BY GROUP LEADER:

Nadiya Rashid 7539

GROUP MEMBERS:
Faiza Farooq Hammad Amin Hina Yousuf 5212 5430 5799

Acknowledgment
We would like to thank many people specially our teacher DR. ROSHAN SHIEKH. He has taught us all priceless lessons in hard work, confidence, and success.Thanks also to Mr.Rizwan (Manager Supply Chain) , Mr.Naseer Zia (Head Of Business Development) and Tariq Nawab (Materials Manager) for their cooperation to provide all the necessary information regarding supply chain of Novartis. Thanks also to the other Public. We are grateful for their patience and support.

KEY WORDS
NOVARTIS

PHARAMACEUTICAL COMPANY

SUPPLY CHAIN MANGEMENT

SCOR MODEL

ABSTRACT
As part of our introductory SUPPLY CHAIN MANAGEMENT course, a study has been undertaken of the Novartis Pakistan pharmaceuticals to identify the supply chain processes, that involve Their company profile, logistics network and their score model and to make recommendations on how the company could make a better use of its resources in order to provide the quality products on right time, right location and the right quantity to the end customer. .The primary purpose of the study was to make an analysis of the company, looking at its relevance to the health sector, including production processes, pricing and turnover performance, and export performance. The study also looks at the bottlenecks affecting the Novartis pharmaceutical. The study presents a number of recommendations that could be implemented for the Novartis supply chain process. .

Novartis was created in 1996 from the merger of Ciba-Geigy and Sandoz Laboratories, both Swiss companies with long histories. At the time it was said to be the largest corporate merger in history after the merger Novartis reorganized its activities, and spun out its chemicals activities as Ciba Specialty Chemicals. In 2003, Novartis created Sandoz, a subsidiary that bundles its generic drug production, reusing the brand of one of its predecessor companies. On April 20, 2006 Novartis acquired the California-based Chiron Corporation. Chiron was formerly divided into three units: Chiron Vaccines and Chiron Blood Testing, which now combine to form Novartis Vaccines and Diagnostics, and Chiron Biopharmaceuticals, to be integrated into Novartis Pharmaceuticals. The ongoing Basel Campus Project has the aim to transform the St. Johann site - Novartis headquarters in Basel - "from an industrial complex to a place of innovation, knowledge and encounter".

With more than 10000 associates and operations in 140 countries, Novartis offers a wide range of healthcare products through its Pharmaceuticals, Vaccines and Diagnostics, Sandoz and Consumer Health divisions. The portfolio of NOVARTIS can be described as follows: Pharmaceuticals: Innovative medicines with improved efficacy and fewer side-effects Vaccines and Diagnostics: Products to fight vaccine-preventable viral and bacterial diseases, as well as diagnostic tools Sandoz: Affordable high-quality generic treatment options following the expiry of patents

Pharmaceuticals
The Pharmaceuticals division of Novartis is recognized worldwide for the innovative medicines it provides to patients, physicians and healthcare organizations. This growing business develops and markets patent protected prescription drugs for important health needs. Novartis products are concentrated in major therapeutic areas: Cardiovascular & Metabolism Oncology & Hematology Neuroscience Respiratory Infectious Diseases, Transplantation & Immunology (IDTI) Ophthalmics, Dermatology, Gastrointestinal, Urinary (ODGU) Arthritis & Bone Novartis current product portfolio includes more than 45 key marketed products, many of which are leaders in their respective therapeutic areas. The product development pipeline involves nearly 140 projectsincluding potential new products as well as potential new indications or formulations for existing productsin various stages of clinical development. Industry experts have ranked Novartis as a leader for having one of the best combinations of organic growth, pipeline opportunities, and low patent-risk exposure among major companies in the pharmaceuticals industry.

