8/10/2019 Madhav Project Ppt (2)

1/17

UNDER THE ESTEEMED GUIDANCE OF

A. Santosh kumari

INTERNATIONAL AND DOMESTIC

PROCUREMENT PROCESSES OF API

IN FLEMING LABORATORIES

8/10/2019 Madhav Project Ppt (2)

2/17

INTRODUCTION

Procurement represents more than 50% of total costs in the

pharmaceuticals industry and plays a key role in driving

innovation, achieving marketing success, controlling costs and

risk and managing volatile raw-material supply markets.

Compared to other industries, Pharma procurement

organizations are facing significant challenges in supplier

relationship management, technology harmonization andworkforce management, since their main focus is on ensuring

regulatory compliance and creating global supply chain

transparency

The primary objectives of this project is to understand themethods of Sourcing and Procurement of Active Pharma

Ingredients (API).To study the various factors impacting

Sourcing and Procurement activities at Fleming Laboratories

Limited.

8/10/2019 Madhav Project Ppt (2)

3/17

OBJECTIVES OF THE STUDYTo study and understand the methods and processes involved in

procurement of API at Fleming Laboratories Limited.

To study the various factors impacting Logistics during

procurement of API at Fleming Laboratories Limited.

To Analyze the performance and quality requirement for

sourcing

To Assess and select new suppliers and improve supplierperformance based on the feedback provided by the suppliers.

8/10/2019 Madhav Project Ppt (2)

4/17

HYPOTHESES OF THE STUDY

H01: There is no significant association between the product

quality and the type of the supplier H02: There is no significant association between cost reduction

and the type of the supplier

H03: There is no significant association between on time delivery

and the type of the supplier. H04: There is no significant association between Logistics

Management and the type of the supplier.

H05:There is no significant association between Bulk Purchases

and Cost Reduction by International suppliers. H06: There is no significant association between on time delivery

and logistics management by international suppliers.

Ho7:There is no significant association between on time delivery

and logistics management by domestic suppliers.

8/10/2019 Madhav Project Ppt (2)

5/17

H08: There is no significant association between product quality and

meeting clientsrequirements by international suppliers.

H09: There is no significant association between Cost Reduction and

product quality of local suppliers H10:There is no significant association between Geographical Location

of International supplier and the on time delivery performance metric

measurement of supplier.

H11: There is no significant association between employee experienceand their opinions on the importance of E-Procurement tool.

H12:There is no significant association between employee experience

and their opinions on the importance of supplier collaboration tool.

H13: There is no significant association between employee experience

and their opinions on the importance of Spend Analysis tool.

H14: There is no significant association between employee experience

and their opinions on current P2P (Procure to pay) drawbacks.

8/10/2019 Madhav Project Ppt (2)

6/17

DATA SOURCES 3.3.1 Primary data:

A survey on Sourcing and Procurement was conducted by

means of questionnaire to derive the Sourcing andProcurement activities at Fleming Laboratories Limited.Efforts were directed in obtaining the view ofemployees/executives who got experience in the area ofSourcing and Procurement.

3.3.2 Secondary data:Secondary data collection included studying the website ofthe company. Information pertaining to Sourcing andProcurement activities was obtained by referring to

journals, books; internet and other published materials for

collection of necessary data on sources of Inventoryprocurement.

3.4 SAMPLE SIZE

The sample size taken for the study includes 50employees from Procurement & Logistics in Fleming

Laboratories Limited Headquartered in Hyderabad, India.Out of the 50 employees 34 were male and 16 were

8/10/2019 Madhav Project Ppt (2)

7/17

SCOPE OF THE STUDY This study covers International and Domestic Procurement

Processes of Active Pharma Ingredients in Fleming Laboratories.It will serves as a tool to examine the Procurement Processeslevels which helps in tracing if the suppliers are connected to theorganization and is delighted to work with the organization.

The Procurement Processes is the challenging factor which helpsthe organization to get best quality Pharma ingredients and alsoreduces wastage and time factor. The corporate sector is a growingone and such burgeoning segment need researches and reports tounderstand the challenges, issues and to gather information. Amore detailed research could be carried out in the next 4-5 years tostudy the significance and also to keep track of changing trends.

PERIOD OF THE STUDY This study covers the International and Domestic sources for

Procurement of API at Fleming Laboratories LimitedHeadquartered in Hyderabad, India. The data has been collectedduring 10.08.2013 to 09.010.2013.

8/10/2019 Madhav Project Ppt (2)

8/17

LIMITATIONS

Since the population was not homogenous, some biases might

have crept up. Non-response by some of the respondents

Sample size collected was small.

As the research time is not adequate i.e. only two months the

data has been constrained to only procurement process. Financial factor is also another major constraint for the project.

8/10/2019 Madhav Project Ppt (2)

9/17

BRIEF PROFILE ABOUT FLEMING LABORATORIES

The Name FLEMING In honor of Noble laureate Dr. Alexander

Fleming, whose invention of Penicillin marked a new era in the

treatment of life threatening bacterial infections. The FLEMINGLABORATORIES LIMITED is established in 1994 by B.RAVI

SHANKAR who is Chairman and Managing Director of the

company

Fleming laboratories limited is 90% export oriented high qualitybulk drug manufacturing company located at gummadidala,

medak district near by Hyderabad. Fleming is a major

manufacturer of cinnarzine, flunarine hcl, and cyproheptadine hcl

loperamide hcl. Well-experienced and skilled personnel are

continuously working round the clock in various departments in

Fleming.

85% of production is exported .About 60 countries in all

geographic locations.

8/10/2019 Madhav Project Ppt (2)

10/17

Cross tabulation

14.b Product quality of local supplier

Total

Neutral

Satisfied

Greatly Satisfied

13.a Product quality of

International supplier

Satisfied

Count

0

11

0

11

% within 13.a Product qlty

of Int supp

0.0% 100.0% 0.0% 100.0%

Greatly Satisfied

Count 1 34 4 39

% within 13.a Product qltyof Int supp

2.6%

87.2%

10.3%

100.0%

Total

Count

1

45

4

50

% within 13.a Product qlty

of Int supp

2.0%

90.0%

8.0%

100.0%

Chi-square test: H01: There is no significant association

between the product quality and the type of the supplier

TABLE 2.1 Chi-Square Tests

Value

df

Asymp. Sig. (2-sided)

Pearson Chi-Square

1.567a

2

.457

Likelihood Ratio 2.637 2 .267

Linear-by-Linear Association .516 1 .473

N of Valid Cases 50

a. 4 cells (66.7%) have expected count less than 5. The minimum expected count is .22.

8/10/2019 Madhav Project Ppt (2)

11/17

S.NO NULL HYPOTHESES SIGNIFICANT

VALUE

RESULT

1

H01: There is no significant association between the product

quality and the type of the supplier

0. 457 Accepted

2 H02 There is no significant association between cost reduction

and the type of the supplier.

0. 318 Accepted

3 H

03: There is no significant association between on time

delivery and the type of the supplier.

0.453 Accepted

4 H04: There is no significant association between Logistics

Management and the type of the supplier.

0.009 Rejected

5 H05: There is no significant association between Bulk Purchases

and Cost Reduction by International suppliers.

0.781 Accepted

6 H06: There is no significant association between on time delivery

and logistics management by international suppliers.

0.000 Rejected

7 H07: There is no significant association between on time delivery

and logistics management by domestic suppliers.

0.002 Rejected

8/10/2019 Madhav Project Ppt (2)

12/17

8 H08: There is no significant association product quality and

meeting clientsrequirements by international suppliers.

0.849 Accepted

9 H09: There is no significant association Cost Reduction and

product quality of local suppliers.

0.742 Accepted

10 H10: There is no significant association between Geographical

Location of International supplier and the on time delivery

performance metric measurement of supplier.

0.294 Accepted

11 H11: There is no significant association between employee

experience and their opinions on the importance of E-

Procurement tool.

