Abbott
Content
COUNTRY PROFILE
COUNTRY NAME: GROWTH RATE: 6.6% GDP: POPULATION:
PAKISTAN
6.9% 165.8million
LITERACY RATE: 48.7% PER CAPITA INCOME: $847
COMPANY PROFILE
Abbot Laboratories (Pakistan) Ltd. The company’s principal activities are to manufacture, import and market based pharmaceutical, nutritional, diagnostic, hospital and consumer products and provides toll-manufacturing services. It operates in two segments Pharmaceutical and other. Pharmaceutical segment manufactures, import and markets research based pharmaceutical products registered with the ministry of health and provides toll-manufacturing services. Other segments includes importing, manufacturing and marketing diagnosing equipment, testing kits, consumer healthcare, nutritional and hospital products. The company’s pharmaceutical products include Kalaricid, Erthrocin, Hytrin, Epival, Brufen, Entamizole, protium and Forane. The other products include Ensure, Pediasure, Pedialyte, Formance etc. Abbott has approximately 70,000 employees worldwide and a global presence in more than 130countries. Abbott Pakistan started operation in Pakistan as a marketing affiliate in 1948. The company has steadily expanded to compromise a work force over 1400 employees. Currently two manufacturing facilities located at Landhi (largest tablet manufacturing plant) and Korangi in Karachi continue to use innovative technology to produce top quality pharmaceuticals products. The diagnostic division operates from its office located at Korangi, Karachi
Locations
Nutritionals and Pharmaceuticals Abbott (Pakistan) Ltd. P.O. Box 7229 Landhi Karachi, Pakistan Telephone: (92 21) 501 50 45 Facsimile: (92 21) 501 32 45
Diagnostics Abbott (Pakistan) Ltd. Plot 13, Sector 20 Korangi Industrial Area Karachi 74900 Pakistan Telephone: (92 21) 504 65 74 Facsimile: (92 21) 504 42 58
ABBOTT’S FINANCIAL DATA
FIVE YEARS SALES
YEARS 2002 2003 2004 2005 2006 SALES (rupees in millions) 4,004 4,277 4,598 5,176 5,888
COMPANY’S FIVE YEARS PROFIT
YEARS 2002 2003 2004 2005 2006 PROFIT (rupees in millions) 439 526 747 962 1,000
BENCHMARKING
Ratio Name Current Ratio Inventory Turnover Total Asset Turnover WYETH 4.10 1.69 times 60% SEARLE 1.714 10.11 times 10.2% HI-NOON 5.08 2.72 times 67.2% ABBOTT 4.76 4.69 times 1.17
Profit Margin on Sales Earnings Per Share Return on Assets
0.182 112 10.9
0.032 3.53 3.2
0.048 10 3.2
1.70 10.21 19.9
VISION
“To be a premier health care company in Pakistan”
MISSION
To deliver consistently superior products and services which contribute significantly to improve the quality of life of the consumers? This will be achieved while ensuring that the interests of all stakeholders including healthcare providers, employees, share holders and the communities are secured. Abbott Pakistan will comply with the highest standards of local cGMP/EHS and adhere to the corporate code of Business Conduct and Ethics.
DICTATED TO
• • • • • Employees Customers Share holders Suppliers Public
WE VALUE
• • • • Pioneering Achieving Caring Enduring
CORE VALUES OF ABBOTT
ABBOTT
Achieving
CAPABILITIES OF ABBOTT
caring
Enduring Pioneer ing
AGILITY
INTEGRITY Y
QUALITY OF EXECUTION
D EA L P
ER
I SH
O TI A IC UN N M CO
CORE COMPETENCIES OF ABBOT
Products & Services Customer intimacy operational excellence People
SUPPLY CHAIN MISSION
ABBOTT’s SCM mission is to configure, coordinate and improve all the sequentially related activities and set of operations with the idea of satisfying the entire chain of suppliers’ suppliers and customers’ customers by providing right product, at the right time, in the right quantity and becoming highly recognized by our employees, customers and shareholders and abiding by Government regulations by adhering to strict ethical and moral standards”.
SUPPLY CHAIN INTEGRATION
Customer I N F O R M A T I O N F L O W
Retailers/ wholesellers Distributors Warehouse ( F O) Manufacturing Warehouse (M O) Transportation Supplier Marketing P R O D U C T F L O W
ABBOTT’S SUPPLY CHAIN STRUCTURE
SUPPLY CHAIN MANAGER
CAPAPCITY PLANNER
MASTER SCHEDULER
MASTER SCHEDULER
PRODUCTION PLANNER
PRODUCTION PLANNER
MATERIALS MANAGER
WAREHOUSE MANAGE R
LOCAL/ IMPORTED PURCHASE MANAGER
EXPORTS MANAGER
SUPPLY CHAIN PROCESS
Marketing ( Demand Generated)
Manufacturing Planning (Demand Generated)
Material Planning
Vendors (Quotations asked)
LC
Follow up ---import & dispatches
Clearance Transit Time
Material in Warehouse
Material Available For Production
Production
QA
Released by QA
FO Batches
Packing line
FO Quarantine (Sampling test by QA)
Central Depot’s
Dispatches
Satellite Depot’s & Distribution
Institutions
Wholesalers
Retailers
SCOR MODEL
S U P P L I E R S
PLAN SOURCE RETURN MO Enable MAKE
DELIVER RETURN FO
C U S T O M E R S
Plan
Deliver
Source Return
Make
Deliver Return
Source Return
Make
Deliver Return
Source Return
Make
Deliver Return
Source
RM Manufactur er Supplier’s Supplier
Indenters Supplier
ABBOTT Lab Pakistan Company
Distributors
Whole salers
Customer
Customerė© Customer
PLANNING
Orders, which are planned according to the demand, made by the external customers, these orders are initially planned and then raw material is purchased according to the planned order. ABBOTT Pakistan’s marketing department considers few things at the time of planning such as past statistical figures like what they have achieved in the last 2-3 years. The ADS has a wide horizon of 24 months for better flexibility. It is not possible to make an ADS without considering the opinions of ABBOTT Pakistan’s 14 Product Managers who are responsible for projecting Aggregate demand for the next 24 month.
BUSINESS PLANNING
The executive management of ABBOTT Pakistan does the long term strategic planning. Every 7th day of the month they conduct a SNO (Sales and Operations) meeting. It is reviewed in the SNO meeting to highlight the gaps in performance if there any, and to make adjustments if required.
DISCUSS
PROPOSED FORECAST
SNO MEETING
ADS
Marketing department gives the forecast to the supply department and then it’s their job to make available all the resources required from the purchases till the delivery of end product to the consumer on the ATP (Availability to promise) .This is how they satisfy their external customers.
APPROVED DEMAND FORECAST
In ABBOTT Pakistan the demand is forecasted by the Marketing department. The Marketing department provides 24 months rolling aggregate demand forecast, which is known as ADS (Approved Demand Statement). This statement shows individual demands for all product lines demanded by end users to whom we are providing quality healthcare products.
ABNORMAL DEMAND PLANNING / HANDLING UNCERTAINTY
Abnormal demand is a demand, which comes unexpectedly Like at the time of War, NATURAL DISASTERS OR ANY EPIDEMICS According to ABBOTT they have a policy to maintain six weeks safety stock to handle the uncertainties and they have positioned themselves to handle such abnormal demand like ABBOTT did with MOSPEL at the time of Dengue Virus
APPROVED SUPPLY PLAN
This plan is made on the bases of ADS and is approved once the supply department has made the initial supply plan. Then after the supply plan has been made it is forwarded it to the MM (Material Management Department.)
MASTER PRODUCTION SCHEDULE
The entire production is based on this plan weather it is Tablet, syrup, injectables or syrup manufacturing. This is set up on the bases of forecasted and some times abnormal demand as well. Date for all the batches is set up according to this plan but when there is a sense of urgency then there are some changes made.
CUSTOMER
MARKETING
MAS
MANUGISTICS
MANUFACTURING
MASTER PRODUCTION ARRIVAL
This is the inventory, which is going to arrive in bulk, and it is the job of Master Production Scheduler to arrange the bulk. This bulk can either be for export or for the market demand done through forecast. He also sets up when to make the required batch on which date.
STOCK KEEPING UNITS
ABBOTT Pakistan has 270 SKU”s, out of which 240 Pharma products and 30 are Nutritional products.
SAFETY STOCK
The raw material, which is stored in extra units in warehouse, is known as safety stock. ABBOTT maintain a MO and FO safety Stock of 6 weeks,
MATERIAL MANAGEMENT PLANNING:
ABBOTT Pakistan is using MRP II to effectively and efficiently handle the Material issues, which is based on the information’s provided by MPS, It has been adopted by ABBOTT Pakistan due to the imposition posted by ABBOTT International, Chicago. This requirement tells us on the system what is the quantity required according to the Master Production Schedule. All transactions are made electronically into BPCS known as Business Planning & Control System. If there is an additional requirement due to abnormal demand then there are some changes made in MRP.
CAPACITY PLANNING
Capacity means a measured ability to accomplish work. Capacity planning is a process in which capacity is planned based upon expected demand and it needs to be balanced with required capacity utilization and it also outlines the capacity requirements for the production, availability of machines and what are the standard hours, which they are required to meet the forecasted demand. ABBOTT Pakistan have a CCR system known as Capacity Consumption Rate which tells us, the consumption rate of the resources, which are available for the production, and on the bases of this update a new planning is developed depending on the consumption rate. A capacity control process is used to measure and manage the resource requirements and where appropriate, the work through put and queue levels. Once they got the ADS than they sub divide that plan into monthly basis and adjust the machines capacity according to it. The planned capacity utilization at ABBOTT is approx. 95%. And to manage the capacity control process ABBOTT Pakistan is using a system known as BPCS which stands for Business Process Control System
ROUGH CUT CAPACITY PLANNING
It indicates requirements for resources by month for a 24-month horizon it is performed after MPS generation imply on critical work centers on Master Scheduled Items. Feasibility checks of MPS and early warning of Bottlenecks.
SCM CONFIGURATION
He knows when the raw material is going to arrive, who are the vendors are going to supply to us. Then accordingly he tells to the bulk planner to plan the inventory which is being piled up in the warehouse. Keep an eye on the efficiencies of different work centers, calculates input and output or work centers and decides which Batch to produce first and what is their in the queue waiting to be produced next.
MAKE OR BUY DECISION
As far as the make or buy decision is concerned, some of the products are imported. The primary reason for importing those products is that the quality of the raw materials is not up to the mark or they are very expensive. Also, these products cater to a very small market segment and manufacturing them here would not be profitable. Therefore ‘C’ categorgry materials (grading as per their value) are purchased locally like for instance Pseudo used in cough syrups from Lahore (alpha chemicals). Some of the products which ABBOTT buy from Parent company and from there subsidiaries. • • Pediasure Hematology Analyzers
The following products are manufactured in Pakistan. • • • Tablets Liquids/Syrups/O.R.S Injectables, Creams/ Ointments.
SOURCE
SOURCE
In Pharmaceutical Industry there are two types in ingredients: • • Active Ingredients Excipient Ingredients
ACTIVE INGREDIENTS
Is an essential intergradient for any specific drug, without which a drug does not cure a respective disease?
EXCIPIENT INGREDIENTS
Is an intergradient which itself is not workable, it when mixed with some other intergradient becomes curable for a respective disease.
It is against the Abbott Pakistan policy to disclose the Excipient Ingredients however some of the Active ingredients along with the suppliers and the country of origin are as follows: • • • • • • • Dy Red – sencient UK Potassium chloride – Merck, Germany Sodium Citrate – Sanfu, Taiwan Sodium chloride – Dominon salt, New Zealand Acid Citric – Jungvuzlaur, Austria Dextrose – Rafhan Industries Faisalabad Artificial bubble gum – IFF Holland
Once the ADS passes in the organization the MM department comes into function, the responsibilities and function can be easily understood by the MM department chart MATERIALS MANAGEMENT
WAREHOUS E
LOCAL/ IMPORTED PURCHASE
EXPORTS
MPS is made by the supply department checked by the supply manager and then forwarded it to the MM department. Then according to the MRP (Material Requirement Planning) an enquiry is carried out for the selection of the suppliers. This is the initiator of Abbot or the most imperative department of the organization. Each and every individual in this department has to play his role according to the requirements of Abbott. All the raw material is arranged whether it is selected by the local vendor or the International vendor. MPS is forwarded to the purchase department and then it’s the job of purchase department to fulfill their requirements and to select the right vendor who meets the specs of the organization. This is not a game of taking risk or gambling but one needs to rethink again and again in order to select the vendor who provides the raw material to the organization. Different quotations are sent to different manufacturers or the vendors, an audit is also carried out and then through different indenters a BID SHEET is prepared.
BID SHEET
A bid sheet is a low cost effective sheet in which there are quotations form different suppliers and on the bases of that low cost suppliers are selected comparing their LANDED COST.
It includes: • • • • • • • • • • Representative/Agent Name of manufacturer and country Vendor status Quotation date Foreign currency Duty Landed cost/kg Local currency Exchange rates Cost and freight
Then after getting the bid sheet orders are finalized and there is a request for an indenter. After the request of an indenter the bid sheet along with the approved indenter is send for approval to the finance department.
REQUIREMENTS FOR THE VENDOR APPROVAL
1) Vendor specification 2) Testing method 3) Abbott Specification signed by vendor 4) MFG date expiry date/shelf life 5) Stability data to support shelf life 6) Vendor evaluation check list 7) Material safety data sheet (MSDS) 8) Full range of raw material 9) Vendors’ certificate of analysis 10) Recommended storage condition 11) Technical bulletin 12) List of solvent if used & other residual levels 13) Is your vendor already approved in other Abbott affiliate? 14) TSE/BSE statement. Transmissible Spongiform Encephalopathy’s/Bovine Spongiform Encephalopathy 15) Vendor capacity
VENDORS APPROVAL STEPS
Material Sample and vendor also provides Certificate of Analysis & Form 7.
Quality Assurance test of the material in ABBOTT”s own laboratory
Quality Control approves the material and assigns a number to batch and a Yellow Sticker.
Trial Batch is made of a actual material
Stability Testing (QA)
Material Approval (QA) Quality Assurance issue a Green Sticker (Release)
Batch Manufactured
End Product
ANALYSIS OF THE REQUIREMENT
Two general categories for vendors are: A) Approved and Active B) Approved and Inactive This is the bases on which the vendors are selected and it is conducted by the ABBOTT itself in order to select the vendor who can provide the material of good quality and at low cost .The basic purpose of selecting a vendor is to have quality service provided by them and to check their EFFECIENCY & RESPONSIVENESS. Quotations from different vendors are sent through mail and on the bases of the BID SHEET, final selection of the vendor is made. There is no indenter involved in local purchases. These are the requirements of ABBOTT’S Pakistan in the selection of their vendors; the vendors must meet these requirements and specifications in order to be approved as a vendor to provide the raw material to this leading pharmaceutical industry. Let suppose if MM department, is buying vitamin C form a vendor worth $4 and a vendor contacts them and says that he is going to provide them of $3, then the MM department will check his past certificate of Analysis or his services to any Abbott affiliate. They will also check his record against other Pharmaceutical industries and his testing analysis, if they qualified then they will buy the material and give it to the QA depart and they will conduct the stability and shelf life test which can take 3-9 months depending on the stability of the raw material. The material should not have pig fats which are used in the raw material by the European vendors.
PROCUREMENT
ABBOTT Pakistan has two purchasing departments. One is for local purchases and the other one is for imports. The procurement function is bifurcated in two categories: • • Direct Product Related Purchases General Purchases
There is a clause imposed by ABBOTT Int. Chicago on ABBOTT Pakistan that if the amount of requisition value is above $ 1000, then at least 3 quotations must be taken.
GENERAL PURCHASES
General Purchases include routine items such as stationery, office equipments, transportations and other minor items which are not directly related with production activities.
DIRECT PRODUCT RELATED PURCHASES
This includes each and every raw material that is required to make end products
MATERIAL CLASSIFICATIONS
ABBOTT Pakistan classifies its materials according to the values or the cost of materials, basically they have allotted three grades or types to their materials:
• •
Grade A (very costly materials, e.g. erythromycin) Grade B (moderate cost, e.g. clathromycin)
•
Grade C (least cost, e.g. bubble gum and artificial flavors like mint)
LOCAL PURCHASING
Local purchasing department of Abbott Laboratories Pakistan deals with local vendors concerning: • Designing –FP Plastics, Al-Ahad Plastics, Thermoplas (Korangi) > Lead Time 30 Days • Printing–Ammara Commercial Printing (Memon Goth, Malir) > Lead Time 30 Days • • • • • • • • Packaging – Saima Packaging (Korangi Industrial Area) > Lead Time 30 Days
Slicing Aluminum foils - Muhammad Corporations, Gulshan -e- Iqbal Cartons – Sultan Packages (Dalmiya, Karachi) > Lead time 7 Days Cartons – King Packages (Lalukhait, Karachi) > Lead Time 7 Days Cartons - Decent packages (S.I.T.E Area) > Lead time 7 Days Dextrose – Rafhan Industries (Faisalabad) Pseudo - Alpha Chemicals – (Lahore) Essential Chemicals – (Lahore)
IMPORT PURCHASING
ABBOTT Pakistan has indenters through which they place their orders to the respective manufacturers of raw materials Some of the Indenters of ABBOTT Pakistan are: • • • • .Rasheedsons - KHI Munico Associates - KHI S. Aijazuddinn - KHI Arfeen - KHI
INDENTER
An indenter is a local supplier or the middle party, we also call them as an agent who gives information to the manufacturer and tells then to arrange the material. They have link with the manufacturer and paid commission by them.