Vaccines and Diagnostics

The Vaccines and Diagnostics division is a leader in providing products to fight more than 20 vaccine-preventable viral and bacterial diseases, as well as in sophisticated equipment used to test blood donations for infections. This new division was formed as a new strategic growth platform following the acquisition of Chiron Corporation in 2006. The portfolio includes more than 20 vaccines used to prevent most life-threatening viral and bacterial infections that were once major public health issues. These products include vaccines against meningococcal infections, required immunizations against childhood diseases, and vaccines to protect travelers against diseases endemic to certain regions. Our division consists of two business units: Novartis Vaccines, focused on creating innovative products to prevent influenza, meningitis and other diseases Novartis blood testing business, which retains the Chiron name, dedicated to preventing the spread of infectious diseases through novel blood-screening tools

Sandoz
Sandoz is a leading global supplier of generic pharmaceuticals. It develop, produce and market high-quality medicines that compete with chemically identical, off-patent branded drugs, often reducing the costs of treatment. Through Sandoz, Novartis is the only major pharmaceutical company to have leadership positions in both patented prescription drugs and generic pharmaceuticals. It offer more than 840 compounds in over 5000 forms in 110 countries. Significant product groups include antibiotics, treatments for central nervous system disorders, gastrointestinal medicines, cardiovascular treatments and hormone therapies. Novartis offer a wide range of products covering many steps in the drug production process: basic molecules, intermediates, active substances and finished drugs. We are an important biotechnological competence center within Novartis due to our many years of manufacturing experience in this area. Our name stands for three related values: speed and simplicity, customer and quality focus, trust and mutual respect. At the same time, we make every effort to stay close to our customers in local markets with decentralized commercial operations. Ranked as the second-largest generics company in the world based on sales, we have completed the integration of a series of targeted acquisitions to strengthen our product portfolio, improve technological expertise and expand our geographic presence. The acquisitions of Hexal and Eon Labs was completed in mid-2005.

Novartis Mission
We want to discover, develop and successfully market innovative products to prevent and cure diseases, to ease suffering and to enhance the quality of life. We also want to provide a shareholder return that reflects Outstanding performance and to adequately reward those who invest ideas and work in our company.

Commitment to Patients We endorse the right to health. This is our primary responsibility. Novartis has pioneered an array of programs to enhance both affordability and access to treatment in developed and developing countries. In 2006, our contributions valued at USD 755 million reached 33.6 million patients globally Commitment to Ethical Business Conduct Strong ethical standards are essential to our drive for top performance. We have established a high-integrity corporate culture based on trust, respect and compliance with legal regulations. We do so because we are convinced it is the right thing to doand is key to our business success. Commitment to Our People and Communities We endeavor to ensure the safety and promote the health, careers, diversity and livelihoods of our people. We also strive to be a good neighbor in the communities where our associates and their families live and work. Commitment to Environmental Care We have a clear responsibility to ensure we protect the environment by operating to the highest standards. We adopt a risk-based approach and focus on minimizing our use of natural resources, cutting our energy consumption and emissions, and preventing active ingredients from entering the environment.

10

SUPPLY CHAIN MISSION STATEMENT

Every second brings our customer closer to us because we know the value of time, life and business. We want to bring our customers closer to us by providing value through our products and services, committing ourselves to providing the quality, variety and convenience they expect.

11

Location of plant/ Warehouses & retailers in Pakistan: Factory

Factory of Novartis is located at JAMSHORO. This factory is not only catering the demand of Pakistan but also exporting to other countries like Afghanistan and Philippines. Business Unit: Address: Consumer Health Novartis Pharma (Pakistan) Limited P.O. Box 100 & 7247 Karachi 74000 PAKISTAN +92 21 2313386to90 +92 21 2311009 Novartis Pharma (Pakistan) Limited 15 West Wharf Karachi 74000

Phone: Fax: Site Address:

Regional offices:
Novartis has following regional offices nationwide Quetta Karachi Hyderabad Sakkar Peshawar Islamabad Lahore Multan 12

Faisalabad

Warehouses:
Novartis has three warehouses in Pakistan which are located at: Karachi -West Wharf Jamshoro Hyderabad

The Karachi warehouse is use to store raw material which directly come from other countries or thorough local vendors. Whereas Hyderabad warehouse is use to store material if they are facing some kind of storage problem or incase of any problem in the mode of transportation. They cannot directly send the material which comes through shipment but store them until it meet the demand for the production .that usually save their transportation cost.

