SUBMITTED TO :

SIR MUHAMMAD HANIF

COURSE:

SUPPLY CHAIN MANAGEMENT

COUNTRY PROFILE

COUNTRY NAME: PAKISTAN

GROWTH RATE: 6.6%

GDP: 6.9%

POPULATION: 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 7229Landhi Karachi, PakistanTelephone: (92 21) 501 50 45Facsimile: (92 21) 501 32 45

Diagnostics Abbott (Pakistan) Ltd.Plot 13, Sector 20Korangi Industrial AreaKarachi 74900 PakistanTelephone: (92 21) 504 65 74Facsimile: (92 21) 504 42 58

ABBOTT’S FINANCIAL DATA

FIVE YEARS SALES

YEARS SALES (rupees in millions)2002 4,0042003 4,2772004 4,5982005 5,1762006 5,888

COMPANY’S FIVE YEARS PROFIT

YEARS PROFIT (rupees in millions)2002 4392003 5262004 7472005 9622006 1,000

BENCHMARKING

Ratio Name WYETH SEARLE HI-NOON ABBOTTCurrent Ratio

4.10 1.714 5.08 4.76

Inventory Turnover

1.69 times 10.11 times 2.72 times 4.69 times

Total Asset Turnover

60% 10.2% 67.2% 1.17

Profit Margin on Sales

0.182 0.032 0.048 1.70

Earnings Per Share

112 3.53 10 10.21

Return on 10.9 3.2 3.2 19.9

Assets

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

PIONEERING

CARING

ACHIEVING

ENDURING

ABBOTT

CAPABILITIES OF ABBOTT

CORE COMPETENCIES OF ABBOT

PRODUCTS &SERVICES

AGILITY

COMUNICATION

LEADERSHIP

INTEGRITYY

QUALITYOFEXECUTION

CUSTOMER INTIMACY

OPERATIONALEXCELLENCE

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

MARKETING

TRANSPORTATION

SUPPLIER

WAREHOUSE (M O)

Manufacturing

WAREHOUSE ( F O)

CUSTOMER

RETAILERS/ WHOLESELLERSDISTRIBUTORS

INFORMATION

FLOW

P R O D UC T

FLOW

ABBOTT’S SUPPLY CHAIN STRUCTURE

MASTER SCHEDULER

CAPAPCITY PLANNER MASTER

SCHEDULER

SUPPLY CHAIN MANAGER

LOCAL/ IMPORTED PURCHASE MANAGER

EXPORTS MANAGER

WAREHOUSE MANAGER

MATERIALS MANAGER

PRODUCTION PLANNER

PRODUCTION PLANNER

SUPPLY CHAIN PROCESS Marketing

( Demand Generated)

Vendors(Quotations asked)

LC

Follow up ---import & dispatches

Manufacturing Planning

(Demand Generated)

Material Planning

Material in Warehouse

Clearance Transit Time

Material Available For Production

QA

Released by QA

Production

Central Depot’s

FO Quarantine(Sampling test by QA)

FO Batches

Packing line

Dispatches

Wholesalers

Satellite Depot’s& Distribution

Retailers

Institutions

SCOR MODEL

RMManufactur

er

Make DeliverSource Make DeliverMakeSourceDeliver SourceDeliverSource

Plan

Indenters ABBOTT LabPakistan

Distributors

ReturnReturn ReturnReturn Return

Return

SupplierSupplier’sSupplier Company Customer

Wholesalers

Customer’sCustomer

DELIVERMAKESOURCE

PLAN

RETURN MO RETURN FO

Enable

SUPPLIERS

CUSTOMERS

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.

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.

A D S

DISCUSS

PROPOSEDFORECAST

SNO MEETING

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.

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.

CUSTOMER

MARKETING

MAS

MANUGISTICS

MANUFACTURING

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

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.

LOCAL/ IMPORTED PURCHASE

EXPORTS WAREHOUSE

MATERIALS MANAGEMENT

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

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

Storage of control/locater system

Storage of temperature sensitive material

Issue of raw material M O

Hazardous drug labeling

Washing of utensils, containers

Cold Storage(Refrigerators 2C- 8C)

Wastage Warehouse

FIFO

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

Material requisition return

Manufacturing

End Product

Quality Assurance of Finished Good

Warehouse FO

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

ArrivingSize of Sample Drawn

5 All

5 - 11 5

11 - 50 7

50 - 100 10

100 - 250 15

over 250 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

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.

Demand of products received by external customer

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 Injectables, 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

Injectables

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)

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

GRANULATION

COATING

DRYING

BLENDING

MILLING

COMPRESSION

BOTTLENECK

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

PROCESS FLOW INJECTIBLES

The processing of injectables 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 injectable

is required then large pressure vessel containers are used for mixing and making the

SEALED

STERILIZED

LEAK TEST

RELEASED

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)

PACKAGING LINE

BOTTLE FEEDING & WASHING

FILLING

SEALING

LEAK TEST

CAPPING

STERILIZATION

AUTO CALVE

UNCAPPED

LEAK TESTER

CAPPING

OPTICAL

LABELLING

SKILLETING & LSPC SEALING

SOLUTIONMANUFACTURING

SKILLETING & TROLLY TRANSFER

BOTTLENECK

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

Hospital

Cent. Depot

Abbott truck

Abbott truck

Distributor

Abbott Pak

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.

Wholesaler

RETURNS

MANUFACTURER

RETURN

There are two types of returns, one associated with Finished Orders and the other

associated with Material Orders.

Product Returns

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 keep those

sensitive MO and

FO. They should

make a proper cold storage

warehouse to store the

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 should avoid doing

this and it will eventually 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: