SUPPLY CHAIN VALUE CHAIN ANALYSIS OF WILLSHIRE

A value chain analysis gives an overview of business activities for the service and product production;
from the initial procurement of raw material to production and delivery to the targeted market. This
type of analysis tries to discover and classify activities within an organization into two categories:
principal activities and supporting activities. Following that, these actions were mapped and used as a
basis for creating information system solutions that would assist the organization. The steps in executing
Value Chain Analysis are to describe all operations in the company's value chain, quantify the expenses
associated with each activity, and assess the potential for growth and creation of competitive
advantages. A value chain analysis is performed to help a company develop and sustain a competitive
advantage.

Primary Steps of Value Chain Analysis

Value chain analysis has five primary steps in the series which are as follows:
 1. Inbound Logistics
2. Operations
3. Outbound logistics
4. Marketing and Sales
5. Service

INBOUND Operations OUTBOUND Marketing Service

Logistics Logistic & Sales
-Production -Communication
-Product return Process -Product Storage -Receiving with Distributor
from distributor Implementation from Production of Product for the
to Warehouse Order from Availability of
-Receiving -Maintenance
Receipt from of Machine Distributor Product in their
-Expenditure of
Suppliers for Customers
Goods from the -Promoting
-Building
the Raw Warehouse Sent Products - Maintain
Maintenance
Material to Distributor Customer
-Employee Loyalty
-Distribution of -Delivery of
Recruitment
Raw Material Goods between
According to -Ordering Raw Branches/
each Material Internal Transfer
operational unit
requirement -

Inbound Logistics

Inbound logistics refers to the internal management and handling of resources from outside the
company, such as external vendors and other supply chain resources. To put this in context, this stage
receives warehouses and performs raw material inventory for the company. This also includes all
transactions and relationships with each product's suppliers of the pharmaceutical company.

Wilshire has an inventory policy of having 75 days of total rolling stock in its inventory among which 45
days of safe stock and 35 days of sale stock but that is utilized up to 90-120 days, hence utilizing
optimum working capital. For inbound logistics “Principle Company Stock Planning” is done which
involves the forecasting of distributor demand beforehand by considering the previous sales pattern,
Material Requirements Planning (MRP), etc. which helps the Senior Members of Decision-makers to
align their interests regarding their respective operations so mutual and beneficial decision is taken. The
variation in stock forecasting varies from 20% for the second month and 40% for the fourth month can
take place according to the Wilshire replenishing forecasting plan. Alignment of each department is
necessary as it will keep the chain of supply chain intact in the most productive manner. Usually, it takes
21 days for the order to go through the issuance of deliverance to the client. The lead time increase if it
is the injectable product from 45 to 65 days by air, 90 days by ships, and make to order product which
includes psychotropic than the whole NCO procedure and receiving takes more than 120 days under
post Covid imports restriction. After extensive import of raw material, they are cleared at custom,
received at the inward gate, the batch is quarantined, inspected for the damages, sampled for quality
assurance and finally its approved for the production of the desired product.

Operations

The operation stage involves procedures and other operations that transform raw resources into
finished goods. To make a profit, these finished products are sold at a greater price than the raw
ingredients and manufacture. Medicines are the ultimate items for consumers to utilize in the
pharmaceutical industry.

It is the core of any supply chain as efficient operations can reduce the lead time of the production and
aid in on-time quality product order receiving and delivery. The value can be added to the process
through the strategic decisions taken by the supply chain manager e.g. the production unit operating
series, efficient workforce use, and innovation in integrating similar tasks in productions. Wilshire
production till delivery takes up to 21 days maximum which indicates its operations and supply chain
efficiency.

OUTBOUND Logistic

Outbound logistics encompasses all activities related to the distribution of finished goods to customers.
This covers product distribution, collecting, and storage systems. Managing the company's external and
internal systems from a customer organization is also part of outbound logistics.

In outbound logistics, the value is added when the distributor places an order with the manufacturer for
at least 45 units. Wilshire deals with 300 brands locally and internationally. The company has 45 days of
safe stock and an inventory of a total of 75 days of rolling stock available in their warehouse. Once the
order is received by the customer service department from the distributor and these orders are placed
bi-weekly so the stock doesn’t pile up downstream. Then the client/distributor is directed to the finance
department where they make advance payment which leads to the production runs for the required
unit of production leading to warehousing of a maximum of 72 hours, quality assurance of the
manufactured products, and verification of the order leading to packing. After that, the stock
consolidation takes place according to the distributors’ routes, and the status of the production unit is
updated to ship stock for the logistics team to track. Average shipment from the manufacturer to the
distributor takes up to 3-5 days by land, 72 hours for detained service, and 24 hours for the urgent
deliveries.

Marketing & Sales

Marketing and sales involve all techniques to increase visibility and target potential clients. Every
product is promoted, advertised, and priced by most companies. Marketing techniques in the
pharmaceutical value chain also include displaying the efficacy of each medicine, which is anticipated to
treat specific conditions.

The marketing department adds value to the supply chain process by promoting the produced product
to new markets using different marketing tools and campaigns while the sales side focuses on pitching in
the new potential customer so sales encourage the production and operational process of the Wilshire
supply chain. Above all the sales data aid in the supply chain, procurement, and production forecasting.
Wilshire has a promotional “GUT Health Campaign” to enhance its prebiotic supplement product

Service

This covers programs and actions aimed at preserving product quality and improving customer
satisfaction. As a result, long-term connections with customers who have purchased the product or
service must be reinforced.

