Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
&
Supply Chain Management
(RENATA LIMITED)
Information System
&
Supply Chain Management
i
(RENATA LIMITED)
Submitted To
Submitted By
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February 07, 2009
Sub: Presenting the paper you assigned for the course Financial
Information System.
Dear Sir
With due respect, we want to inform you that, we were given the opportunity
to prepare a report on Information Systems & its Supply Chain Management,
as a partial fulfillment of the requirement of the course Management
Information Systems(F – 406). This was really a very interesting & important
opportunity for us to work on. During the course of this assignment we
experienced every nook and corner of an organization (Renata Ltd.), which
gives us a lot of insights and understanding about the overall condition of the
organization’s information systems & how it is maintaining its supply chain
system.
Sincerely Yours
Sayma Siddiqui
(On behalf of the Group)
Enclosure
1. The Paper
ACKNOWLEDGEMENT
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The course teacher, Muhammad Bakhtear Uddin Talukdar, deserves the
thanks for assigning the topic and for necessary instruction.
We also would like to give thanks all the officers of Renata Ltd. specially Mr.
Shibbir Ahmed, IT Manager, Renata Ltd. & Mr. Shofiqul Islam, Marketing
Manager, Renata Ltd. who helped us a lot providing all the necessary
information.
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Table of Contents
v
No. Topic Page No.
Executive Summary vi
Part: one About the company 03
Company Background 04
Company description 05
Product and services 05
Part: Two Information system 07
Introduction 08
Dimensions of Information System in Renata 09
Organizations 09
Management: 09
Information Technology 10
Part: IS and SCM 11
Three
Supply chain management 12
Developments in supply chain management 13
Practice by Renata Limited 15
Supply Chain Models 16
Setbacks in supply chain management 17
Options for restructuring supply chain 18
E-supply chain management 22
IS infrastructure for supply chain 24
management
Supply chain process: 26
Information and supply chain 29
management
Supply Chain Management Application 30
Supply chain performance 30
measurement
Demand driven supply chain: 31
Systems as planned organizational change 32
Strategic analysis or critical success factors 34
Practice by Renata Limited 35
Software used by Renata 36
Goods Distribution Process 37
Part: Four Demand planning & Supply 38
Planning
The concept 39
THE demand planning 40
The supply planning 41
Recommendation & Conclusion 43
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EXECUTIVE SUMMARY
Supply chain concept is extended to the activities started from the raw
materials suppliers through the organization to the end consumer. Once
thought only as the Physical Distribution Management (PDM), that is the
logistics management, has now been the part of Enterprise Resources
Planning (ERP). From a set of activities is now considered a part, module, of
an integrated system.
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There has been a change in supply chain management thinking from a push
oriented supply chain that emphasizes distribution of a product to passive
customers to a pull-oriented supply chain that utilizes the supply chain to
deliver value to customers who are actively involved in product and service
specifications.
Our studied company, Renata Limited, also has got a Distribution Channel
Management (DCM) that works in the downstream supply chain arena while
upstream one is still managed conventionally with the help of mail or e-
commerce solution.
Over competition in the industry and the cost leadership approach have been
making the pace of change a bit slower and they are still being led by the
existing system, we can say legacy system. They still maintain a good
amount of safety level that cost time and hazards. But we see some
improvement in database management that works in downstream arena is
helping them a lot.
Since the market driving force is the marketing to doctors and chemist, any
sophisticated system, in their words, is only contributing to curtailed profit.
But some part of the industry is doing better in quality and excellence in
export while others whose market share are inside the boundary are
adjusting themselves to the situation.
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Objective of the report
General objective is to see that how an organization cope with the
information system to effectively make decisions and operate functional
activities. Assess the level of importance of supply chain management of the
company and also to determine how well the company meet up the
compliance of information system. More specific objective is to provide
information on Renata Ltd. & their supply chain management.
Scope
The scope of this report is limited to the overall description of the company,
their information system-hardware, software & Information technology
configuration, information system planning, supply chain management, their
demand planning and supply planning.
