG, food, paper, packaging, brewery etc. industries. We strongly believe in investing heavily in R&D so that our software can serve our clients better in solving their everyday problems. Compared to other solutions in the market, our solution is extremely fast, produces most optimal and dynamic solution, easily integrable to existing ERPs and customizable. Website: www.goldenembryo.net

©Copyright 2004 GoldenEmbryo Technologies Pvt. Ltd. All rights reserved. No part of this publication may be reproduced or transmitted in any form or for any purpose without the express permission of GoldenEmbryo Technologie s Pvt. Ltd. The information contained herein may not be changed without prior notice. Some software products marketed by GoldenEmbryo Technologies Pvt. Ltd. and its distributors contain proprietary software components of other software vendors. Optimizatio n Engine, and other GoldenEmbryo Technologies Pvt. Ltd. products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of GoldenEmbryo Technologies Pvt. Ltd. in India and in several other countries all over the world. All other product and service names mentioned are the trademarks of their respective companies.

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