IMPORTED RAW MATERIALS
• • • • • • • • Dy Red – Sencient UK Potassium chloride – Merck, Germany Sodium Citrate – Sanfu, Taiwan Sodium chloride – Dominon salt, New Zealand Acid Citric – Jungvuzlaur, Austria Aluminum Seals and PV– Vaasen, Flexible Packaging Holland Artificial bubble gum – IFF Holland Supplier for Sugar - Malayam Malaysics, Malayasia
•
Sodium Sulphate – Merck, Germany
IMPORTED MATERIALS’ AVERAGE LEAD TIME
• • By sea is approximately 75 days By air approximately 45 days
DOCUMENTS REQUIRED FOR IMPORT
• • • Invoice Picking List Form 3 and 7 (Imposed by Ministry of Health which contains Batch Certificate, name of the manufacturer, raw material to get a Drug Import License from MOH) • • • Bill of Lading / Air Label Certificate of Analysis Certificate of Origin
OPENING OF LC
For importing material, ABBOTT needs to open an LC. An LC is a Letter Of Credit which is opened through a bank and it ensures to the manufacturer that if they are going to provide the material to Abbott then they are going to pay you on the scheduled date. This goes for Abbott also and It’s their job if they receive the material on time then they have to pay to the manufacturer
ADVISING BANKS OF ABBOT PAKISTAN
• • • • Detuche Bank Standard Chartered Bank ABN AMBRO HSBC Then after this process the LC is send to the concern suppliers and indenters and then they set the raw material to be shipped, shipment is done through different shipping company and this part is dealt by the imports department.
FEW SHIPPING COMPANIES THROUGH WHICH ABBOT PAKISTAN IMPORTS RAW MATERIALS
• • • P&O NEDLLOYD MAERSK SEALAND HOPAG LLOYD
WAREHOUSE
FIFO Checking of raw material on the bases of check list
Received through MRR & kept in quarantine for QA approval
Storage of raw/packaging material after acceptance
Handling of non acceptance material
Wastage Warehouse
Storage of control/locater system
Storage of temperature sensitive material
Cold Storage (Refrigerators 2C- 8C)
Issue of raw material MO
Hazardous drug labeling
Washing of utensils, containers Material requisition return
Manufacturing
End Product
Quality Assurance of Finished Good
Warehouse FO The process of warehousing starts when a consignment enters the premises of ABBOTT and starts unloading. An actual physical cont is taken first and only then is the consignment allowed to be fully offloaded. Two separate warehouse facilities exist: one for finished orders and one for material orders. Furthermore, material orders consist of two types of materials: • • Active Ingredients Exciepent Ingredients While offloading material orders, if any individual packet is found to be damaged or exposed, it is straight away placed in the Rejection Room which is located separately so that there is no possibility that it might get mixed and be used up in the production
process. Also, there are certain raw materials which require a temperature range of 2-8°C. In order to ensure that this temperature range is maintained throughout its long journey, each packet has a temperature seal attached to it and if, at any point in time during transportation, the temperature exceeds the said limit, it changes color. This acts as a surety because although at the time of inspection the temperature might appear normal, but this temperature seal really tells us whether the temperature range was breached or not during transportation. In keeping with its policy of using only the best materials, all consignments have to pass a Quality Assurance test before they can be used in the production process. Because of the large number of consignments that arrive, the Quality Assurance Department draws out samples from the entire consignment of exciepent ingredients while all active ingredients are tested fully. While under quality testing, the consignment is placed in a quarantine area and a Yellow sticker is placed on items, specifying that such batches cannot be used up under any circumstances. At this point, the consignment’s status is designated as Quarantined, or simply “Q”. Depending on the number of batches of exciepent ingredients, Quality Assurance draws out the following number of samples:
No.
of
Packages
Arriving 5 5 - 11 11 - 50 50 - 100 100 - 250 over 250
Size of Sample Drawn All 5 7 10 15 20
Once Quality Assurance has tested the sample, they place a Green Sticker on the consignment which is known as the Release Sticker. Only then is the status of the batch changed from Q to A, which stands for Assured and the consignment is ready to be used up in the production process. It must be mentioned that the Warehouse operates on a first
in first out and this ensures the maximum amount of time of the final product before it expires. After manufacturing, Finished Products are again sent to the Quality Assurance Department for testing. Once end products have passed quality testing, they are placed in the FO Warehouse with a green sticker, which means that they are ready to be delivered. Once the material is arrived at the store, the MO warehouse personnel store the material according to: • • • • • • Product Name. Quantity. Supplier Name. Import invoice. Certificate of Analysis Quality Control Report. From supplier
Type of information through which Finished Product docking is done in the FO ware house • • • • Product Name. Batch No. Quantity. Release Status.
RECEIVING THROUGH MRR
Raw material is received in warehouse through MRR (Material Receiving Report).This report ensures that the right raw material for the required product is received.
FOR TESTING QA
The raw material is send to QA (Quality Assurance) for testing if it approved then it is ready for issuance to the manufacturing department also called as MFG. If it’s rejected then it is send back to the suppliers.
PRACTICES THAT SET ABBOTT APART
The Rejection Room where damaged or exposed materials are placed can only be accessed via two keys which must be placed simultaneously in the lock. The warehouse Manager has one key, while the Quality Assurance Department has the other. ABBOTT Pakistan also has a method of ensuring that such faulty material is not sold on the black market. For this reason, an employee of Quality Assurance accompanies the inferior quality materials to a disposal site where the materials are put into an incinerator where the temperature is as high as 800°C. The name of the facility where ABBOTT disposes off such materials is ABBASEEN.
EXPORTS
Demand of products received by external customer
Performa raised against the demand of products by the exports in charge
Performa forwarded to Materials planning
Arrangement of raw material regarding the product
Invoice and bill of lading prepared
Documents sent to MOH Ministry of Health
Shipment made before the due time after all the process has been completed before.
ABBOTT Pakistan fulfills the demand of countries like: • • • • • • • South Africa Sri Lanka Thailand Bangladesh Malaysia Indonesia Syria
For example if there is a demand of 8,000 units from Sri Lanka, imports comprising 2,000 units of Vitamins, 2000 units of Inject-able, 3500 units of General health care products like Mospel, Selson Blue and 1500 units of Nutritious products. The designated man will make a Performa according to the demand raised by certain country and forward it to the Material Planning Department requesting them to arrange the raw material as well as the Packaging material for the desired product. Export department will send the Performa to the advising bank through which an LC or bank contract is opened’ in return he will get an answer from the bank that they have received the Performa send by the person in charge in exports. During this period all the completed documents along with the Invoice, bill of lading will be send to MOH to check weather the product which is being send is the right quantity and the raw material through which it has been manufactured is the right specifications.
MAKE
MAKE
All the production held at Abbott is make- to -stock that is to say 99% of their making. Whereas 1% is make -to -order for certain customized institutional orders like for instance army orders which have special labeling/carton labeling requirements. The whole production/manufacturing process at Abbott may it be tablets, syrups or injections is based on production plan which is eventually based on MPS. Master production schedule is made by the supply department which is forwarded to the MATERIALS MANAGEMENT department .The job of Material Management department is to arrange the raw material for the production department well before the required time so that there are no delays in the manufacturing of the product. This plan is initially made during the plan stage. While planning production it is kept in view what resources they have with them in order to produce and what type of raw material is stored in warehouse so that according to that they make their production plan. Production plan is made on weekly bases as well as monthly bases depending upon the availability of the resources, which are required to make the required product. Then S &O P meeting is held, which is represented by two parties’ one from supply side and the other from demand side and production related decisions are made as per the plan. Abbott Pakistan is using BPCS system. This activity monitors the status of manufacturing department including: • • • Tablet manufacturing Syrups Injectables
The MO’s, which has been send to the manufacturing department for the finished product, are at what stage and what batches are being manufactured on which machines.
. As per this system, the system is programmed in such a way that only the multiples of batch size can be produced and no random manufacturing can be done that is to say if the batch size is 100 then 200 or 300 can be produced even if the requirement/demand is 125units. In order to cater the demand of 125units, 200units products need to be manufactured which will later be adjusted through the system in the coming months.
ABBOTT PAKISTAN TYPES OF PRODUCTS TYPES OF PRODUCT:
• • • • Tablets Liquids/Syrups/O.R.S Inject-able Creams/Ointments
MAIN PRODUCTS
• • • • • • • • • • • Multivitamins Antibiotics Anti Inflammatory Cough and Cold Haematincs Anesthetics Analgesics Anti Arthritic Antacid Anti B.P.H Anti Epileptic
STANDARD OPERATING PROCEDURES
• • • Cleaning Uniform Carefully usage of instruments
TOLERANCE LEVEL
Currently +/-5% tolerance level is set but it can vary from product to product.
PROCESS FLOW (TABLETS)
GRANULATION
DRYING
MILLING
BLENDING Bottleneck COMPRESSION
COATING
In granulation stage the raw material is put under a process where solids are broken down into small granules. Next is drying stage where these granules are kept on large trays and passed through e certain temperature for specific period of time (varying as per the tablet). Milling process where further REFINING of this dried material is done separately and is converted into fine powder form follows this stage. Then comes blending stage where different materials are mixed together and are then passed into the compression process where a certain amount of pressure is given and the mixed material is given a tablet form (shape). Coating is the last stage where the tablets are coated with sugar and dyes/ colors (HPMC and Methocyl) in order to differentiate the tablets from other tablets available and to avoid bitter taste. The bottlenecks in the production of tablets are compression and coating.
PROCESS FLOW (SYRUPS)
The processing of syrups is done in huge tanks, which are already filled with water (as per the requirement/specifications). Raw materials and glucose are added in the tanks, certain material are also dissolved separately in other small tanks or large beakers etc and dissolved solution is then added to the tanks along with glucose etc. the solution is heated at a very high temperature usually (varies as per different syrups). The sample is then passed to QA for testing and once the tests are approved the packaging of these syrups starts.
PACKAGING PROCESS (SYRUPS)
FILLING
SEALED
STERILIZED
LEAK TEST
RELEASED
PROCESS FLOW INJECTIBLES
The processing of inject-able is done in beakers with a capacity of 50 liters. The materials are mixed in that beaker in the form of a solution. If large amount of inject-able is required then large pressure vessel containers are used for mixing and making the solution. Keeping a PH check and PH adjustments is the most important factor during this process. The filtration of the solution should be 0.2 microns.
PROCESS FLOW (PEDIALYTE)
BOTTLE FEEDING & WASHING SOLUTION MANUFACTURING
FILLING SEALING Bottleneck Sterilization
LEAK TEST CAPPING
SKILLETING & TROLLY TRANSFER
PACKAGING LINE
AUTO CALVE
UNCAPPED
LEAK TESTER CAPPING
OPTICAL LABELLING SKILLETING & LSPC SEALING
DISTRIBUTION
DISTRIBUTION
The distribution at ABBOTT is all about delivering products to customers at the right time, right place and in right quantity so that there are no shortages. Distribution can be done through different methods.
TYPES OF DISTRIBUTION
• • Direct Distribution Indirect Distribution
Direct Distribution is done through the manufacturing plant i.e. after manufacturing, products are distributed via ABBOTT delivery trucks to the institutions according to contracts and demand by institutions. Indirect Distribution is all about distributing through appointed distributors i.e. those distributors who have proper contracts and than they distribute the respective product to the wholesalers and different chemists. Here, the concept of Third-party logistics (3PL) comes into play.
ABBOTT DISTRIBUTION
ABBOTT has their own depot i.e. their own distributorship in Karachi, Multan, Lahore and Islamabad dealing directly to customers (Distributors and institutions) ABBOTT has market distributors in big cities and specific
areas are assigned to each distributor (who works on 6% commission basis) so that they can specifically take care of their areas and make sure those proper services and products are delivered to each and every customer. These distributors are linked with ABBOTT through satellites which report back on weekly basis about sales and inventory level. ABBOTT Pakistan monitors these distributors with the help of inventory system as this is the standard system they use for distributors i.e. they are supposed to hold six weeks inventory.
DISTRIBUTORS
• • • • • Premier Agency—Muslimabad, Karachi. Babar Medicine, Lahore. Nadeem Traders, Peshawar. Baloch Enterprise, Multan. D.S Pharma, Rawalpindi.
MODES OF TRANSPORTATION
ABBOTT has different modes of transport as per requirement of the product and the distance to be covered. Some products such as Atrelax require temperature controlled environments (2-8 °C) and for this reason they are delivered to Peshawar through courier services so that they can be maintained properly throughout. They have their own vans with ABBOTT monogram and they are generally used for distributing to local customers (distributors and institutions) within Karachi and nearby areas. Names of some of the transportation services hired by ABBOTT are as follows: • • Lahore Naulakkah Transport Bashir Siddique Trasport
• • •
Fast Track Cargo Service Leopard Courier Services Courier Per emergency
ABBOTT’S DISTRIBUTION CHANNEL
Abbott Pak Abbott truck Hospital
Cent. Depot
Distributor
Abbott truck
Wholesaler
DOCUMENTATION AND INVOICING
There are some legal formalities that need to be fulfilled before making a contract with distributors. • • • Delivery Chalaan Customer Invoice Merchandise Receiving Report (MRR) ⇒ ⇒ ⇒ ⇒ ⇒ ⇒ Product Name Quantity Delivered by Received by Condition (sound or spoiled) Date of receiving
RESTRICTIONS
There are few rules and regulations that are very important for the company and distributors to abide by them in order to avoid any mishap or confusion. • • • Distributors can’t go out of their area for sale. Discount policy should be followed according to company’s instructions. Distributors should carry 6 weeks inventory at there side.
RETURNS
Product Returns
MANUFACTURER
RETURN
There are two types of returns, one associated with Finished Orders and the other associated with Material Orders.
CONDITIONS FOR RETURNING RAW MATERIALS
Raw Materials are returned either at the time when they are being unloaded or after they have been tested by the QA and found to be defective.
RETURN OF MATERIAL ORDERS (MO’S)
This can occur if the batch size is found to be wrong i.e. ABBOTT suppliers mistakenly supplied the wrong quantity of materials or the materials were of incorrect specifications or the product is found contaminated. In either case, the material is not allowed to be kept in the warehouse and is returned immediately. Another type of Source Return takes place after disapproval from the Quality Assurance Department. The inferior material along with the entire batch with which it was delivered at ABBOTT is sent to the Rejection Room which is located in a separate building located
far away from the manufacturing plant. ABBOTT also has an approved policy of disposing these materials which is in accordance with the EPA ACT 2003.
WASTAGE HANDLING
There is only one dumping side in Karachi, Surjani town which is owned by the Government of Pakistan but it is not upto the standards set by the Parent Company (Abbott In’t) that is why ABBOTT Pakistan does the dumping through a Private organization name ABASEEN (Pvt) Ltd which is a more costly as compare to the traditional process (Rs 30/= per Kilogram)
RETURN OF FINISHED ORDERS (FO’S)
• Finished Orders are returned due to excess supply or supply of incorrectly specified products. • Another condition for returning finished orders occurs when the product is just 90 days away from its expiration date. In this case, ABBOTT grants a full refund to customers and donates all those drugs to hospitals that the drugs are used as soon as possible before its expiry date.
FO’s Returns
Factory
OBSERVATIONS AND RECOMMENDATIONS
• There is no Cold Storage warehouse for the sensitive Materials and Sensitive end Product to store, they have few refrigerators (2C-8C) to FO. keep MO They those and storage the should sensitive
make a proper cold warehouse to store Temperature sensitive products.
•
There is no proper handling of MO’s and FO’s. They are loaded and unloaded from the container/ truck is in an open environment (in the sunlight, in moisture) without any precautions to maintain a specific temperature and to handle the medicines carefully. They this and it will eventually should avoid doing
result in their low wastage cost which causes by the mishandling of the product.
•
All the unloading and loading is done mechanically and sometimes they just through the products. They should make a proper terminal where the trucks can easily and efficiently unloaded and loaded through a conveyer Belt or with a Fork lifter, so the product should not be damaged.
•
For temperature sensitive drugs or Materials, they do not use any Temperature control containers; they simply use the ice box at the time of packaging that particular product in the carton.
•
There are no bar code sensors or any computerized system to count the Material arrival from consignment, all the counting is done manually by the supervisors. They should adopt any computerized customized software to do the counting procedure so it will save the time and there will far less chances of error.
•
Chemicals drums and Acid bottles can easily be found in the visitors waiting area which proves that they do not have a proper material handling in ABBOTT Pakistan.
•
The empty bottles and caps for syrups can be found at the stairs of the Material Management department.