Methodologies
In this study, exploratory research was undertaken to gain insights and
understanding of their system and for preparing the assignment. To prepare
this term paper, we have collected information from different sources:
company personnel, things provided by the organization, internet searching
and our peer group. Some information, which was not available from any of
the sources, was assumed. After that a more comprehensive conclusive
research was undertaken to fulfill the main purpose of the study.
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About the Company
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COMPANY BACKGROUND
Renata Limited is a public limited company incorporated in Bangladesh, with
more than Tk. 2.3 billion in assets. The company manufactures and sells
various pharmaceutical products, animal health, animal nutritional, oral
saline, hormone products and other medical products in the local and foreign
markets. The company has two subsidiary companies; Renata Agro
Industries Limited and Purnava Limited.
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Another subsidiary, Purnava Limited, was incorporated as a private limited
company in 2004 to explore the prospects of entering into Fast Moving
Consumer Goods (FMCG). The principal activities of the company are to carry
on the business of manufacturing, marketing and distribution of all kinds of
consumer goods, consumer durables, food items, sugar confectioneries,
edible oils, beverages etc, raw materials, semi-finished items, producers,
goods and various other products of local or foreign origin and to engage in
the business as traders, importers, exporters, commission agents of all kinds
of goods and services including pharmaceutical drugs and medicines. But the
company has not started production yet.
COMPANY DESCRIPTION
Renata Limited is the holding company for Renata Agro Industries Limited
and Purnava Limited. Starting in 1972 as Pfizer Laboratories (Bangladesh)
Limited, subsidiary of Pfizer Corporation, USA this company was renamed as
‘’Renata Limited’’ in 1993 after divestment of shareholdings by Pfizer
corporation, USA. The company operates by manufacturing pharmaceutical
products, animal health medicines, nutritional and vaccines. It was listed in
Dhaka Stock Exchange in 1979.
Anto-bacterial preparation:
Cephalosporins is one of the most sold
anti-bacterial product of Renata ltd.
Anti-ulcerant Preparation:
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Omeprazole is one of the most reknowned
anti-ulcerant product of Renata Ltd.
Anti-spasmodic Preparation:
Anti-hemorrhoidal Preparations
Diasmin & Hesperidin is also
an effective anti-hemorrhoidal Preparation.
NSAID Preparations
Anti-allergic Preparations
Anti-Diabetic Preparations
Gliclazide is used for diabetic patient.
Cardiovascular Preparations
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Amlodipine is an effective medicine for cardiovascular patients.
Information Systems
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Introduction
By information we mean data that have been shaped into a form that is
meaningful and useful to human beings. Data in contrast, are streams of
raw facts representing events occurring in organization or the physical
environment before they have been organized and arranged into a form that
people can understand and use.
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Dimensions of Information System in Renata
Renata uses both the manual and computer based information system.
Manual systems serve important needs in Renata but they are not the
main focal point of our analysis. In the computer based information system
Renata uses an array of infoamation technologies including bar-code
scanning systems, handheld computers, intranet network, the internet, and
many different pieces of software for tracking packages, calculating fees,
maintaining customer accounts and managing logistics.
Organizations
Management:
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Information Technology
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Information System
&
Supply Chain Management
Supply Chain Management (SCM) includes not only supplier and buyer, but
also the intermediaries such as the supplier’s suppliers and the customers’
customers. It is the coordination of supply activities of an organization from
its suppliers and partners to its customers. For most commercial and not for
profit organization we can distinguish between upstream supply chain and
down stream supply chain.
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An organization’s supply chain can be viewed from a systems perspective as
the acquisition of resources (inputs) and their transformation (processes)
into products and services (outputs) which are then delivered to customers.
Such a perspective indicates that as part of moving to e-business,
organizations can review the transformation process and optimize it in order
to deliver products to customers with greater efficiency and lower cost.