Services of Wilshire include customer service, reverse logistics, and catering to customer complaints
which are similar to the procedure of importing raw material as it includes similar steps. This provides
the company an open communication way to engage in profitable decisions and tracking throughout the
process and maintain a customer quality service criteria so that the company’s reputation is maintained
in the best way.

Secondary Steps of Value Chain Analysis

There are four secondary steps of the value chain which are as follows:

1. Firm Infrastructure
2. Human Resource Management
3. Product & Technology Development
4. Procurement

Firm Infrastructure: Management, Legal, NCO Approval for the procurement

Human Resource Management: Hiring educated, skilled and innovative employees by Wilshire e.g.
from UMT, LUMS, NUST, etc.
Technology Development: Introduction of new technology and its training followed by DRAP
Guidelines
Procurement: Documentation, custom, financing, quality assurance, sampling, and approval of raw
material being procured at an economical smart price

Firms Infrastructure

This includes the company’s administrative activities like finance layout, legal actions, accounting plans,
public and private sector affairs, quality assurance, and other general management.

These include all the NCO Approval for the procurement, especially imports of psychotropic products,
documentation for customs, and legalized government permission for the import of raw material from
the UK and Germany is done through the administration department, and it provides added value to the
procurement process, operations, and supply chain process. Although, the government tried to ease
drug imports by lowering tariffs under the 5th Schedule of the Customs Act, 1969, and exempting them
from GST under the 6th Schedule of the Sales Tax Act, 1990 under recent import restrictions and
inflation the cost and approval

Human Resource Management

This includes people management activities which are hiring, recruitment, training, compensation,
employee development, and dismissal of the personnel that design, builds, and distribute the product of
the company.

Hiring educated, skilled and innovative employees helps a lot in reducing the lead time of the whole
production run as the work will take place at humanly possible optimum efficiency and accuracy and less
basic training will be required by them. Personnel who can operate ERP, Forecast demand, and
operational strategies in better ways.

Product and Technology Development

Product and technology actions include equipment, software and hardware, procedures, and other
technical procedures knowledge that is required to transform any material into required products.

The introduction of new technology and its training to the employees will also reduce lead time at
Wilshire and increase the quality, branding, and ranking of the company to a reputable level. Wilshire
follows DRAP guidelines for the operation of medicines production which include:

 Current Good Manufacturing Practices (cGMP): Includes price and quantity checks.
 Current Goods Storage Practices: Whether a suitable HVAC System (Heating-Ventilation-Air
Conditioning) is installed for the medicines.
 Current Goods Laboratory Practices: Whether the laboratory meets the safety and health
requirements.
 Current Goods Documents Practices: A check on the legality of operations and decisions taken.

Procurement

Procurement involves acquiring the raw material for the manufacturing products, managing suppliers
negotiating and their relationships, prices negotiation. Somewhat similar to the marketing, inbound
logistics, and the operations to acquire materials on time and to increase the cost-effectiveness of this
whole process.

Wilshire procurement process is forecasted beforehand through replenishing plan using the previous
and present data provided by the distributor then the raw material is purchased where all the imported
raw material legal, documentation, custom, financing, quality assurance, sampling, and approval goes
through the procurement team and is signed off by the procurement manager at Wilshire so that
accountability is attached to it and operations are made smoother.

Cost and Value Chain Analysis

According to the field interview done at the Wilshire, the supply chain manager enlightened us on the
cost involved in the supply chain which involves 20% of the budget for export and agents fees, 6% for
packaging, 20% for marketing, 15% of labor & fixed cost, 5%-15% of the raw and material budget, 4%
utility cost bust, 3% transportation and logistics, 1% for R&D and 1% for Registration.

Problem Identification Alternatives

After the interview with the supply chain spokesperson, we were able to identify that firstly it takes
around 120 days under the current situation to import and procure the raw material, and secondly
according to raw material procurement cost i.e. 5-15% of the whole company budget annually which
accounts for 3,973,241 Rupees. This delayed time in importing the raw material affects the lead time of
the production run and shows a chance of an increase in gaps between the production run, additionally,
the cost can be managed if the raw procurement process can be made partially made localized.

Procurement of the imported raw material

The procurement of raw materials is tending to increase the lead time of the whole production cycle,
especially for the injectable as the uncertainty in the import of raw material is increasing along with
increased delivery time. In order to cater to this Wilshire should look for innovative solutions and
alternatives for the psychotropic that are used in its multiple products which involve localizing the
procurement for the psychotropic to 25% initially of the current import masses to the extent where
quality of the product is not compromised.

Action Plan

In order to cater to this alternative Wilshire could opt for the following action plan steps:

1. Generate multiple suppliers of raw material for a psychotropic product from most nearby
countries which have less delivery time and near to similar quality.
2. Focus on the R&D, and encourage biochemists in the manufacturing labs to look for new
formula development which can replace those imported chemicals from the medicine
manufacturing or might limit them to 20-25% and gradually increase it as it will reduce WIP
inventory for this purpose.
3. Global research should be surfed through the internet and new and skilled labor should be hired
with advanced knowledge of nanotechnology which can try and ensure the replacement of old
methods of medicine production in this way, the procurement might change or limit the raw
material procurement to another direction (might be a local option) while maintaining the good
quality standards.