REFERENCES:
COUNTRY NAME: GROWTH RATE: 6.6% GDP: POPULATION:
PAKISTAN
6.9% 165.8million
LITERACY RATE: 48.7% PER CAPITA INCOME: $847
COMPANY PROFILE
Abbot Laboratories (Pakistan) Ltd. The company’s principal activities are to manufacture, import and market based pharmaceutical, nutritional, diagnostic, hospital and consumer products and provides toll-manufacturing services. It operates in two segments Pharmaceutical and other. Pharmaceutical segment manufactures, import and markets research based pharmaceutical products registered with the ministry of health and provides toll-manufacturing services. Other segments includes importing, manufacturing and marketing diagnosing equipment, testing kits, consumer healthcare, nutritional and hospital products. The company’s pharmaceutical products include Kalaricid, Erthrocin, Hytrin, Epival, Brufen, Entamizole, protium and Forane. The other products include Ensure, Pediasure, Pedialyte, Formance etc. Abbott has approximately 70,000 employees worldwide and a global presence in more than 130countries. Abbott Pakistan started operation in Pakistan as a marketing affiliate in 1948. The company has steadily expanded to compromise a work force over 1400 employees. Currently two manufacturing facilities located at Landhi (largest tablet manufacturing plant) and Korangi in Karachi continue to use innovative technology to produce top quality pharmaceuticals products. The diagnostic division operates from its office located at Korangi, Karachi
Locations
Nutritionals and Pharmaceuticals Abbott (Pakistan) Ltd. P.O. Box 7229 Landhi Karachi, Pakistan Telephone: (92 21) 501 50 45 Facsimile: (92 21) 501 32 45
Diagnostics Abbott (Pakistan) Ltd. Plot 13, Sector 20 Korangi Industrial Area Karachi 74900 Pakistan Telephone: (92 21) 504 65 74 Facsimile: (92 21) 504 42 58
ABBOTT’S FINANCIAL DATA
FIVE YEARS SALES
YEARS 2002 2003 2004 2005 2006 SALES (rupees in millions) 4,004 4,277 4,598 5,176 5,888
COMPANY’S FIVE YEARS PROFIT
YEARS 2002 2003 2004 2005 2006 PROFIT (rupees in millions) 439 526 747 962 1,000
BENCHMARKING
Ratio Name Current Ratio Inventory Turnover Total Asset Turnover WYETH 4.10 1.69 times 60% SEARLE 1.714 10.11 times 10.2% HI-NOON 5.08 2.72 times 67.2% ABBOTT 4.76 4.69 times 1.17
Profit Margin on Sales Earnings Per Share Return on Assets
0.182 112 10.9
0.032 3.53 3.2
0.048 10 3.2
1.70 10.21 19.9
VISION
“To be a premier health care company in Pakistan”
MISSION
To deliver consistently superior products and services which contribute significantly to improve the quality of life of the consumers? This will be achieved while ensuring that the interests of all stakeholders including healthcare providers, employees, share holders and the communities are secured. Abbott Pakistan will comply with the highest standards of local cGMP/EHS and adhere to the corporate code of Business Conduct and Ethics.
DICTATED TO
• • • • • Employees Customers Share holders Suppliers Public
WE VALUE
• • • • Pioneering Achieving Caring Enduring
CORE VALUES OF ABBOTT
ABBOTT
Achieving
CAPABILITIES OF ABBOTT
caring
Enduring Pioneer ing
AGILITY
INTEGRITY Y
QUALITY OF EXECUTION
D EA L P
ER
I SH
O TI A IC UN N M CO
CORE COMPETENCIES OF ABBOT
Products & Services Customer intimacy operational excellence People
SUPPLY CHAIN MISSION
ABBOTT’s SCM mission is to configure, coordinate and improve all the sequentially related activities and set of operations with the idea of satisfying the entire chain of suppliers’ suppliers and customers’ customers by providing right product, at the right time, in the right quantity and becoming highly recognized by our employees, customers and shareholders and abiding by Government regulations by adhering to strict ethical and moral standards”.
SUPPLY CHAIN INTEGRATION
Customer I N F O R M A T I O N F L O W
Retailers/ wholesellers Distributors Warehouse ( F O) Manufacturing Warehouse (M O) Transportation Supplier Marketing P R O D U C T F L O W
ABBOTT’S SUPPLY CHAIN STRUCTURE
SUPPLY CHAIN MANAGER
CAPAPCITY PLANNER
MASTER SCHEDULER
MASTER SCHEDULER
PRODUCTION PLANNER
PRODUCTION PLANNER
MATERIALS MANAGER
WAREHOUSE MANAGE R
LOCAL/ IMPORTED PURCHASE MANAGER
EXPORTS MANAGER
SUPPLY CHAIN PROCESS
Marketing ( Demand Generated)
Manufacturing Planning (Demand Generated)
Material Planning
Vendors (Quotations asked)
LC
Follow up ---import & dispatches
Clearance Transit Time
Material in Warehouse
Material Available For Production
Production
QA
Released by QA
FO Batches
Packing line
FO Quarantine (Sampling test by QA)
Central Depot’s
Dispatches
Satellite Depot’s & Distribution
Institutions
Wholesalers
Retailers
SCOR MODEL
S U P P L I E R S
PLAN SOURCE RETURN MO Enable MAKE
DELIVER RETURN FO
C U S T O M E R S
Plan
Deliver
Source Return
Make
Deliver Return
Source Return
Make
Deliver Return
Source Return
Make
Deliver Return
Source
RM Manufactur er Supplier’s Supplier
Indenters Supplier
ABBOTT Lab Pakistan Company
Distributors
Whole salers
Customer
Customerė© Customer
PLANNING
Orders, which are planned according to the demand, made by the external customers, these orders are initially planned and then raw material is purchased according to the planned order. ABBOTT Pakistan’s marketing department considers few things at the time of planning such as past statistical figures like what they have achieved in the last 2-3 years. The ADS has a wide horizon of 24 months for better flexibility. It is not possible to make an ADS without considering the opinions of ABBOTT Pakistan’s 14 Product Managers who are responsible for projecting Aggregate demand for the next 24 month.
BUSINESS PLANNING
The executive management of ABBOTT Pakistan does the long term strategic planning. Every 7th day of the month they conduct a SNO (Sales and Operations) meeting. It is reviewed in the SNO meeting to highlight the gaps in performance if there any, and to make adjustments if required.
DISCUSS
PROPOSED FORECAST
SNO MEETING
ADS
Marketing department gives the forecast to the supply department and then it’s their job to make available all the resources required from the purchases till the delivery of end product to the consumer on the ATP (Availability to promise) .This is how they satisfy their external customers.
APPROVED DEMAND FORECAST
In ABBOTT Pakistan the demand is forecasted by the Marketing department. The Marketing department provides 24 months rolling aggregate demand forecast, which is known as ADS (Approved Demand Statement). This statement shows individual demands for all product lines demanded by end users to whom we are providing quality healthcare products.
ABNORMAL DEMAND PLANNING / HANDLING UNCERTAINTY
Abnormal demand is a demand, which comes unexpectedly Like at the time of War, NATURAL DISASTERS OR ANY EPIDEMICS According to ABBOTT they have a policy to maintain six weeks safety stock to handle the uncertainties and they have positioned themselves to handle such abnormal demand like ABBOTT did with MOSPEL at the time of Dengue Virus
APPROVED SUPPLY PLAN
This plan is made on the bases of ADS and is approved once the supply department has made the initial supply plan. Then after the supply plan has been made it is forwarded it to the MM (Material Management Department.)
MASTER PRODUCTION SCHEDULE
The entire production is based on this plan weather it is Tablet, syrup, injectables or syrup manufacturing. This is set up on the bases of forecasted and some times abnormal demand as well. Date for all the batches is set up according to this plan but when there is a sense of urgency then there are some changes made.
CUSTOMER
MARKETING
MAS
MANUGISTICS
MANUFACTURING
MASTER PRODUCTION ARRIVAL
This is the inventory, which is going to arrive in bulk, and it is the job of Master Production Scheduler to arrange the bulk. This bulk can either be for export or for the market demand done through forecast. He also sets up when to make the required batch on which date.
STOCK KEEPING UNITS
ABBOTT Pakistan has 270 SKU”s, out of which 240 Pharma products and 30 are Nutritional products.
SAFETY STOCK
The raw material, which is stored in extra units in warehouse, is known as safety stock. ABBOTT maintain a MO and FO safety Stock of 6 weeks,
MATERIAL MANAGEMENT PLANNING:
ABBOTT Pakistan is using MRP II to effectively and efficiently handle the Material issues, which is based on the information’s provided by MPS, It has been adopted by ABBOTT Pakistan due to the imposition posted by ABBOTT International, Chicago. This requirement tells us on the system what is the quantity required according to the Master Production Schedule. All transactions are made electronically into BPCS known as Business Planning & Control System. If there is an additional requirement due to abnormal demand then there are some changes made in MRP.