The position of the system boundary for the SCM extends beyond the
organization- in involves not only improving the internal processes, but also
processed performed in conjunction with suppliers, distributors and
customers. The process perspective has also a strategic importance that
provides great opportunities to improve product performance and deliver
superior value to the customers. As a result, Supply Chain Management can
dramatically have an impact on the profitability of a company through
reducing operating costs and increasing customer satisfaction and so loyalty
and revenue.
For the companies that have first-tier suppliers, second-tier and even third-
tier suppliers or first-, second- and higher-tier customers maintain a supply
chain network. A supply chain network is the link between an organization
and all partners involved in multiple supply chain.
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Although information systems were developed to manage these processes
they were often paper-based and not integrated across different functions.
However, some leading companies started using EDI at this time. PDM was
essentially about the management of finished goods but not about the
management of materials and processes that impacted upon the distribution
process. PDM was superseded by logistics management which viewed
manufacturing storage and transport from raw material to final consumer as
integral parts of a total distribution process.
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undersupply/oversupply can have a significant impact on the organization’s
profitability. The two primary goals of supply chain management are to
maximize the efficiency and effectiveness of the total supply chain for the
benefit of all the players, not bust one section of the channel, and to
maximize the opportunity for the customer purchase by ensuring adequate
stock levels at all stages of the process.
These two goals impact upon the sourcing of raw materials and stockholding.
A recent phenomenon has been the rapid in global sourcing of supplies from
preferred suppliers, particularly amongst multinational or global
organizations. The internet will provide increased capability for the smaller
players to globally source raw materials and therefore improve their
competitiveness. The internet will revolutionize the dynamics of international
commerce and in particular lead to the more rapid internalization of small
and medium sized enterprise. The web will reduce the competitive
advantage of economies of scale in many industries, making it smaller
companies to compete on a worldwide basis.
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by suppliers and agents to improve targeting offers. However, as customers
become more aware of the value of information and as technology n the
internet enables them to protect private information relating to site visits
and transactions, then the opportunity grows for intermediaries to act as
customer agents not supplier agents.
The Block list, total procurement needed for a year, is usually made at the
beginning of a year with minor adjustment afterwards. This is determined by
a forecasting based on previous years sale with adjustment for the micro
factors, every single response from the field force who visit doctors and
chemists.
The technology used here are simple mail communication for the overall
supply chain while keeping track of every movement of inbound and
outbound logistics are kept in custom database. Since the procurement is
designed for once in a year there are tenders to bid by the suppliers, the
management is simple and largely done by the suppliers. For the local
supplier the complication is less and supply can happen as per order at any
time.
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Push supply chain
Push to Customer
Supplier
This model emphasizes on using the supply chain to deliver the value to
customers who are actively involved in product and service specifications.
Here the supply chain is constructed to deliver value to the customer by
reducing costs and increasing service quality.
Renata Limited is following the pull model of supply chain as they are
demand oriented and this model has been the strategy for many
organizations.
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The practice by Renata Limited for its supply chain, the Goods Distribution
Process (GDP), has been suffering from many problems that a future
participant in pharmaceuticals arena should have been eliminated. We can
list the shortcomings as following.
• The time lag in back is high as it needs several steps for ordering the
new materials and coordination with different agencies.
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supply chain elements through outsourcing. The two end elements of the
continuum are usually referred to as ‘vertical integration’ and ‘virtual
integration’.
Vertical integration refers the extent to which supply chain activities are
undertaken and controlled within the organization.
Vertical
Integration Vertical Virtual
integration
Disintegration
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There was a general trend in during the second half of twentieth century
from vertical integration through vertical disintegration to virtual integration.
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process span. This change is the main way in which e-business can
impact vertical integration by assisting the change from wide to
narrow process span.
xxvii
mice. Assembly of some components in final product by third parties, e.g.
adding appropriate monitor to system unit for each order.
The typical benefits that B2B companies have from e-SCM are as following
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Benefits: Lower costs through price competition and reduced spend
on manufacturing capacity and holding capacity. Better service
quality through contractual arrangement.
