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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.
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
Logistics Plan
- Supplier to CFA
- Shipping Plan Factory FG Stock Level
- Truck Loading Report
- Requisitions to be fulfilled
Update Sales
Requisitions (Status),
which are fulfilled.
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.
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