CAPACITY PLANNING
Capacity means a measured ability to accomplish work. Capacity planning is a process in which capacity is planned based upon expected demand and it needs to be balanced with required capacity utilization and it also outlines the capacity requirements for the production, availability of machines and what are the standard hours, which they are required to meet the forecasted demand. ABBOTT Pakistan have a CCR system known as Capacity Consumption Rate which tells us, the consumption rate of the resources, which are available for the production, and on the bases of this update a new planning is developed depending on the consumption rate. A capacity control process is used to measure and manage the resource requirements and where appropriate, the work through put and queue levels. Once they got the ADS than they sub divide that plan into monthly basis and adjust the machines capacity according to it. The planned capacity utilization at ABBOTT is approx. 95%. And to manage the capacity control process ABBOTT Pakistan is using a system known as BPCS which stands for Business Process Control System
ROUGH CUT CAPACITY PLANNING
It indicates requirements for resources by month for a 24-month horizon it is performed after MPS generation imply on critical work centers on Master Scheduled Items. Feasibility checks of MPS and early warning of Bottlenecks.
SCM CONFIGURATION
He knows when the raw material is going to arrive, who are the vendors are going to supply to us. Then accordingly he tells to the bulk planner to plan the inventory which is being piled up in the warehouse. Keep an eye on the efficiencies of different work centers, calculates input and output or work centers and decides which Batch to produce first and what is their in the queue waiting to be produced next.
MAKE OR BUY DECISION
As far as the make or buy decision is concerned, some of the products are imported. The primary reason for importing those products is that the quality of the raw materials is not up to the mark or they are very expensive. Also, these products cater to a very small market segment and manufacturing them here would not be profitable. Therefore ‘C’ categorgry materials (grading as per their value) are purchased locally like for instance Pseudo used in cough syrups from Lahore (alpha chemicals). Some of the products which ABBOTT buy from Parent company and from there subsidiaries. • • Pediasure Hematology Analyzers
The following products are manufactured in Pakistan. • • • Tablets Liquids/Syrups/O.R.S Injectables, Creams/ Ointments.
SOURCE
SOURCE
In Pharmaceutical Industry there are two types in ingredients: • • Active Ingredients Excipient Ingredients
ACTIVE INGREDIENTS
Is an essential intergradient for any specific drug, without which a drug does not cure a respective disease?
EXCIPIENT INGREDIENTS
Is an intergradient which itself is not workable, it when mixed with some other intergradient becomes curable for a respective disease.
It is against the Abbott Pakistan policy to disclose the Excipient Ingredients however some of the Active ingredients along with the suppliers and the country of origin are as follows: • • • • • • • Dy Red – sencient UK Potassium chloride – Merck, Germany Sodium Citrate – Sanfu, Taiwan Sodium chloride – Dominon salt, New Zealand Acid Citric – Jungvuzlaur, Austria Dextrose – Rafhan Industries Faisalabad Artificial bubble gum – IFF Holland
Once the ADS passes in the organization the MM department comes into function, the responsibilities and function can be easily understood by the MM department chart MATERIALS MANAGEMENT
WAREHOUS E
LOCAL/ IMPORTED PURCHASE
EXPORTS
MPS is made by the supply department checked by the supply manager and then forwarded it to the MM department. Then according to the MRP (Material Requirement Planning) an enquiry is carried out for the selection of the suppliers. This is the initiator of Abbot or the most imperative department of the organization. Each and every individual in this department has to play his role according to the requirements of Abbott. All the raw material is arranged whether it is selected by the local vendor or the International vendor. MPS is forwarded to the purchase department and then it’s the job of purchase department to fulfill their requirements and to select the right vendor who meets the specs of the organization. This is not a game of taking risk or gambling but one needs to rethink again and again in order to select the vendor who provides the raw material to the organization. Different quotations are sent to different manufacturers or the vendors, an audit is also carried out and then through different indenters a BID SHEET is prepared.
BID SHEET
A bid sheet is a low cost effective sheet in which there are quotations form different suppliers and on the bases of that low cost suppliers are selected comparing their LANDED COST.
It includes: • • • • • • • • • • Representative/Agent Name of manufacturer and country Vendor status Quotation date Foreign currency Duty Landed cost/kg Local currency Exchange rates Cost and freight
Then after getting the bid sheet orders are finalized and there is a request for an indenter. After the request of an indenter the bid sheet along with the approved indenter is send for approval to the finance department.
REQUIREMENTS FOR THE VENDOR APPROVAL
1) Vendor specification 2) Testing method 3) Abbott Specification signed by vendor 4) MFG date expiry date/shelf life 5) Stability data to support shelf life 6) Vendor evaluation check list 7) Material safety data sheet (MSDS) 8) Full range of raw material 9) Vendors’ certificate of analysis 10) Recommended storage condition 11) Technical bulletin 12) List of solvent if used & other residual levels 13) Is your vendor already approved in other Abbott affiliate? 14) TSE/BSE statement. Transmissible Spongiform Encephalopathy’s/Bovine Spongiform Encephalopathy 15) Vendor capacity
VENDORS APPROVAL STEPS
Material Sample and vendor also provides Certificate of Analysis & Form 7.
Quality Assurance test of the material in ABBOTT”s own laboratory
Quality Control approves the material and assigns a number to batch and a Yellow Sticker.
Trial Batch is made of a actual material
Stability Testing (QA)
Material Approval (QA) Quality Assurance issue a Green Sticker (Release)
Batch Manufactured
End Product
ANALYSIS OF THE REQUIREMENT
Two general categories for vendors are: A) Approved and Active B) Approved and Inactive This is the bases on which the vendors are selected and it is conducted by the ABBOTT itself in order to select the vendor who can provide the material of good quality and at low cost .The basic purpose of selecting a vendor is to have quality service provided by them and to check their EFFECIENCY & RESPONSIVENESS. Quotations from different vendors are sent through mail and on the bases of the BID SHEET, final selection of the vendor is made. There is no indenter involved in local purchases. These are the requirements of ABBOTT’S Pakistan in the selection of their vendors; the vendors must meet these requirements and specifications in order to be approved as a vendor to provide the raw material to this leading pharmaceutical industry. Let suppose if MM department, is buying vitamin C form a vendor worth $4 and a vendor contacts them and says that he is going to provide them of $3, then the MM department will check his past certificate of Analysis or his services to any Abbott affiliate. They will also check his record against other Pharmaceutical industries and his testing analysis, if they qualified then they will buy the material and give it to the QA depart and they will conduct the stability and shelf life test which can take 3-9 months depending on the stability of the raw material. The material should not have pig fats which are used in the raw material by the European vendors.
PROCUREMENT
ABBOTT Pakistan has two purchasing departments. One is for local purchases and the other one is for imports. The procurement function is bifurcated in two categories: • • Direct Product Related Purchases General Purchases
There is a clause imposed by ABBOTT Int. Chicago on ABBOTT Pakistan that if the amount of requisition value is above $ 1000, then at least 3 quotations must be taken.
GENERAL PURCHASES
General Purchases include routine items such as stationery, office equipments, transportations and other minor items which are not directly related with production activities.
DIRECT PRODUCT RELATED PURCHASES
This includes each and every raw material that is required to make end products
MATERIAL CLASSIFICATIONS
ABBOTT Pakistan classifies its materials according to the values or the cost of materials, basically they have allotted three grades or types to their materials:
• •
Grade A (very costly materials, e.g. erythromycin) Grade B (moderate cost, e.g. clathromycin)
•
Grade C (least cost, e.g. bubble gum and artificial flavors like mint)
LOCAL PURCHASING
Local purchasing department of Abbott Laboratories Pakistan deals with local vendors concerning: • Designing –FP Plastics, Al-Ahad Plastics, Thermoplas (Korangi) > Lead Time 30 Days • Printing–Ammara Commercial Printing (Memon Goth, Malir) > Lead Time 30 Days • • • • • • • • Packaging – Saima Packaging (Korangi Industrial Area) > Lead Time 30 Days
Slicing Aluminum foils - Muhammad Corporations, Gulshan -e- Iqbal Cartons – Sultan Packages (Dalmiya, Karachi) > Lead time 7 Days Cartons – King Packages (Lalukhait, Karachi) > Lead Time 7 Days Cartons - Decent packages (S.I.T.E Area) > Lead time 7 Days Dextrose – Rafhan Industries (Faisalabad) Pseudo - Alpha Chemicals – (Lahore) Essential Chemicals – (Lahore)
IMPORT PURCHASING
ABBOTT Pakistan has indenters through which they place their orders to the respective manufacturers of raw materials Some of the Indenters of ABBOTT Pakistan are: • • • • .Rasheedsons - KHI Munico Associates - KHI S. Aijazuddinn - KHI Arfeen - KHI
INDENTER
An indenter is a local supplier or the middle party, we also call them as an agent who gives information to the manufacturer and tells then to arrange the material. They have link with the manufacturer and paid commission by them.