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Information systems need to deliver supply chain visibility to different parties
who need to access the supply chain information of an organization, whether
they be employees within the organization, suppliers, logistics service
providers or customers. Information systems have a key role in providing this
visibility. Since a huge volume of information defines supply chain processes
for each organization, users of this information need to be able to
personalize their view of information according to their need- customers
want to see the status of their order, suppliers want to access the
organization’s database to know when their customer is next likely to place
major order. Security is also important – of a company has differential
pricing, it will not want customers to see price differences.
FIG
These requirements for delivering supply chain information imply the need
for an integrated supply chain database with different personalized views for
different parties. A typical integrated information systems infrastructure for
delivering supply chain management is illustrated in above figure. It can be
xxx
seen that applications can be divided into those for planning the chain and
those to execute the supply chain process.
xxxi
competitive advantage may be based on entire supply chains rather than
individual firms.
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Plan:
Balance resources with requirement
Align supply chain plan with business and financial plan
Deliver:
Sources: Make:
Select carrier
Identify suppliers Schedule production
Route shipment
Schedule deliveries Evaluate quality & performance
Manage warehouse
Manage inventory Manage work in process
Invoice customers
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Manager A Manager B Manager C Manager C
Aggregate + analyze
Individual CSFs
Develop agreement on
company CFSs
Define company
CFSs
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Information and supply chain management
Inefficiencies in supply chain such as parts shortages, underutilization of
plant capacity, excessive finished goods inventory are caused by inaccurate
or untimely information. These supply chain inefficiencies can waste as much
as 25% of company’s operating costs.
xxxv
the flow of information between a company and its supply chain partners so
they can make better decisions to optimize their performance.
xxxvi
produce and deliver only what customers have ordered move up the supply
chain from retailers to distributors to manufacturers and eventually to
suppliers. Only products to fulfill these orders move back down the supply
chain to the retailer. Manufacturers would use only actual order demand
information to drive their production schedules and the procurement of
components or raw materials.
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Key business processes
Management strategy
3. Current system
Major systems supporting business functions and process
Current infrastructure capabilities
Hardware
Software
Database
Telecommunication and internet
Difficulties meeting business requirement
Anticipated future demands
4. New developments
New system projects
Project description
Business rationale
Application’ role in strategy
New infrastructure capabilities required
Hardware
Software
Database
Telecommunication and internet
5. Management strategy
Acquisition plans
Milestones and timing
Organizational realignment
Internal reorganization
Management controls
Major training initiatives
Personnel strategy
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6. Implementation plan
Anticipated difficulties in implementation
Progress report3
7. Budget requirements
Requirements
Potential savings
Financing
Acquisition cycle
This table is a summarize output of enterprise analysis which shows what
information is required to support a particular process, which processes
create the data, and which use them.
The principal method use in CFS analysis is personal interviews- three or four
with a number of top managers identifying their goals and the resulting
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CFSs. These personal CFSs are aggregated to develop a picture of the firm’s
CFSs. Then the systems are built to deliver information on these CFSs.
Distribution Planning
The Block list, total procurement needed for a year, is usually made at the
beginning of a year with minor adjustment afterwards. This is determined by
a forecasting based on previous years sale with adjustment for the micro
factors, every single response from the field force who visit doctors and
chemists. After analyzing all the required micro and macro factors, and
reviewing all those, generally a plan is given to the Distribution Chain
Channel.
Based on the condition of 15 sales outlet of Renata, and inventory kept in the
central warehouse, the total planning is determined. After initiating the plan,
goods are moved to the outlets for sale, from the central inventory
warehouse.
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The Organization Service Department of Renata Ltd. includes Purchase
Department and Distribution Department.
Mail Communication
The technology used here are simple mail communication for the overall
supply chain while keeping track of every movement of inbound and
outbound logistics are kept in custom database. Since the procurement is
designed for once in a year there are tenders to bid by the suppliers, the
management is simple and largely done by the suppliers. For the local
supplier the complication is less and supply can happen as per order at any
time.