0.540 Accepted

12 H12: There is no significant association between employee

experience and their opinions on the importance of supplier

collaboration tool.

0.849 Accepted

13 H13: There is no significant association between employee

experience and their opinions on the importance of Spend

Analysis tool.

0.921 Accepted

14 H14: There is no significant association between employee

experience and their opinions on current P2P (Procure to pay)

drawbacks.

0.342 Accepted

8/10/2019 Madhav Project Ppt (2)

13/17

Findings

It is observed that 22% of the employees are satisfied and 78%

are greatly satisfied with the product quality of International

suppliers whereas 90% are satisfied, 8% are greatly satisfied and

2% are neutral with the product quality of domestic suppliers.

It is observed that 54% of employees are satisfied and 46% are

greatly satisfied with the cost reduction by International sourcing

where as 68% of the employees are satisfied and 32% are greatlysatisfied with reduced cost by souring from domestic suppliers.

58% of the employees are satisfied and 34% are greatly satisfied

with on time delivery by International suppliers while 86% are

satisfied and 14% are greatly satisfied with on time delivery bylocal suppliers.

8/10/2019 Madhav Project Ppt (2)

14/17

It is observed that 2% of the employees are unsatisfied, 8% are

neutral whereas 74% are satisfied and 16% are greatly satisfied

with the logistics management by international suppliers.2% of

them reported neutral,96% are satisfied and 2% are greatlysatisfied with the logistics management by domestic suppliers,

28% of the employees are satisfied and 72% are greatly satisfied

by bulk purchases from international suppliers. 54% of

employees are satisfied and 46% are greatly satisfied with costreduction by international suppliers. Hence cost reduction by

international suppliers does not depend on the quantities

purchased.

8/10/2019 Madhav Project Ppt (2)

15/17

SUGGESTIONS Pharmaceutical industry is more driven to gain competitive

advantage through innovative technology. Therefore employingsome of the well known technologies like Enterprise ResourcePlanning (ERP), Electronic Data Interchange (EDI), SupplyChain Management (SCM) etc., can derive value in terms ofcompelling business process, tapping technological mega-developments, reducing delays and complexities that are beingfaced by Fleming laboratories ltd. with their current

procurement tools.

Only Primary reference materials are being used asPharmaceutical Reference Standard at Fleming laboratories ltd,

Using Secondary reference materials can eliminate time andeffort involved with preparing and validating onesown workingstandards and it is also price advantage relative to primaryreference standards when larger quantities are purchased.

8/10/2019 Madhav Project Ppt (2)

16/17

Adopting some more risk management strategies through the

consistent use of the tools/methods and periodic review will

reduce the number of threats or minimize their impact on

sourcing and procurement activities of Fleming laboratories ltd.

Expanding the use of E-Sourcing Tools for project management,

reporting, e-request for X (eRFxs) and online reverse auctions,

process integration will add value to the business.

Adopting alternate purchase methods like P Card , Purchase

Order (PO) process, Evaluated Receipt Settlement (ERS ) within

P2P will reduce delays and complexities that are being faced by

Fleming laboratories ltd. with their current P2P (Procure-to-Pay)

process.

8/10/2019 Madhav Project Ppt (2)

17/17

CONCLUSION

The study at Fleming Laboratories Ltd. shows that the productquality, cost reduction and on time delivery of raw material doesnot depend on the type (International or domestic) of the

supplier. It is also noticed that cost reduction by internationalsuppliers does not depend on the quantities that are purchased.Similarly cost reduction by domestic suppliers does not dependon the quality of the product they supply.

The supplier selection processes are very important to

organizations nowadays since choosing the one that fits best thecompanys needs, can bring significant savings. This researchsignifies that the supplier performance measurement criteria mostcommonly used by pharmaceutical industries are quality,delivery and service. Our study is concerned with mitigatingsupplier failure risk hence risk transfer is the key supply riskstrategy implemented by Fleming . Ultimately, applying riskmanagement to pharmaceutical industry should reduce thenumber of threats or minimize their impact through theconsistent use of the tools/methods and periodic review.