IMPORTED RAW MATERIALS
• • • • • • • • Dy Red – Sencient UK Potassium chloride – Merck, Germany Sodium Citrate – Sanfu, Taiwan Sodium chloride – Dominon salt, New Zealand Acid Citric – Jungvuzlaur, Austria Aluminum Seals and PV– Vaasen, Flexible Packaging Holland Artificial bubble gum – IFF Holland Supplier for Sugar - Malayam Malaysics, Malayasia
•
Sodium Sulphate – Merck, Germany
IMPORTED MATERIALS’ AVERAGE LEAD TIME
• • By sea is approximately 75 days By air approximately 45 days
DOCUMENTS REQUIRED FOR IMPORT
• • • Invoice Picking List Form 3 and 7 (Imposed by Ministry of Health which contains Batch Certificate, name of the manufacturer, raw material to get a Drug Import License from MOH) • • • Bill of Lading / Air Label Certificate of Analysis Certificate of Origin
OPENING OF LC
For importing material, ABBOTT needs to open an LC. An LC is a Letter Of Credit which is opened through a bank and it ensures to the manufacturer that if they are going to provide the material to Abbott then they are going to pay you on the scheduled date. This goes for Abbott also and It’s their job if they receive the material on time then they have to pay to the manufacturer
ADVISING BANKS OF ABBOT PAKISTAN
• • • • Detuche Bank Standard Chartered Bank ABN AMBRO HSBC Then after this process the LC is send to the concern suppliers and indenters and then they set the raw material to be shipped, shipment is done through different shipping company and this part is dealt by the imports department.
FEW SHIPPING COMPANIES THROUGH WHICH ABBOT PAKISTAN IMPORTS RAW MATERIALS
• • • P&O NEDLLOYD MAERSK SEALAND HOPAG LLOYD
WAREHOUSE
FIFO Checking of raw material on the bases of check list
Received through MRR & kept in quarantine for QA approval
Storage of raw/packaging material after acceptance
Handling of non acceptance material
Wastage Warehouse
Storage of control/locater system
Storage of temperature sensitive material
Cold Storage (Refrigerators 2C- 8C)
Issue of raw material MO
Hazardous drug labeling
Washing of utensils, containers Material requisition return
Manufacturing
End Product
Quality Assurance of Finished Good
Warehouse FO The process of warehousing starts when a consignment enters the premises of ABBOTT and starts unloading. An actual physical cont is taken first and only then is the consignment allowed to be fully offloaded. Two separate warehouse facilities exist: one for finished orders and one for material orders. Furthermore, material orders consist of two types of materials: • • Active Ingredients Exciepent Ingredients While offloading material orders, if any individual packet is found to be damaged or exposed, it is straight away placed in the Rejection Room which is located separately so that there is no possibility that it might get mixed and be used up in the production
process. Also, there are certain raw materials which require a temperature range of 2-8°C. In order to ensure that this temperature range is maintained throughout its long journey, each packet has a temperature seal attached to it and if, at any point in time during transportation, the temperature exceeds the said limit, it changes color. This acts as a surety because although at the time of inspection the temperature might appear normal, but this temperature seal really tells us whether the temperature range was breached or not during transportation. In keeping with its policy of using only the best materials, all consignments have to pass a Quality Assurance test before they can be used in the production process. Because of the large number of consignments that arrive, the Quality Assurance Department draws out samples from the entire consignment of exciepent ingredients while all active ingredients are tested fully. While under quality testing, the consignment is placed in a quarantine area and a Yellow sticker is placed on items, specifying that such batches cannot be used up under any circumstances. At this point, the consignment’s status is designated as Quarantined, or simply “Q”. Depending on the number of batches of exciepent ingredients, Quality Assurance draws out the following number of samples:
No.
of
Packages
Arriving 5 5 - 11 11 - 50 50 - 100 100 - 250 over 250
Size of Sample Drawn All 5 7 10 15 20
Once Quality Assurance has tested the sample, they place a Green Sticker on the consignment which is known as the Release Sticker. Only then is the status of the batch changed from Q to A, which stands for Assured and the consignment is ready to be used up in the production process. It must be mentioned that the Warehouse operates on a first
in first out and this ensures the maximum amount of time of the final product before it expires. After manufacturing, Finished Products are again sent to the Quality Assurance Department for testing. Once end products have passed quality testing, they are placed in the FO Warehouse with a green sticker, which means that they are ready to be delivered. Once the material is arrived at the store, the MO warehouse personnel store the material according to: • • • • • • Product Name. Quantity. Supplier Name. Import invoice. Certificate of Analysis Quality Control Report. From supplier
Type of information through which Finished Product docking is done in the FO ware house • • • • Product Name. Batch No. Quantity. Release Status.
RECEIVING THROUGH MRR
Raw material is received in warehouse through MRR (Material Receiving Report).This report ensures that the right raw material for the required product is received.
FOR TESTING QA
The raw material is send to QA (Quality Assurance) for testing if it approved then it is ready for issuance to the manufacturing department also called as MFG. If it’s rejected then it is send back to the suppliers.
PRACTICES THAT SET ABBOTT APART
The Rejection Room where damaged or exposed materials are placed can only be accessed via two keys which must be placed simultaneously in the lock. The warehouse Manager has one key, while the Quality Assurance Department has the other. ABBOTT Pakistan also has a method of ensuring that such faulty material is not sold on the black market. For this reason, an employee of Quality Assurance accompanies the inferior quality materials to a disposal site where the materials are put into an incinerator where the temperature is as high as 800°C. The name of the facility where ABBOTT disposes off such materials is ABBASEEN.
EXPORTS
Demand of products received by external customer
Performa raised against the demand of products by the exports in charge
Performa forwarded to Materials planning
Arrangement of raw material regarding the product
Invoice and bill of lading prepared
Documents sent to MOH Ministry of Health
Shipment made before the due time after all the process has been completed before.
ABBOTT Pakistan fulfills the demand of countries like: • • • • • • • South Africa Sri Lanka Thailand Bangladesh Malaysia Indonesia Syria
For example if there is a demand of 8,000 units from Sri Lanka, imports comprising 2,000 units of Vitamins, 2000 units of Inject-able, 3500 units of General health care products like Mospel, Selson Blue and 1500 units of Nutritious products. The designated man will make a Performa according to the demand raised by certain country and forward it to the Material Planning Department requesting them to arrange the raw material as well as the Packaging material for the desired product. Export department will send the Performa to the advising bank through which an LC or bank contract is opened’ in return he will get an answer from the bank that they have received the Performa send by the person in charge in exports. During this period all the completed documents along with the Invoice, bill of lading will be send to MOH to check weather the product which is being send is the right quantity and the raw material through which it has been manufactured is the right specifications.
MAKE
MAKE
All the production held at Abbott is make- to -stock that is to say 99% of their making. Whereas 1% is make -to -order for certain customized institutional orders like for instance army orders which have special labeling/carton labeling requirements. The whole production/manufacturing process at Abbott may it be tablets, syrups or injections is based on production plan which is eventually based on MPS. Master production schedule is made by the supply department which is forwarded to the MATERIALS MANAGEMENT department .The job of Material Management department is to arrange the raw material for the production department well before the required time so that there are no delays in the manufacturing of the product. This plan is initially made during the plan stage. While planning production it is kept in view what resources they have with them in order to produce and what type of raw material is stored in warehouse so that according to that they make their production plan. Production plan is made on weekly bases as well as monthly bases depending upon the availability of the resources, which are required to make the required product. Then S &O P meeting is held, which is represented by two parties’ one from supply side and the other from demand side and production related decisions are made as per the plan. Abbott Pakistan is using BPCS system. This activity monitors the status of manufacturing department including: • • • Tablet manufacturing Syrups Injectables
The MO’s, which has been send to the manufacturing department for the finished product, are at what stage and what batches are being manufactured on which machines.
. As per this system, the system is programmed in such a way that only the multiples of batch size can be produced and no random manufacturing can be done that is to say if the batch size is 100 then 200 or 300 can be produced even if the requirement/demand is 125units. In order to cater the demand of 125units, 200units products need to be manufactured which will later be adjusted through the system in the coming months.