13

The Karachi warehouse is located at WEST WHARF where it manages all the flow of Raw material from port to the jamshoro. The Hyderabad warehouse is used to store additional amount of finished good products or raw material. Whereas the warehouse located at jamshoro is the factory based warehouse which stores all the finished goods products and Raw Material as per production requirement. Parazelsus owned 9 warehouses allover Pakistan. The warehouse locations are not owned by Parazelsus but are hired on rental basis. Most of these depots also comprise of the office premises for Novartis personnel. Generally raw materials, finished products, packaging materials and expired or rejected goods are stored in separate storage areas or separate compartments within a combined warehouse. Temperature sensitive raw materials are stored in a separate cold storage room, maintained at the desirable temperature.

Retailers
14

They have different retailer in different cities. They didnt have much information about retailer because they are under the control of parazelsus which is not in the control of Novartis they do their work separately .parazelsus is only working for Novartis .their distribution channels are divided into six cities and their total customer coverage 25431 of which 53 % are their retailer who sell their products.

Marketing Strategies
Strategies used by Novartis in introduction of their new products are as follows. Typically pharmaceuticals companies dont use advertisement in their product promotion. For promotions and marketing of their products, Novartis use three types of marketing strategies. Medical representatives Symposium Seminars

They usually have their sales force called medical representatives who go to different clinics and hospitals, tell the doctors about their product and motivate them to prescribe the Novartis products.

15

They arrange seminars and symposiums to let the people aware about the diseases and what their product offer to them in fighting against those diseases. They also sponsors different health related programs.

AN OVERVIEW OF PAKISTAN PHARMACEUTICAL SECTOR

Pharmaceutical products in Pakistan range from all kinds of vitamins, anti-allergies, and Alkaloids to ointments and cough syrups. Around 125 categories of medicines produced in According to the annual government report the growth in the pharmaceutical sector of Pakistan in percentage was: A majority of Pakistans leading pharmaceutical companies have acquired ISO quality Certifications, demonstrating their quality standards and vision. Around 15 new productions Facilities are being established to comply with FDA standards. All this reflects that the national pharmaceutical companies are aiming at highly regulated markets, such as the United States and Europe. Market growth in volume is14% per year

16

Significance of the pharmaceutical industry to Pakistan economy

Local production US$1 billion Local consumption US$1 billion Number of manufacturing units 316 Share of MNCs in the pharmaceutical industry 47% Share of local companies 53% 36 International Trade Centre Global sales of pharmaceuticals US$317 billion Pakistans share in the global pharmaceutical market 0.31% Increase in exports of pharmaceuticals 17% per year

Profile of pharmaceutical industries Number of units 316 Investment PKR 21 billion (US$350m) Import of pharmaceuticals US$275m (2003-04) Export of pharmaceuticals US$50m (2003-04)

Following is the list of top ten pharmaceutical companies in Pakistan 1. GSK 2. Pfizer 3. Abbott Laboratories (Pakistan) Ltd 4. Novartis Pharma (Pakistan) Ltd 5. Merck Marker (Pvt.) Ltd 17

6. Roche Pharmaceuticals 7. Bristol-Myers Squibb 8. Pharmacia and Upjohn (Pvt.) Ltd 9. Parke-Davis 10. Wyeth Pakistan Ltd

35% 30% 25% 20% Series1 15% 10% 5% 0% GSK PFIZER ABBOT NOVARTIS

ORGANIZATION STRUCTURE OF NOVARTIS PAKISTAN Formal Structure: Novartis Pakistan has a formal organization structure where Head is the person in charge of Novartis Pakistan who actually acts as a CEO. There are two main departments, one is the supply chain department and other is the technical operations department. The head of these departments are called General Managers. Under operations departments there are sub departments of solid, liquid, injectibles, quality control, warehouses etc. Supply chain is further divided into sub departments of Procurement and material management. The structure overall is centralized. Each decision involves a lot of paper work and documentation and everything has first to be approved by the General managers. 18

The general hierarchy of Novartis in Karachi is as follows: 1. CEO 2. General Manager (Operations and supply chain) 3. Manager (Solid, Liquid etc) 4. Manager procurement and Material management. The sales structure for Karachi is as follows: Regional sales manager Sales manager .
Head Head technical operations Head Eng. Head solid Head liquid Supply chain manager

Head procurement

Head MM

Head semisolid Head injection

Head QC.

Head warehouse

19

Logistics Network Distribution arrangements:

For distribution of its products, Novartis has a separate entity called parazelsus. Parazelsus distribution network is made up of two components: warehouses that stock the pharmaceuticals at various points around the country and the trucks that move the stock where and when it is needed. The table below is the statistical view of the distribution network of Parazelsus.

National Statistics Population # of pharmacies (approx) Hospitals/Institution (approx) Distribution Key Figures Warehouses 20 150 Million 35,000 1000 9

(in all major cities of Pakistan) Pharmacies covered (approx) Hospitals/Institution Towns Covered Order Bookers Calls / Day Invoices per day Sales per day Vans 25,000 740 962 221 35 40 2,700 PKR 12.4 mio (USD 0.21 mio) 84

INBOUND LOGISTICS NETWORK

21

INBOUND LOGISTICS
150 km
JAMSHOR O

PORT (Air/Sea)

VENDOR

WEST WHARF WAREHOUS E

HYDERABA D WAREHOUS E

F A C T O R Y

VENDOR VENDOR VENDOR

Hauling approx. 3500 tons annually

The inbound Logistics network of Novartis can be described in following steps. The raw material arrived at port via sea and air which normally transferred to the factory located at jamshoro. Sometimes the raw material is of lesser quantity so its not feasible for Novartis to send it to the factory because it would result in higher transportation cost. To 22

make sure that their raw material would not get damaged they store it in Karachi warehouse. They wait for other shipment of raw material and than collectively send the previous and the new raw material either to the Hyderabad warehouse or to the factory. The vendors can also ship it from Karachi warehouse to Hyderabad depending upon the situation. If enough raw materials are available in plant warehouse, they store excess raw material in Hyderabad warehouse. From Hyderabad warehouse the vendor send it to factory depending upon the requisition of raw material.

Outbound Logistics

23

Outbound Logistics
EXPORT TO PHILIPPIN ES Parazelsus/Premier Depots 1. KSD Karachi 2. HSD Hyderabad 3. SSD Sukkur 4. MSD Multan 5. FSD Faisalabad 6. LSD Lahore 7. ISD Islamabad 8. PSD Peshawar 9. QSD Quetta Premier Depots 10. NWB Nawabshah 11. MIR Mirpurkhas 12. LAR Larkana 13. GUJ Gujranwala 14. JHE Jehlum

EXPORT TO AFGHANISTA N

PSD

ISD JHE GUJ LSD

EXPORT TO AFGHANISTA N

FS D

QSD

MSD SSD

Dispatch approx. 66.0 mio packs annually

LKR NWB

MIR
JAMSHORO

HSD

KSD

The outbound logistics of Novartis can be described in following steps. The parazelsus has 11 warehouses and premier depots all over Pakistan which are used for the effective and smooth supply of products all over the country. The finished goods are transported all across the country form the Jamshoro plant and warehouse. Novartis also export the finished goods to Afghanistan and Philippines. Philippines is their major export market. Shipment of product takes place from the Hyderabad warehouse via Karachi airport. The total dispatch is approximately 66 million annually. The export to Afghanistan takes places from the Quetta and Peshawar route.

24

SUPPLY CHAIN ORGANIZATION CHART

Head of Supply Chain

Materials Manager

Factory Warehouse Manager

WW Warehouse Manager

Procurement Manager

Vacant

Supply Chain

25

Doctors Doctors Prescription Order Prescription Order Wholesaler

Hyderabad warehouse

Karachi warehouse

Emergency Only
Novartis Other Hospitals Hospital Pharmacy
R x Wholesaler

Wholesaler

Retail Pharmacies Patient

International and Local vendors

SUPPLY CHAIN

26

Raw material import

Local vendors

Karachi port Karachi warehouse

Hyderabad warehouse Production

Bottle necks

Finished Goods Ware House (Imported + Locally Manufactured Goods)

100%%

Locations / Depots (9)

53% Retail / Chain Pharmacy 32% Wholesalers 7% Dispensing Doctors 8% Distributors

100% Retail / Chain Pharmacy 100%

2% Hospitals 100%

6% Others (Institutio ns) 100%

Consumer / Patients

27

This is the overall supply chain process of Novartis pharmaceutical company .this shows how finished good after passing through production process can be deliver to their final customers. The distributors which are parazelsus can also deliver product to hospital for their pharmacy and other institutions The warehouse locations are not owned by Parazelsus but are hired on rental basis. Most of these depots also comprise of the office premises for Novartis personnel. We can describe the supply chain process of NOVARTIS in following steps. 1. The Raw material arrived at Karachi port via sea-route and than directly transferred to the plant at jamshoro for the production 2. If the Raw material is lesser in quantity than it is deposited in Karachi warehouse and than either shifted to Hyderabad warehouse or at manufacturing plant. 3. Than this raw material is used in the production of medicines and other products 4. The finished good is than moved to the plant warehouse or to Hyderabad warehouse depend upon the quantity. 5. Now after Finished goods the parazelsus take the charge and moved the products to the 9 different locations and depots. 6. From these 9 locations and depots 53% of the products are distributed through retail/Chain pharmacy, 32% to wholesalers, 7% to dispensing doctors and 85 through distributors. 7. From wholesalers it moved 100% to the retail/chain pharmacist and from distributors it moved to hospitals and other institutions. 8. From all these distribution channels the end product reaches to the end customer.

28

This process flow diagram shows their exchange process as well as the documentation process of their goods First they receive orders Then they prepare invoicing In third step goods segregation takes place Then the segregated good will be loaded into vans to deliver into market place Finally they receive cash in return of goods.

29

SCOR Model

30

PLAN

31

Planning is the most important part in production as well as success of product in Novartis the supply chain department organizes meetings on weekly and monthly basis where different teams are assigned their tasks and they review that whether the tasks or previous goals were achieved or not. In Novartis, they usually make a plan for 1 month and for the proper accomplishment of goals and meeting targets they arrange weekly production meetings. Usually athe accomplishment percentage of targets and goals is less than 100% but they strive their best to get the maximum achievable targets. We can describe the planning process in following steps.

2 years plan segregate on monthly basis

Then it is sub divided into weekly schedule

Schedule forecast for week

Current schedule

Tentative schedule

This process is base on marketing plan which they develop through past years sales as well as current demand.

32

Procurement process:

Marketing demand MPS plan according to Forecast

Imports drug demand forward to procurement Then local MPS demand forecast

MATERIAL MANAGEMENT FUNCTIONAL FLOW CHART

Information flow Material flow Production management Sales forecast

Marketing strategy Budgetary planning

Market research

Product requirement planning Material requirement planning

Production schedule

Procurement

Inventory planning control

Vendor RM/PM Warehouse

Quality assurance

Production

Distribution

FG warehouse

Sales to customer

Sales analysis

33

Material management functional flow is not stand alone activity, it is tightly integrated with Market Demand and sales forecast. Production schedule is fully dependent on market demand and budgetary planning Product requirement planning is depend on sales forecast and then based on that planning MRP department may able to create production schedule. Material requirement planning for that production schedule is another parallel activity which is performs by MRP department. MRP department forward their material requirement to procurement so that procurement can make sure the availability of required material on right time from appropriate vendors. The integration of this information reduces the unnecessary delays and lead time. When raw material comes, its received in warehouse for inspection and approved material forward to production as per requirement. Finally, Finished Goods subsequent to quality assurance, stored in FG warehouse and ready for distribution where Parazelsus start distribution through out in country and at the end, product is available for end user. Sales analysis helps production management to forecast the sales for next year. Whole Cycle is repeated in the similar approach.

34

Make

35

Process order

Manufacture dispensing
(Issue of all raw materials & packaging Material)

Manufacturing

Compensation/capsule filling Coating (Tablets coating)

Final packaging

Final release by QA

Transferring to different depots and F.G

WWAREwarehouses
Major equipment used for production of different pharmaceutical products include: Mixing & Blending Vessels Granulating machines Drying Chambers Autoclaves and Ovens Tablets Compression Machines Tablets Coating Machines Capsule Manufacturing Machines Encapsulation Machines

A variety of purpose-built automatic or semiautomatic filling machines forliquids in bottles, liquids in ampoules vials, powders in bottles and creams &ointments in collapsible tubes

36

A variety of purpose-built automatic Printing Machines

Reactor

Extraction Decanting Centrifugation

Separation Crystallization

Filtration Purification

Drying

The Make process of Novartis can be described as follows Raw materials or ingredients, including solvents, used to produce the intermediate or bulk substances are charged into the reactor vessel. Once the reactor vessels are charged with the raw materials, the reaction takes place. Several separation mechanisms are employed by the Novartis including extraction, decanting, centrifugation, and filtration. These mechanisms may be employed jointly or individually, in multiple stages, to separate the intermediate or bulk substance from the reaction solution and to remove impurities After the reaction takes place, the intermediate or final bulk substance (which is usually in solid form) can be separated from the reaction solution by crystallization. Crystallization is one of the most common separation techniques and is often used alone or in combination with one or more of the separation techniques described above. In crystallization, a supersaturated solution is created in which crystals of the desired 37

compound are formed. Super saturation depends on the solubility of the desired compound. If the compounds solubility increases with temperature, super saturation can be achieved by cooling the solution. Once the intermediate or the bulk substance has been separated, it may need to be purified. In vitamin production, for example, there are at least three to four purification steps. Purification typically is achieved through additional separation steps such as those described above. Purification is often achieved through recrystallization. The final step in the chemical synthesis process is drying of the intermediate or final bulk substance. Drying is done by evaporating the solvents from the solids.

38

Sourcing

39

Raw materials for medicines include active pharmaceutical ingredients, excipients (like sugar and lactose) and solvents (such as ethylene chloride, dichloride ethane, ethyl acetate and methanol). Most of the requirements of raw materials are met through import. Basic raw material used in the manufacturing of empty capsules is pharmaceutical grade gelatin. Gelatin is a mixture of water-soluble proteins derived primarily from collagen, which is a naturally occurring protein. Other major materials used in the capsule manufacturing are dyes, dye -aids, preservatives and glycerin. Variety of packaging materials like glass bottles, blisters, plastic caps, aluminum seals, polythene/paper bags, cartons, carton partitions, labels and shrink wrappers are also used by pharmaceutical industries. They use FEFO method (first expiry first out) Sourcing is taken place though shipment as well as through airways Shipment process takes 5 month and carry large amount of raw material Through air ways it take 60 days but carry less as compare to shipment According to them ship is more cost effective for them frequently the raw material is directly transferred to jamshoro and excess material is stored in Karachi warehouse Main imports are from Europe, Switzerland, Germany, Italy, and India. Major portion of raw material are imported from the countries above. And their vendors are also located in Karachi, Hyderabad. Basic raw mat. And packaging mat. Is also imported through other countries almost 95 % because basic manufacturing of these materials are not in Pakistan

40

Deliver

41

Deliver process is take place through parazelsus which is separate company and the distribution system is also discuss in parazelsus slides. Parazelsus Premier These are the two distribution networks work for Novartis In starting the distribution system was controlled by Novartis it self form jan. This year they handed the distribution department to parazelsus

Distribution Operation Overview

Customers Coverage (25,431)

Trade Customers Retailers Whole Salers Others Doctors Hospitals Institutions 22,310 20,299 2,011 3,121 ,363 503 255

42

Business Contribution in Total Sales

Trade Retailers Whole Salers Others Doctors Hospitals Institutions 85.00 53.00 32.00 15.00 7.00 2.00 6.00

W. Sale / Retail Ratio in Trade Sales

Retailers Whole Salers 62.35 37.65

37.65 62.35

43

44

Return

45

There are three types of return in Novartis supply chain. Return of product if expired Return of Product in fault of production process Return of product due to defective raw material

The products are to be returned to NOVARTIS if they reach to their expiry period. To safeguard the health and to avoid any severe condition the expiry products can be sent back to Novartis. Novartis mainly import raw material form different countries. Sometimes this raw material has been found defective in quality assurance testing and this raw material is sent back. Due to the mishandling of raw material the addition or lesser quantity of certain raw material in production process would force the company to callback its batch.

46

PROBLEMS
Bottle Necks
Mechanical problems Novartis has an older plant, due to which not only the cost of maintenance increases but the production process also slows down. Some of the maintenance problems are Machine break downs Maintenance break downs

Problems with raw material. Novartis mainly import raw material from Switzerland and India. Most of the time the shipment didnt reach on time which hurt the production of company. Another problem is that most of the drivers put grains and wheat with raw material that can damage not only the raw material but also effect the production process. Severe limitation of storage space. The one and the most important factor is the lesser number of warehouses. Novartis is facing the problem of limited storage space. They have 3 warehouses located in Karachi, Hyderabad and Jamshoro which are not enough to store the products. So they have to either rent more warehouses or built warehouses in order to solve this problem.

47

Bullwhip Effect Fluctuation in the demand of medicine takes place only in the month season of winter and summer where as in spring there is no fluctuation like summer and winter .In spring the demand become constant as per their forecast. In summer the demand of calcium increase by 4 times and the demand for kafkol rises 4 times in winter. High cost of supply due to low forecast accuracy Another problem that Novartis is currently facing is of lack of coordination between the planning and the production departments. In most of the cases the forecast was either much higher or lower than the actual demand which in turns increases the cost of supply.

High logistics costs due to remoteness of factory and space constraints. The plant of Novartis is located in interior Sindh at JAMSHORO. On asking the question from us that why the plant is located in interior remote area the supply chain manager respond that its due to some governmental restrictions on us. Despite of any reasons remoteness of factory and limited storage space definitely results in baring high logistics cost to the Novartis.

48

Recommendations
After detailed view of the Novartis Supply chain management and other departments associated with it, we have following recommendations that can help Novartis to improve their system. Talented and skillful employees required Novartis has to set the level of skills required by its personnel. One thing that is hurting pharmaceutical sector is the lack of skills and the expertise require in the relevant fields. Novartis has to search for the talent and benchmark the skills to be set by them. Remove Capacity constraints in Production. Another problem we observe in Novartis supply chain is the capacity constraints. They have to remove the bottlenecks in their production process to maximize the capacity in their production. New machineries required Novartis has an older plant which in results not only affecting the production of the pharmaceutical products but in financial terms it increasing the maintenance cost. Increase number of warehouses As they have limited number of warehouses so it is suggested that they should increases their ware houses

49

Lack of integration of supply chain functions. The supply chain functions should be integrated in order for effective and smooth supply chain process. The planning and production department should coordinate in order to meet the demand accurately and efficiently. Wind fall opportunities dying down in Urban markets- look out at rural markets Novartis is mainly focusing on urban areas although its true that major part of business comes through the urban route but infact the rural markets cant be neglected. The other companies like ABBOT and GSK are enjoying the major part in urban market and day by day the opportunities are dying down. Novartis has an opportunity to capture the rural markets like many NGOS are opening hospitals in rural areas of NWFP, Punjab and Sindh.

50