Renata Ltd. has Intranet facilities for the inter connection of total
organization. For this, they use “World Client” software.
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For accounts purposes, Renata uses renowned software, which is called
“Troyee”. Troyee is effective for accounts purpose because, it records all
the entries in a structured format.
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Demand Planning
&
Supply Planning
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The concept
Demand planners are kind of like weather forecasters -- they rarely get credit
for doing their job correctly, and they're only noticed when they get it wrong.
Nevertheless, it's vitally important that they get it right, or else severe -- and
potentially disastrous -- supply chain glitches can occur.
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6. Educate before training. Because the demand planning process is
cross-functional, many people input to the forecast without realizing the
importance of their contributions. As a result, the quality of their
contributions may suffer. A good educational program will help everyone
understand their contribution and impact on the performance of the
demand plan.
7. Cleanse the data so you don't spend all your time questioning it and
losing confidence in the process, which can create a breeding ground for
others to second-guess the demand plan and produce their own version.
Demand planning deals with huge quantities of data and robust processes
are required to keep the data cleansed.
8. Trust the numbers and manage by exception. 80% of your return
can be achieved by reviewing 20% of the items.
9. Use the error in your forecast to positive effect. A good statistical
forecast will have an appropriate error which drives an appropriate safety
stock target. This leads to good inventory management and delivers
higher service with lower total inventory.
10. Deploy a proven best-in-class solution. A recent Aberdeen study
shows that companies that excel in demand management -- reporting
higher forecast accuracies and lower inventories -- are two-and-a-half
times as likely to have implemented a best-in-class demand planning
system.
• Response from the field force: They have got an efficient field force that
visits their customers, doctors and chemist, in particular make a demand
plan that would survive for the coming period based on their findings.
• Make regional demand schedule: As not every region of their market need
the same product in same quantity, they make a regional demand schedule
based on the data coming from the field force that indicate different trends
for territory.
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• Adjustment with the forecasted trend: Once they got the regional demand
schedule they adjust it with the forecasting based on the sales of previous
years and quantity the total needs for that year.
• Adjustment with the stock in hand: The finished goods in hand and the
returned goods form the market is subtracted from the total demanded
amount for that year. Company normally holds 8 weeks inventory level in
end, front and back, of finished goods and raw materials.
• Technology and time lag: The technology used here is intranet that helps
every field force unit to update the present demand condition at the end of
the day, every working day. Since the downstream supply chain is more
updated and automated the time lag is least, 12 hours. This can be checked
at any moment.
District
Regional Sales National
Field Force Sales Manager
Sales Manager Manager Sales Manager
(DSM)
• Block list and approval: Once the demand schedule is ready, it is formatted
into a block list and seeks the permission for import. This is done for supplies
from outside. For inside oriented supply no such steps need to be
maintained.
• Tender float: According to the approved block list the company calls the
eligible agents who can purchase the raw materials in favor of the company.
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There is a communication maintained between these agents and company to
supply the materials on time. This is manual.
• Segregating into lots: Then suppliers are asked to supply the raw material
needed in each month. The forecasted demand of each month is
communicated to the suppliers and they perform their job.
• Monthly production: According to the demand the company goes for monthly
production target. This may vary as per demand.
• Distribution: The Company has got 15 sales depots across the country which
supplies the finished product to each district according to their monthly
need. There is a central inventory that keeps connection with the depots and
upcoming supply needs.
Recommendation:
In near future, they have the plan to use Planning Based Improvement
process to strengthen their Information System & Supply Chain
Management, as per their opinion.
Nevertheless we can forward some recommendation based on our
understanding of the current position of supply chain management and
overall information system. They are
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• As long as the other related parties in their supply chain network are
not concerned B2B e-commerce and as long as there are legacy
system in the regulatory framework, a not integrated supply chain
network isn’t possible. So there should be a pressure from the industry
people to have it done.
Conclusion
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