ABBOTT PAKISTAN TYPES OF PRODUCTS TYPES OF PRODUCT:
• • • • Tablets Liquids/Syrups/O.R.S Inject-able Creams/Ointments
MAIN PRODUCTS
• • • • • • • • • • • Multivitamins Antibiotics Anti Inflammatory Cough and Cold Haematincs Anesthetics Analgesics Anti Arthritic Antacid Anti B.P.H Anti Epileptic
STANDARD OPERATING PROCEDURES
• • • Cleaning Uniform Carefully usage of instruments
TOLERANCE LEVEL
Currently +/-5% tolerance level is set but it can vary from product to product.
PROCESS FLOW (TABLETS)
GRANULATION
DRYING
MILLING
BLENDING Bottleneck COMPRESSION
COATING
In granulation stage the raw material is put under a process where solids are broken down into small granules. Next is drying stage where these granules are kept on large trays and passed through e certain temperature for specific period of time (varying as per the tablet). Milling process where further REFINING of this dried material is done separately and is converted into fine powder form follows this stage. Then comes blending stage where different materials are mixed together and are then passed into the compression process where a certain amount of pressure is given and the mixed material is given a tablet form (shape). Coating is the last stage where the tablets are coated with sugar and dyes/ colors (HPMC and Methocyl) in order to differentiate the tablets from other tablets available and to avoid bitter taste. The bottlenecks in the production of tablets are compression and coating.
PROCESS FLOW (SYRUPS)
The processing of syrups is done in huge tanks, which are already filled with water (as per the requirement/specifications). Raw materials and glucose are added in the tanks, certain material are also dissolved separately in other small tanks or large beakers etc and dissolved solution is then added to the tanks along with glucose etc. the solution is heated at a very high temperature usually (varies as per different syrups). The sample is then passed to QA for testing and once the tests are approved the packaging of these syrups starts.
PACKAGING PROCESS (SYRUPS)
FILLING
SEALED
STERILIZED
LEAK TEST
RELEASED
PROCESS FLOW INJECTIBLES
The processing of inject-able is done in beakers with a capacity of 50 liters. The materials are mixed in that beaker in the form of a solution. If large amount of inject-able is required then large pressure vessel containers are used for mixing and making the solution. Keeping a PH check and PH adjustments is the most important factor during this process. The filtration of the solution should be 0.2 microns.
PROCESS FLOW (PEDIALYTE)
BOTTLE FEEDING & WASHING SOLUTION MANUFACTURING
FILLING SEALING Bottleneck Sterilization
LEAK TEST CAPPING
SKILLETING & TROLLY TRANSFER
PACKAGING LINE
AUTO CALVE
UNCAPPED
LEAK TESTER CAPPING
OPTICAL LABELLING SKILLETING & LSPC SEALING
DISTRIBUTION
DISTRIBUTION
The distribution at ABBOTT is all about delivering products to customers at the right time, right place and in right quantity so that there are no shortages. Distribution can be done through different methods.
TYPES OF DISTRIBUTION
• • Direct Distribution Indirect Distribution
Direct Distribution is done through the manufacturing plant i.e. after manufacturing, products are distributed via ABBOTT delivery trucks to the institutions according to contracts and demand by institutions. Indirect Distribution is all about distributing through appointed distributors i.e. those distributors who have proper contracts and than they distribute the respective product to the wholesalers and different chemists. Here, the concept of Third-party logistics (3PL) comes into play.
ABBOTT DISTRIBUTION
ABBOTT has their own depot i.e. their own distributorship in Karachi, Multan, Lahore and Islamabad dealing directly to customers (Distributors and institutions) ABBOTT has market distributors in big cities and specific
areas are assigned to each distributor (who works on 6% commission basis) so that they can specifically take care of their areas and make sure those proper services and products are delivered to each and every customer. These distributors are linked with ABBOTT through satellites which report back on weekly basis about sales and inventory level. ABBOTT Pakistan monitors these distributors with the help of inventory system as this is the standard system they use for distributors i.e. they are supposed to hold six weeks inventory.
DISTRIBUTORS
• • • • • Premier Agency—Muslimabad, Karachi. Babar Medicine, Lahore. Nadeem Traders, Peshawar. Baloch Enterprise, Multan. D.S Pharma, Rawalpindi.
MODES OF TRANSPORTATION
ABBOTT has different modes of transport as per requirement of the product and the distance to be covered. Some products such as Atrelax require temperature controlled environments (2-8 °C) and for this reason they are delivered to Peshawar through courier services so that they can be maintained properly throughout. They have their own vans with ABBOTT monogram and they are generally used for distributing to local customers (distributors and institutions) within Karachi and nearby areas. Names of some of the transportation services hired by ABBOTT are as follows: • • Lahore Naulakkah Transport Bashir Siddique Trasport
• • •
Fast Track Cargo Service Leopard Courier Services Courier Per emergency
ABBOTT’S DISTRIBUTION CHANNEL
Abbott Pak Abbott truck Hospital
Cent. Depot
Distributor
Abbott truck
Wholesaler
DOCUMENTATION AND INVOICING
There are some legal formalities that need to be fulfilled before making a contract with distributors. • • • Delivery Chalaan Customer Invoice Merchandise Receiving Report (MRR) ⇒ ⇒ ⇒ ⇒ ⇒ ⇒ Product Name Quantity Delivered by Received by Condition (sound or spoiled) Date of receiving
RESTRICTIONS
There are few rules and regulations that are very important for the company and distributors to abide by them in order to avoid any mishap or confusion. • • • Distributors can’t go out of their area for sale. Discount policy should be followed according to company’s instructions. Distributors should carry 6 weeks inventory at there side.
RETURNS
Product Returns
MANUFACTURER
RETURN
There are two types of returns, one associated with Finished Orders and the other associated with Material Orders.
CONDITIONS FOR RETURNING RAW MATERIALS
Raw Materials are returned either at the time when they are being unloaded or after they have been tested by the QA and found to be defective.
RETURN OF MATERIAL ORDERS (MO’S)
This can occur if the batch size is found to be wrong i.e. ABBOTT suppliers mistakenly supplied the wrong quantity of materials or the materials were of incorrect specifications or the product is found contaminated. In either case, the material is not allowed to be kept in the warehouse and is returned immediately. Another type of Source Return takes place after disapproval from the Quality Assurance Department. The inferior material along with the entire batch with which it was delivered at ABBOTT is sent to the Rejection Room which is located in a separate building located
far away from the manufacturing plant. ABBOTT also has an approved policy of disposing these materials which is in accordance with the EPA ACT 2003.
WASTAGE HANDLING
There is only one dumping side in Karachi, Surjani town which is owned by the Government of Pakistan but it is not upto the standards set by the Parent Company (Abbott In’t) that is why ABBOTT Pakistan does the dumping through a Private organization name ABASEEN (Pvt) Ltd which is a more costly as compare to the traditional process (Rs 30/= per Kilogram)
RETURN OF FINISHED ORDERS (FO’S)
• Finished Orders are returned due to excess supply or supply of incorrectly specified products. • Another condition for returning finished orders occurs when the product is just 90 days away from its expiration date. In this case, ABBOTT grants a full refund to customers and donates all those drugs to hospitals that the drugs are used as soon as possible before its expiry date.
FO’s Returns
Factory
OBSERVATIONS AND RECOMMENDATIONS
• There is no Cold Storage warehouse for the sensitive Materials and Sensitive end Product to store, they have few refrigerators (2C-8C) to FO. keep MO They those and storage the should sensitive
make a proper cold warehouse to store Temperature sensitive products.
•
There is no proper handling of MO’s and FO’s. They are loaded and unloaded from the container/ truck is in an open environment (in the sunlight, in moisture) without any precautions to maintain a specific temperature and to handle the medicines carefully. They this and it will eventually should avoid doing
result in their low wastage cost which causes by the mishandling of the product.
•
All the unloading and loading is done mechanically and sometimes they just through the products. They should make a proper terminal where the trucks can easily and efficiently unloaded and loaded through a conveyer Belt or with a Fork lifter, so the product should not be damaged.
•
For temperature sensitive drugs or Materials, they do not use any Temperature control containers; they simply use the ice box at the time of packaging that particular product in the carton.
•
There are no bar code sensors or any computerized system to count the Material arrival from consignment, all the counting is done manually by the supervisors. They should adopt any computerized customized software to do the counting procedure so it will save the time and there will far less chances of error.
•
Chemicals drums and Acid bottles can easily be found in the visitors waiting area which proves that they do not have a proper material handling in ABBOTT Pakistan.
•
The empty bottles and caps for syrups can be found at the stairs of the Material Management department.
REFERENCES:
