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supply chain management at glaxo copy

  1. 1. SUPPLY CHAIN MANAGEMENT THE INDISPENSABLE DISTRIBUTION WEB INTRODUCTION A supply chain is a network of services and distribution options that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these finished products to customers. Supply chain management (SCM) is the combination of art and science that goes into improving the way your company finds the raw components it needs to make a product or service and deliver it to customers. Supply chains exist in both manufacturing and service organizations, even if the complexity of the chain may vary greatly from industry to industry and firm to firm. Below is an example of a very simple supply chain for a single product, where raw material is procured from vendors, transformed into finished goods in a single step, and then transported to distribution centers, and ultimately to the customers. Realistic supply chains have multiple end products with shared components, facilities and capacities. The flow of materials is not always along an arborescent network, various modes of transportation may be considered, and the bill of materials for the end items may be both deep and large. Traditionally, marketing, distribution, planning, manufacturing, and the purchasing organisation along the supply chain operated independently. These organizations have their own objectives and these are often conflicting. Marketing's objective of high customer service and maximum sales dollars conflict with manufacturing and distribution goals. Many manufacturing operations are designed to maximize throughput and lower costs with little consideration for the impact on inventory levels and distribution capabilities. Purchasing contracts are often negotiated with very little information beyond historical buying patterns. The result of these factors is that there is not a single,
  2. 2. integrated plan for the organization---there were as many plans as businesses. Clearly, there is a need for a mechanism through which these different functions can be integrated together. Supply chain management is a strategy through which such integration can be achieved. Supply chain management is typically viewed to lie between fully vertically integrated firms, where the entire material flow is owned by a single firm, and those where each channel member operates independently. Therefore coordination between the various players in the chain is key in its effective management. Cooper and Ellram have compared supply chain management to a well-balanced and well-practiced relay team. Such a team is more competitive when each player knows how to be positioned for the hand-off. The relationships are the strongest between players who directly pass the stick, but the entire team needs to make a coordinated effort to win the race. DEFINITION OF SUPPLY CHAIN AND SUPPLY CHAIN MANAGEMENT. When a new concept is launched, there is always a great deal of confusion about the definition, content and field of application. Handfield and Nichols (2002) define supply chain and supply chain management as follows: The supply chain encompasses all organizations and activities associated with the flow and transformation of goods from the raw material stage, through to the end user, as well as the associated information flow. Materials and information flow both up and down the supply chain. Supply chain management is the integration and management of supply chain organization and activities through co-operative organizational relationships, effective business processes, and high levels of information sharing to created
  3. 3. high performance value system that provide member organizations a sustainable competitive advances. Christopher (2005) defines supply chain management as “ the management of upstream and downstream relationships with suppliers and customers to deliver superior customer value at less cost to the supply chain as a whole. This definition of supply chain management focus on management of relationships as a means of achieving better results for all members orf the supply chain including customer. “Supply chain management is a set of approaches utilized to efficiently integrate suppliers, manufactures, warehouse, and stores, so that merchandise is produced and distributed in the right quantities, to the right locations, and at the right time, in order to minimize systems aside costs while satisfying service lend requirement” DIFFFERENCE BETWEEN DISTRIBUTION, LOGISTICS AND SUPPLY CHAIN MANAGEMENT There has been much discussion in recent years of the differences between the terms "distribution," "logistics," and "supply chain management." To many people, those terms are synonymous. Yet they are different, and so it's important to distinguish between them, not only to ensure clarity of communication, but also as a way to understand the progressive levels of capabilities that companies need to develop to successfully compete today. Here are some definitions which can be find useful: • Distribution involves the outbound flow of materials from the supplier or manufacturer to customers. It naturally includes warehousing, transportation, and inventory management activities.
  4. 4. • Logistics, according to the Council of Logistics Management, is "that part of the supply chain that plans, implements, and controls the efficient forward and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption in order to meet customer requirements." • Supply chain management, in my mind, is broader than logistics and includes all activities involved in the sourcing, manufacturing or conversion, storage, distribution, and delivery of goods to customers. It involves integration with channel partners, including suppliers, distributors, and customers, Supply chain management is a broader concept whereas Logistics management is a narrower concept. The concept of Supply chain management is relatively new whereas the concept of Logistics management is relatively old. Supply chain management is an extension of Logistics management. Logistics management is primarily concerned with optimizing flows within the organization whilst supply chain management recognizes that internal integration by itself is not sufficient. Logistics is essentially a planning orientation and framework that seeks to create a single plan for the flow of product and information through a business. Supply chain management builds upon this framework and seeks to achieve linkage and co-ordination between processes of the other entities in the pipeline, i.e. suppliers and customers, and the organization itself. The focus of Supply chain management is upon the management of relationships in order to achieve a more profitable outcome for all parties in the chain where as the focus of Logistics management is upon the management of resources within the organization.
  5. 5. OBJECTIVE OF SCM “To reduce or eliminate the buffers of inventory that exists between organization in a chain through the sharing of information on demand and current stock levels.” Supply Chain Management or SCM as it is popularly known is also known as Value Chain Management. This is nothing but handling through a single system, all interaction that deals with people external to an organisation. Supply Chain Management deals with two distinct areas; the customers and the vendors. On the customer side it deals with all transactions dealing with the customers; from inquiry to ordering to order execution to final delivery and payment. Another part of the system would be there to handle returns from customers as well as handling grievances. More transparent the system is to the outside user, less is the interaction required on a personal level and greater is the confidence that the customer builds on the organisation. The upstream value chain consisting of suppliers, when integrated in the company’s internal chain, leads to partnership between the two. With the onset of this concept, the vendors are no longer considered as suppliers, but viewed as partners in progress. This leads to the formation of narrow, but dedicated vendor base, and who get committed to the buyers’ organisation. Similarly, the downstream value chain encompasses the distributors and dealers, which when integrated with the company’s internal value chain, results in better marketing inputs such as product development, distribution, and customers’ services. Cost reduction is a perennial concern of every well run organisation, and the only way this can be achieved, is by re- engineering the supply chain. The supply chain management concept will result in better control on deliveries, quality, inventories, and prices, assuring a long term association between the vendor and the buyer to a mutual benefit. In fact, the company can have a competitive edge in the market by using its scarce resources on the activities that it can do the
  6. 6. best, i.e. by focusing on the core competency, and leaving the rest to the supply chain. The key to effective Supply Chain Management is supply chain integration – ensuring that all parts of the supply chain work together, rather than at cross- purposes. Supply chain integration is a state where timely information transmitted among trading partners is in manner that lets them readily adjust to changes in requirements for material, production, or delivery. The progress towards the idea of supply chain integration as a source of competitive advantage will gain momentum as the growth of ‘time based competition’ accelerates. In markets that are increasingly volatile, responsiveness becomes a critical competitive requirement. The critical decisions to be made are not about minimising costs but about wherein the chain to position inventory and available production capacity in order to hedge against uncertain demand. In the business of fashion almost 95% of the products are completely new designs and the demand forecasts often err by as much as 200%. This high uncertainty of demand is intrinsic and inherent to fashion products. Devising a responsive supply chain alone can help cope up with this phenomenon. Companies like Benetton and The Limited have gained significant advantage through their ability to respond rapidly to fashion changes in the markets they serve. Through the use of highly coordinated logistics and supply chain structures, driven by the real- time capture of sales data, these companies adapted their product range and their volumes in weeks rather than months. A central theme of supply chain integration is “to identify the unnecessary activities, which do not add value to the supply chain or activities which would be better carried out at a different place or time in the supply chain, address the inefficiencies caused by them and develop solutions by working closely with supply chain partners.”
  7. 7. BACKGROUND The competitiveness of international companies is highly dependent on their ability to deliver customized product quickly and timely all over the world. Therefore focus has moved form competition between firms at the same level in the production process to competition between supply chain, from raw materials to end customers. A company’s ability to create trust-based and long term business relationships with customers, suppliers, and other strategic partners becomes a crucial competitive parameter. The tendency towards increased integration and co-operation between the enterprises in the supply chain results in greater complexity in the management and control technology, which requires increased co-ordination of resources and activities. Most companies compete in and environment characterized by:  Turbulent and dynamic markets, where the customers requirements change rapidly and unforeseeably.  Strongly segmented markets, where various customer have varying requirement for products and services  Market requirements for multiple product varieties and customization of both product and services.  Increase customer demand for “experiences” and not merely physical products.  Global competition, which forces companies to become faster, better and cheaper. These are the challenges that made supply chain management an important management tool and competitive parameter for many firms.
  8. 8. FIVE BASIC COMPONENTS OF SUPPLY CHAIN MANAGEMENT 1. Plan – This is the strategic portion of Supply Chain Management. we need a strategy for managing all the resources that go toward meeting customer demand for your product or service. A big piece of planning is developing a set of metrics to monitor the supply chain so that it is efficient, costs less and delivers high quality and value to customers. 2. Source – We should choose the suppliers that will deliver the goods and services you need to create your product. Develop a set of pricing, delivery and payment processes with suppliers and create metrics for monitoring and improving the relationships. And put together processes for managing the inventory of goods and services that we receive from suppliers, including receiving shipments, verifying them, transferring them to your manufacturing facilities and authorizing supplier payments. 3. Make – This is the manufacturing step. Schedule the activities necessary for production, testing, packaging and preparation for delivery. As the most metric-intensive portion of the supply chain, measure quality levels, production output and worker productivity. 4. Deliver – This is the part that many insiders refer to as logistics. Coordinate the receipt of orders from customers, develop a network of warehouses, pick carriers to get products to customers and set up an invoicing system to receive payments. 5. Return – The problem part of the supply chain. Create a network for receiving defective and excess products back from customers and supporting customers who have problems with delivered products. SUPPLY CHAIN DECISIONS The decisions for supply chain management can be classified into two broad categories -- strategic and operational. As the term implies, strategic decisions
  9. 9. are made typically over a longer time horizon. These are closely linked to the corporate strategy, and guide supply chain policies from a design perspective. On the other hand, operational decisions are short term, and focus on activities over a day-to-day basis. The effort in these types of decisions is to effectively and efficiently manage the product flow in the "strategically" planned supply chain. There are four major decision areas in supply chain management: 1) location, 2) production, 3) inventory, and 4) transportation (distribution), and there are both strategic and operational elements in each of these decision areas. LOCATION DECISIONS The geographic placement of production facilities, stocking points, and sourcing points is the natural first step in creating a supply chain. The location of facilities involves a commitment of resources to a long-term plan. Once the size, number, and location of these are determined, so are the possible paths by which the product flows through to the final customer. These decisions are of great significance to a firm since they represent the basic strategy for accessing customer markets, and will have a considerable impact on revenue, cost, and level of service. These decisions should be determined by an optimization routine that considers production costs, taxes, duties and duty drawback, tariffs, local content, distribution costs, production limitations, etc. Although location decisions are primarily strategic, they also have implications on an operational level. Production Decisions The strategic decisions include what products to produce, and which plants to produce them in, allocation of suppliers to plants, plants to DC's, and DC's to customer markets. As before, these decisions have a big impact on the revenues, costs and customer service levels of the firm. These decisions assume the existence of the facilities, but determine the exact path(s) through which a product flows to and from these facilities. Another critical issue is the capacity of
  10. 10. the manufacturing facilities--and this largely depends the degree of vertical integration within the firm. Operational decisions focus on detailed production scheduling. These decisions include the construction of the master production schedules, scheduling production on machines, and equipment maintenance. Other considerations include workload balancing, and quality control measures at a production facility. Inventory Decisions These refer to means by which inventories are managed. Inventories exist at every stage of the supply chain as either raw materials, semi-finished or finished goods. They can also be in-process between locations. Their primary purpose to buffer against any uncertainty that might exist in the supply chain. Since holding of inventories can cost anywhere between 20 to 40 percent of their value, their efficient management is critical in supply chain operations. It is strategic in the sense that top management sets goals. However, most researchers have approached the management of inventory from an operational perspective. These include deployment strategies (push versus pull), control policies --- the determination of the optimal levels of order quantities and reorder points, and setting safety stock levels, at each stocking location. These levels are critical, since they are primary determinants of customer service levels. Transportation Decisions The mode choice aspect of these decisions are the more strategic ones. These are closely linked to the inventory decisions, since the best choice of mode is often found by trading-off the cost of using the particular mode of transport with the indirect cost of inventory associated with that mode. While air shipments may be fast, reliable, and warrant lesser safety stocks, they are expensive. Meanwhile shipping by sea or rail may be much cheaper, but they necessitate holding relatively large amounts of inventory to buffer against the inherent uncertainty
  11. 11. associated with them. Therefore customer service levels, and geographic location play vital roles in such decisions. Since transportation is more than 30 percent of the logistics costs, operating efficiently makes good economic sense. Shipment sizes (consolidated bulk shipments versus Lot-for-Lot), routing and scheduling of equipment are key in effective management of the firm's transport strategy. SUPPLY CHAIN MANAGEMENT: A STRATEGIC TOOL The role of customer service is to provide ‘time and place utility’ in the transfer of goods and services between seller and buyer. There is no value in the product or service until it is in the hands of the consumer. Availability is one of the most important factors for success of any company in the merging competitive scenario. A galaxy of factors, which together constitute customer service, impacts upon availability. These factors might include delivery frequency and reliability, stock levels and order cycle time, etc. ultimately, customer service is determined by the interaction of all those factors that affect the process of making products and services available to the buyer. An effective supply chain management strategy, which addresses all these factors, can improve the customer service levels of an organisation significantly. Effective supply chain management requires an in depth understanding of the structure, economics, and requirements of, as well as the constraints on, components of the system. But this internal perspective, while necessary, is not sufficient. To succeed, companies must also have several external perspectives- views of how supply chain policies being implemented affect the overall competitiveness of the company in the market place.
  12. 12. Supply Chain Modeling Approaches Clearly, each of the above two levels of decisions require a different perspective. The strategic decisions are, for the most part, global or "all encompassing" in that they try to integrate various aspects of the supply chain. Consequently, the models that describe these decisions are huge, and require a considerable amount of data. Often due to the enormity of data requirements, and the broad scope of decisions, these models provide approximate solutions to the decisions they describe. The operational decisions, meanwhile, address the day to day operation of the supply chain. Therefore the models that describe them are often very specific in nature. Due to their narrow perspective, these models often consider great detail and provide very good, if not optimal, solutions to the operational decisions. To facilitate a concise review of the literature, and at the same time attempting to accommodate the above polarity in modeling, we divide the modeling approaches into three areas --- Network Design, ”Rough Cut" methods, and simulation based methods. The network design methods, for the most part, provide normative models for the more strategic decisions. These models typically cover the four major decision areas described earlier, and focus more on the design aspect of the supply chain; the establishment of the network and the associated flows on them. "Rough cut" methods, on the other hand, give guiding policies for the operational decisions. These models typically assume a "single site" (i.e., ignore the network) and add supply chain characteristics to it, such as explicitly considering the site's relation to the others in the network. Simulation methods is a method by which a comprehensive supply chain model can be analyzed, considering both strategic and operational elements. However, as with all simulation models, one can only evaluate the effectiveness of a pre-specified policy rather than develop new ones. It is the traditional question of "What If?" versus "What's Best?".
  13. 13. GlaxoSmithKline (GSK) is a world leading research-based pharmaceutical company with a powerful combination of skills and resources that provides a platform for delivering strong growth in today's rapidly changing healthcare environment. GlaxoSmithKline engages in the creation, discovery, development, manufacture, and marketing of pharmaceutical and consumer health-related products worldwide. Headquartered in the UK and with operations based in the US, the new company is one of the industry leaders, with an estimated seven per cent of the world's pharmaceutical market. GSK has over 100,000 employees worldwide. Of these, over 40,000 are in sales and marketing, the largest sales force in the industry. Around 35,000 employees work at 82 manufacturing sites in 37 countries and over 15,000 are in R&D. GSK R&D is based at 24 sites in 11 countries. MISSSION GSK's mission is to improve the quality of human life by enabling people to do more, feel better and live longer. VISION
  14. 14. GSK’s vision for the future is powered by their business drivers. It finds purpose and direction with their strategic intent. THE VISION FOR THE FUTURE GlaxoSmithKline's vision is exciting and will give you the opportunity to make a difference in the health of billions of people. Their value systems and operating principles will provide the necessary guide on how they work at GSK. The key to their success will be powered by the desire and passion to pursue GSK's priorities, expressed by the business drivers. GSK has four manufacturing units in India, located at Thane, Nashik, Mysore Bangalore. GSK has its head office in Mumbai at Worli. Company has a formidable presence in the domestic pharmaceuticals market with a market share of above 5.9 per cent. GSK India markets a wide range of ethical formulations and is the leader in therapeutic areas of respiratory, dermatology and vaccines, besides having a significant presence in areas of gastroenterology, dietary supplements, gynecology, neurology, cardiovascular and intensive care. GSK India is also the undisputed leader in the animal health and fine chemicals businesses. GSK also has leadership in four major therapeutic areas - anti- infectives, central nervous system (CNS), respiratory and gastro- intestinal/metabolic. In addition, it is a leader in the important area of vaccines and has a growing portfolio of oncology products. The company also has a Consumer Healthcare portfolio comprising over-the-counter (OTC) medicines, oral care products and nutritional healthcare drinks, all of which are among the market leaders. Glaxo India completed 75 years of its operations in India in the year 1999 and was named as India's most respected Pharmaceutical Company in a survey conducted by Businessworld and the Indian Market Research Bureau (IMRB). GlaxoSmithKline was named as India's most respected Pharmaceutical Company in a survey conducted by Businessworld and the Indian Market Research Bureau in the year 2003. GSK India has made a significant
  15. 15. contribution and is growing year by year. It figures among the top five markets and so it is a cornerstone of the performance in the international markets. If GSK India doesn’t do well, international division will also have a problem doing well too. MANAGING DIRECTOR 6VICE PRESIDENTS 1 EXECUTIVE DIRECTOR SENIOR GENERAL MANAGER SENIOR MANAGER MANAGERS orga ni za t ioN AL STRUCTURE
  16. 16. ASSISTANT MANAGER STAFF OTHER BUSINESS GlaxoSmithKline is a leading, global, research-based healthcare and pharmaceutical company. In India, it is the Number One Pharmaceutical company with a market share of 5.9 per cent. GSK commands the number one position in six of the 10 therapeutic categories in which it operates. Other than pharmaceuticals. GSK has other businesses - Qualigens Fine Chemicals (QFC). ABOUT QFC GENERAL INFORMATION QUALIGENS FINE CHEMICALS (QFC):- The Big Picture Qualigens Fine Chemicals (QFC) is a division of GlaxoSmithKline Pharmaceuticals that manufactures and markets a range of products required in a laboratory, including chemicals, diagnostic kits, glassware, culture media, instruments, filter papers and more… The word Qualigens is derived from two words—Quality and Genesis, which means origin. Thus Qualigens can be translated to mean the Origin of Quality. Qualigens is committed to manufacture and sell high quality products at competitive prices. The objective is to provide everything a laboratory needs from a single, reliable source. And the focus is on delighting the existing customers and enlarging the customer base in terms of Quality, Service and safety.
  17. 17. QFC has over 750 products in its portfolio of fine chemicals. The nucleus of QFC’s business is high quality and its products are manufactured and tested at facilities that have ISO 9002 accreditation and highly skilled manpower and instrumentation. The Qualigens Fine Chemicals (QFC) holds #1position in a highly fragmented market of fine chemicals. It has an estimated market share of 27%. QFC has a growing presence in Diagnostics, which covers the complete seriodiagnosis and biochemical tests, and has achieved a sizable growth in diagnostic instruments. Allied range of products including laboratory glassware has been successfully launched. Complementing these ranges, QFC also deals in laboratory requirements such as filter papers, disinfectants, dispowares and distillers. QFC has also introduced filtration range of products and culture media, which are seen as high growth products in the future. QFC has a nation wide presence through 14 stock points, which serve as regional distribution centers. The Central stock point is located at Bhiwandi, Thane. QFC has 8 contract sites around Mumbai for manufacturing / packing purposes. The overall product portfolio in different pack sizes extends to approximately 2700 products. Quality is of paramount importance in the
  18. 18. laboratory chemicals business, QFC also has a Quality Assurance (QA) lab which ascertain products comply with stringent quality parameters. CUSTOMERS QFC's biggest customers are industrial and institutional laboratories. Besides this manufacturing units requiring specialty chemicals are also major customers. Many of the dealings happen through stock points or by means of trading parties. Hence they form the direct customer interface. DOCUMENTS USED FOR TRANSACTIONS IN THE CURRENT SYSTEM. PO: - Purchase order is issued from procurement department to the suppliers to order for RM / PM. LR: - Lorry receipt or Lorry note is used to ascertain physical flow of good from sites, CSP etc. GRN: - Goods receipt note is issued to acknowledge goods from suppliers or from sites to CSP. GAN: - Goods Acceptance Note is issued by the QA when the products have passed required quality parameters. GAN is used to finally accept goods. RDC: - Rejected delivery challan is used when goods are rejected and returned back.
  19. 19. PFI / STN is used to record material transfers between CSP and depots. When excess goods are detected during physical stock check or goods of STN/PFI due are not physically dispatched RSAN is issued to acknowledge receipt and accept goods in stock When Customer on whose favour the invoice is made returns goods then a RBP is made to accept goods back in stock. When damaged products are received and they have to be scrapped then an ISAN is issued to record this loss of goods. INVOICE is the final billing that is done to the customer. Stock Factor Reeport is the monthly report containing data about stock levels at various Stock points. It also contains information about forecasts about products, this report is primarily used for planning and scheduling purposes. DAN :- When materials are sent for sub processing from the sites they issue a DAN containing instructions about the job to be done MASTER DATABASES  A complete database of QFC products with product codes is maintained. Products have five digit codes with the first four digits indicating the material used and the fifth digit the pack type. When a new product is to be added marketing has to decide a code for it. This updating of the database is done at various stock points based on instructions from H.O.
  20. 20.  Raw materials and Packing materials used for manufacturing or packing are also coded for easy classification. Whenever any new material is to be added Procurement at HO updates the database in PPMC systems.  Customers are also identified by codes. Depending upon the region and area the customer falls under he is allotted a code. Whenever a new customer is to be added the respective RBM, ABM approvals are needed, then the customer is added to the database.  A standard bill of materials (BOM) is maintained.  A standard supplier database is also maintained for procurement purposes. Addition of a new supplier to the database is done by Procurement from HO only. All the databases will have to be edited either at the HO or on direct permission from HO. THE EXISTING SUPPLY CHAIN AT GLAXOSMITHKLINE (QFC). THE FIRST SUPPLY CHAIN MODULE IS DEVELOPED FOR THE QFC CHEMICALS BUSINESS This is a broad overview of how the process of ordering Packing/Manufacturing and dispatch occurs. This process is carried out at manufacturing & packing sites namely, Sai Swaroop, Vasuda, Shreyas. Trichem, Chemiline. The difference between production and packing sites is that for production sites the Raw material as well as the finished goods is passed by the QA labs, before final dispatch occurs. Details regarding the depot functions were obtained from the Bhiwandi depot as well as the CSP office at Worli. During each and every process documents are generated to keep a record of the current transaction. Also it passes information for the next-in-line Operation to be performed.
  21. 21. Billings to customers and collections from them are received either at the stock points or at the HO. This data is then transferred to the Finance Department on monthly basis. In case of bounced Cheques both the Zonal Sales Managers and respective stock points are informed about it. In case of Suppliers the Bill is received by the procurement department and is verified against the GAN from QA. This is then sent to the billing department and the QFC Finance can get updated when data is updated in MFG Pro system.  Determination of requirements at stock points based current stocks and previous three months sales data. Based on this a manufacturing schedule for the plants is generated.  Based on this monthly schedule the sites plan their Manufacturing/ Packing process. RM and PM requirements are also generated based on this schedule and given to Procurement. Other than the above planned / scheduled method, sometimes due to stock outs at the stock points many times direct orders are placed by the customer or stock points. The process for handling of such orders is given below. Receipt of monthly data regarding stocks in hand from the stock points Stock Factor Report Monthly scheduling done for plants Procurement Manufactu ring/Packin g
  22. 22. The customer orders are checked against current stock by the stock point or Head office is notified about the requirements. On basis of this indents are issued or billing is done  Indents and final Product transfer notes are of two types Normal and Modvat.  In case of manufacturing plants the Raw material has to be processed further. Please see the process on the next page Customer Orders Raw material & packing material availability is compared with BOM and checked at site. Packing/Productio n and dispatch to Parijat Available Not Procurement orders given to Vendors Quality Assurance lab At stock points availability is checked and material is billed. If not then following process occurs. Indents
  23. 23.  If Raw material/Packing material is not available then Vendors are to be contacted and orders are placed for the material. Vendors/Suppliers Sites Sampling for testing 1 GRN Quality Assurance lab Manufacturing / Production process Plant sends back to Vendor and reorders on same invoice PTN is received from the sites and a commercial invoice as well as lorry order is sent to Worli (Parijat) office Passed Rejected Production sites QA Lab Manufacturing process Finished Goods QA Lab After GAN is received Label requisition is issued. PassedRejected 1 1 2 2 GAN Label requisition is issued
  24. 24. SUPPLY CHAIN PROCESS FOR THE DIAGNOSTICS DEPARTMENT Most of the diagnostic products are traded. Some of them are manufactured by Vendors in India or imported. Some of the products are procured in bulk and then repacked in small units at the repackaging site at Vasai. Since most of the items are imported with procuring the same requiring a high lead time, hence maintaining a high inventory becomes inevitable. A three- month rolling forecast given by the RBM's is used for planning purposes. Customer gets invoice and goods Cheques are deposited at HO or at the Stock point Customer billing is directly at HO or by DCS is entered and Finance is informed. Customer /Stockiest Stock Point Procurement at HO Vendors Repackaging unit
  25. 25. SUPPLY CHAIN PROCESS FOR THE ALLIED RANGE OF PRODUCTS Allied Ranges of products consist of Laboratory products like Distillation units, Filtration aids, Chromatographic test kits, Culture media, Laboratory glassware etc. The selling method differs from other QFC products in that some of the products are sold through quotations in a formal B2B format. All of these products are traded items. Most of the products are procured only on demand from the customer. Some of the fast moving segments have a small amount of inventory maintained to avoid stock outs.  After order is received it is verified against current stocks, if available products are billed else indents are generated for procurement. DISTRIBUTOR ORDER IS PLACED WITH HO BILLING IS DONE AT WORLI (PARIJAT) OFFICE INDENTS ARE ISSUED FOR PROCUREMENT FROM VENDORS. AVAILABLE UNAVAILABLE
  26. 26. SALES ORDER PROCESSING  For Qualisystems orders are accepted on basis of advance payments through DD only in which case the order is accepted and sales order processing occurs. Currently this verification is done manually it should be integrated and order processing instructions should be displayed. Customer / Stock Point requirements Worli Sales Processing Worli CSP office Packing & Manufacturing Sites 1 2 Products available Products not available Stock Factor Report
  27. 27.  When excess goods are detected during physical stock check or goods of STN/PFI due are not physically dispatched RSAN is issued to acknowledge receipt and accept goods in stock  Based upon RSAN the complaint is checked by HO (Parag Kharkar) and if reworking etc is possible then respective action is taken or goods are scrapped, for this an ISAN is issued.  Until LN is received the invoice is treated as pending invoice and the order has to be tracked.  When Customer returns goods on whose 1 Worli CSP Office Mother depot, Bhiwandi Invoice Invoice copy + Lorry Note Customer Invoice/Bill + Lorry Order Accounts Cheques Worli Head office Orders Stock Points Quotation Invoice STN Material movement
  28. 28. favor the invoice is made then a RBP is made to accept goods back in stock. Worli Head office Manufacturing & Packing Units and Procurement dept. Parijat Worli Head office Mother Depot, Bhiwandi Indent Delivery Challan + Excise Invoice Delivery Challan Invoice Invoice + Lorry note PFI Stock Points STN Customer Accounts Cheques Invoice/Bill + Lorry Order
  29. 29. PROCUREMENT PROCESSING In case of packing material the PO is generated annually estimating the monthly demand. After a shortage is detected as against the order the components of a packing material and their availability is verified against the BOM and the stock status from plants, to fulfill the order. Vendors are then asked to supply the material as against the annual order. PRODUCTION / PACKING SITES PROCUREMENT DEPARTMENT SALES ORDER PROCESSING ADDITIONAL INDENTS RLM051 PENDING INDENTS QA LAB VENDOR PRODUCTION / PACKING SITES QA LAB 1 SAMPLING STOCK STATUS UNDER TESTING MATERIAL STATUS PO # + LR GRN + TEST ANALYSIS SHEET Based upon all the requirements and available stocks a requisition is generated and purchase order is issued. PO
  30. 30. ACCEPTED REJECTED PRODUCTION / MANUFACTURING SITE SUPPLIERS PROCUREMENT QA LAB ACCOUNTS GRN + RDC in case of rejection GRN GAN 1 GAN GRN BILL is sent in case of acceptance BILL + GAN after verification
  31. 31. INTRODUCTION Mumbai is a densely populated city with a huge flow of traffic. Because of this, lengthy commutes to workplaces are common, with many workers traveling by train. Instead of going home for lunch or paying for a meal in a café, many office workers have a cooked meal sent by a caterer who delivers it to them as well, essentially cooking and delivering the meal in lunch boxes and then having the lunch boxes collected and re-sent the next day. This is usually done for a monthly fee. The meal is cooked in the morning and sent in lunch boxes carried by dabbawalas, who have a complex association and hierarchy across the city. A collecting dabbawala, usually on bicycle, collects dabbas from homes or, more often, from the dabba makers (who actually cook the food). The dabbas have some sort of distinguishing mark on them, such as a color or symbol (most dabbawalas are illiterate). ] The dabbawala then takes them to a designated sorting place, where he and other collecting dabbawalas sort (and sometimes bundle) the lunch boxes into groups. The grouped boxes are put in the coaches of trains, with markings to identify the destination of the box (usually there is a designated car for the boxes). The markings include the rail station to unload the boxes and the building address where the box has to be delivered. At each station, boxes are handed over to a local dabbawala, who delivers them. The empty boxes, after lunch, are
  32. 32. again collected and sent back to the respective houses. Everyone who works within this system is treated as an equal. Regardless of what function a dabbawala, everyone gets paid about 4,000 rupees (which equals around 50 British pounds), not a lot of money when one considers that they also return the lunch's packaging to the home. More than 175,000–200,000 lunches get moved every day by an estimated 4,500–5,000 dabbawalas, all with an extremely small nominal fee and with utmost punctuality. According to a recent survey, there is only one mistake in every 6,000 deliveries. In fact, the American business magazine Forbes gave a Six Sigma performance rating for the precision of dabbawalas. This rating indicates a 99.999999 accuracy percentage of correctness, meaning one error in every six million transactions—an astonishing (and perhaps unbelievable) degree of exactness. Mumbai’s Dabbawalas operation is confined to Mumbai only, which is the commercial capital of India. Thousands of Mumbai residents leave for work empty-handed, without anything to eat for lunch. Mumbai’s In Mumbai, there is a small army of 'dabbawalas' who picks up 175,000 lunches from the customers homes and delivers them to harried students, managers and workers on every working day. They serve hot lunch to this harried person at their desk at 12.30 pm sharp. In Mumbai there are around 5000 dabbawalas who work as tiffin carriers. Just like a well-oiled Olympic relay team. They collect, sort and transport the dabbas to the respective destinations. They do this with absolutely zero documentation and yet rarely has it happened that a lunch has missed its destined belly. The service includes collection, transportation and delivery of lunch boxes from home to office location in the morning. In the evening the (empty) lunch boxes are moved in the reverse direction. More than four thousand five hundred semi- literate dabbawalas collect and deliver 175,000 packages within hours. This is a
  33. 33. very unique, simple and highly well-organised logistics system of120-year which is followed in Amchi Mumbai. The Mumbai dabbawallas operation is widely recognized as an outstanding example of excellence in logistics. Though the work sounds simple, it is actually a highly specialized trade that is over a century old and which has become integral to Mumbai's culture. The dabbawalas is a 113-year business run by a group of people with practically no formal education, no investment and no technology. The task of accurately delivering food to over 2 lakh customers daily in crowded Mumbai is something that would daunt even the biggest management gurus. But the dabbawallahs, with almost no formal management training, accomplish the task with such precision that they have become a worldwide management and logistics phenomenon. WHO IS A DABBAWALA? The word "Dabbawala" means "one who carries a box”. Available literature on the subject broadly identifies a Dabbawala as a carrier of tiffin boxes. Most of the Dabbawala hail from a few places in rural Maharashtra, which are located closer to Pune. These include district and towns such as Audar, Ambegoan, Akola, Junnar, Mulshi, Mawal, Rajgurunagar, Sangamner and Khed. Most of them belong to a certain community and so they share certain common beliefs and values in area like work ethics, living styles, food habits, religious beliefs and so on. They also speak common dialect. They also share similar customs and traditions like gathering together for a week every April for a festival in their. They follow a strict dress code which comprises of the conspicuous white Gandhi-Cap and Khadi Kurtha Pyjamas – a loose white dhoti shirt or cotton Pyjama.
  34. 34. Economic necessity was the most important factor that drove them to migrate to Mumbai for employment. Most have left behind their family, visiting them once in a while, and live a Spartan life in Mumbai. All Dabbawalas share the same belief that being “Annadattas” their role on the job is of prime importance. So their single most important objective each day is to ensure that no individual, subscribing to their services, would go hungry on any day. The dabbawalas have a distinct local identity and are easily recognized in the crowded and most busy location in Mumbai. Pedestrians and commuters yield to the dabbawalas in order not to interfere with their service delivery. They are always in a hurry they are known for their reliability and work ethics. All are fueled by the overall objective the “work is worship” and “Atiti Devo Bhava”. When we bring to perspective the essential characteristics of Dabbawala we need to reflect o what are the intrinsic personality variables that distinguishes the Dabbawalas. The Dabbawalas are called Mard Marathas, the worrier cast in Maharashtra, and as “Vithoba Chi Fauz” i.e. the army of Lord Vishnu and are also descendents of Shivaji. They carry in their collective consciousness a spirtit of struggle and achievement of the highest order. Their work ethics and the belief that in the sweat and toil of day to day living there is scope for transformation of
  35. 35. the spirit fuels them to work harder and with greater commitment of purpose. It is these qualities of the spirit that distinguishes them form the others. HISTORY OF DABBAWALA The origin of the Dabbawalas' lunch delivery service dates back to the 1890s during the British Raj. The history of tiffin box carriers run parallel to the history of Mumbai's development. Saddled with growing population in the late19th century, new settlements -- further from the original in the old Fort complex, started cropping up in Mumbai. Ballard Pier and Fort still remained the business centers though, as they housed most of the banks, government departments, insurance houses, shipping companies, etc. The tiffin carrier service by Dabbawalas is believed to have originated in the 19th century and has been evolved over a period of over 100 years. At that time, people from various communities migrated to Mumbai for work. As there were no canteens or fast food centers then, if working people did not bring their lunch from home, they had to go hungry and invariably, lunch would not be ready when they left home for work. As residential colonies kept moving further from the Fort, a lot of office goers started finding it difficult to go home for their lunch in the afternoons. Carrying lunch boxes while leaving home in the morning was not exactly fashionable. It was a Parsi banker finally found a solution. In 1890, a Parsi broker working in a Ballard pier employed a young man, who had come down from Pune district, to fetch his lunch every afternoon. The idea caught on and this inspired many unemployed people to become dabba carriers. The purpose of the service was to collect the tiffin from the each house and deliver to the consigned persons and after the lunch the respective tiffins are returned back to their houses
  36. 36. Business picked up through referrals and soon the pioneer tiffin-carrying entrepreneur had to call for more helping hands from his village. Though there were no umbrella organizations for the carriers then, the first informal attempt to unionize was made by Mahadev Havji Bacche in 1930. A charitable trust was registered n 1956 under the name of "Nutan Mumbai Tiffin Box Suppliers Trust". Even today every carrier is expected to contribute Rs 15 (US $ 0.30) per month towards the trust. The commercial arm was registered quite later in 1968 as "Mumbai Tiffin Box Carriers Association. WHAT IS THE BASIC NEED ADDRESSED? The value proposition that Mr. Madhu Havji Bache offered was very simple ensure “timely supply” of “home food” to the working class. This involved pick up of lunch boxes from individual homes and their delivery at the work place and again returning these boxes back home. Though the job profile was simple, they were made aware that non delivery of the boxes on time or abstention from work would seriously impact the reputation of the Dabbawallas. No initial investment was required by him as he used the available transport and infrastructure facilities for the task. In the beginning he had an informal arrangement to handle the job o pick up and delivery of the dabbas. The areas covered were restricted to the geographic regions were work was underway. Over the years this has evolved to meet the growing demand for supply of “home food”. It was only in 1890, when this services delivery model was established that Nutan Mumbai Tiffin Box Suppliers Charity Thrust was formed. The people working on this job were formally called “Dabbawalas”. THE NUTAN MUMBAI TIFFIN BOX SUPPLIERS TRUST The Nutan Mumbai Tiffin Box Suppliers Association is a smooth 120-year-old organisation with 5000 semi-literate members providing a quality door-to-door service to a large and loyal customer base. 5000 semi-literate Dabbawalas transport 1,75,000-boxes in a 3-hours period, through a 25-Km of public transportation involving multiple transfer points at six sigma level of quality.
  37. 37. History: Started in 1880 Avg. Literacy Rate: 8th Grade Schooling Avg. area coverage: 60 Km per Tiffin Box Employee Strength: 5000 Number of Tiffins: 200000 Tiffin Boxes i.e.400000 transactions daily. Time taken: 3 hrs (9 am–12 pm delivery of carriers, 2 pm – 5 pm collection of empty carriers) Cost of service: Rs.200/month. Turnover: Rs.50 crore per month approx. ORGANISATIONAL STRUCTURE
  38. 38. PRESIDENT Mr. Raghunath Medage. VICE PRESIDENT Mr. Sabaji Medage. GENERAL SECRETARY Mr. Gangaram Talekar. MEMBERS (5000) MUKADAM TREASURER Mr. Damodar Manohar Pingale DIRECTORS (9) 13 MEMBERS
  39. 39. BUILDING A CLIENTELE The range of customers includes students (both college and school), entrepreneurs of small businesses, managers, especially bank staff, and mill workers. They generally tend to be middle-class citizens who, for reasons of economy, hygiene, caste and dietary restrictions or simply because they prefer whole-some food from their kitchen, rely on the dabbawala to deliver a home cooked mid-day meal. Service charges vary from Rs 150 to Rs 300 per tiffin per month, depending on location and collection time. Money is collected in the first week of every month and remitted to the mukadam on the first Sunday. He then divides the money equally among members of that group. It is assumed that one dabbawala can handle not more than 30-35 customers given that each tiffin weighs around 2 kgs. And this is the benchmark that every group tries to achieve. Typically, a twenty member group has 675 customers and earns Rs 100,000 per month which is divided equally even if one dabbawala has 40 customers while another has 30. Groups compete with each other, but members within a group do not. It's common sense, points out one dabbawala. One dabbawala could collect 40 tiffins in the same time that it takes another to collect 30. From his earnings of between Rs 5,000 to Rs 6,000, every dabbawala contributes Rs15 per month to the association. The amount is utilised for the community's upliftment, loans and marriage halls at confessional rates. All problems are usually resolved by association officials whose ruling is binding. Meetings are held in the office on the 15th of every month at the Dadar. During these meetings, particular emphasis is paid to customer service. If a tiffin is lost or stolen, an investigation is promptly instituted. Customers are allowed to deduct costs from any dabbawala found guilty of such a charge.
  40. 40. If a customer complains of poor service, the association can shift the customer's account to another dabbawalas. No dabbawalas is allowed to undercut another. Before looking into internal disputes, the association charges a token Rs 100 to ensure that only genuinely aggrieved members interested in a solution come to it with their problems, and the officials' time is not wasted on petty bickering. ECONOMICAL ANALYSIS Everyone who works within this system is treated as an equal. Regardless of a dabbawalas function, everyone gets paid about 2000-4,000 rupees per month (around 25-50 British pounds). More than 175,000-200,000 lunches get moved every day by an estimated 4,500-5,000 dabbawalas, all with an extremely small nominal fee and with utmost punctuality. According to a recent survey, there is only one mistake in every 6,000,000 deliveries. The American business magazine Forbes gave a Six Sigma performance rating for the precision of dabbawalas. The BBC has produced a documentary on Dabbawalas, and Prince Charles, during his visit to India, visited them (he had to fit in with their schedule, since their timing was too precise to permit any flexibility). Owing to the tremendous publicity, some of the dabbawalas were invited to give guest lectures in top business schools of India, which is very unusual. Most remarkably, the success of the dabbawala trade has involved no modern technology. The main reason for their popularity could be the Indian people's aversion to fast food outlets and their love of home-made food.
  41. 41. UNINTERRUPTED SERVICE The service is uninterrupted even on the days of extreme weather, such as Mumbai's characteristic monsoons. The local dabbawalas at the receiving and the sending ends are known to the customers personally, so that there is no question of lack of trust. Also, they are well accustomed to the local areas they cater to, which allows them to access any destination with ease. Occasionally, people communicate between home and work by putting messages inside the boxes. However, this was usually before the accessibility of telecommunications. DABBAWALAS ON SMS It is for their hard work that dabbawalas of Mumbai have got the Six-Sigma certified. Less than two months after they went online, the 4,000-strong food delivery experts have gone mobile, too. One can book their dabbawala through their cell phone just by sending an SMS to 3636. According to Raghunath Medge, president, Nutan Mumbai Tiffin Box Suppliers Charity Trust,, “On receiving the message, a dabbawala contacts the sender on his cell, and the delivery service can be started immediately.” Dabbawalas have decided to accept messages from outside the city as well. “Anyone can send a message from anywhere in India,” says Medge. “Interesting messages is updated on the website under the “Mobile Blog” section.”Medge feels that the mobile platform is just another way for people to access the dabbawala service. “When they launched the web site, mydabbawala.com, they could manage their databases in an organised manner. Now, the mobile phone messages help them to engage more customers, and all those who did not know how to access their services.” The website has been receiving new orders every day, even from management students from around the world. “Two students from Singapore and Scotland contacted them through the website, and are studying the dabbawalas from a logistics point of view. In fact, several people have volunteered to work for them.”
  42. 42. DISTRIBUTION NETWORK
  43. 43. DELIVERY PROCESS An important facilitating factor developed indigenously by these illiterates and school level qualified dabbawala for smooth execution of the job has been the system of coding. It comprises of the use of 3-4 symbols crudely painted on the lunch boxes, in a combination of the colour which enable the dabbawala to easily identify the dabba and facilitates accurate execution of the task. In this they are guided by their intuition, spirit of teamwork, value and work ethics. The coding system evolved by them is unique when viewed in its totality. These have emerged from the needs of the job which has given freedom for individual sub groups to develop their region specific coding system. Thus the dabbawala in Central Mumbai would have their unique coding system while the dabbawalas at Churchgate have what his group feel is best for their clientele and geographic area covered. The logistics system revolves around its fit with the available infrastructure, the culture of the people and the geographic characteristics. In addition to the individual jobs at the micro level, it is important to know how this complex system has worked consistently over the years in the most cohesive manner. STARTING JOURNEY 8.30 AM – 10.34 AM. The day for the dabbawalas starts at 8.30 am, with collecting the dabba’s from the various houses. The dabbawala goes to collects the tiffin on cycle. People usually leave the dabba’s outside the door for them. In case they are late the dabbawalas have to urge them to hurry up, else if it gets late they have to leave if the clients Tiffin is not ready in time. He then picks up all the tiffins and meets the other dabbawalas at the station. The dabbawala is forced to do so because he is bound by the train time. The departing train’s time is very crucial and must consider the time required for the sorting process. There may, on the other hand, be further delays caused by other customers too. It is extremely difficult, yet crucial to ensure that the entire pick up
  44. 44. of all tiffins takes place as per schedule. The scheduling has to include cushion time for uncertainties such as these without which the whole system will, be disrupted. For example, the dabbawala picks up the tiffin from his customers houses and meets the other group members at the designated spot at the station. This particular group of 10 dabbawalas takes the 10.35 am Churchgate local train everyday. Therefore, the dabbawalas have to make sure that they reach the platform for the sorting process at least by 10.15 am in order to ensure a smooth flow of their networking throughout their daily routine, this period in the morning that includes picking up the tiffins and meeting at the designated spot at the station is the most crucial part of the system. One bit delay in this aspect will disrupt the whole system and will lead to a chaotic situation. Therefore, the dabbawalas have to collect the tiffins in time and reach the station with enough time left for sorting to take place before the train arrives. SORTING 10.15 AM – 10.34 AM The critical phase of the system is sorting. Sorting of all the tiffins according to their destination station and arranging them into wooden crates take 20 to 25 minutes. The aim of the process is to segregate the tiffins and differentiate them as per the destination of the each of them. The tiffins are then handed to different dabbawalas at the destination station and sorting makes it easier to identify each group of tiffins and less time consuming for the respective dabbawala. The sorting makes the entire process error free. The process of sorting is similar to that of a post office where letters are segregated according to their destinations. Since each tiffin exchanges many hands, each of he lids of the tiffins is marked with a colored code indicating the originating station, destination and building with the floor number. The coding is the secret behind the efficient working of the system and that’s why the network is “information rich”. This is a unique feature as it requires no documentation or record keeping. There is no communication between the 2 groups, but just coordination among them because the whole blueprint is pre-decided by the dabbawalas themselves.
  45. 45. The Mukadam plays a key role here to ensure smooth working and co-ordination, his responsibility is to know all the tiffins his group carriers. The responsibility of the Mukadam is to the extent that he has to know all the tiffins that his group carries. Therefore, he must be able to recognize these tiffins even if the codes on them are barely visible. Also, if any member of the group abstains from his duty for a particular day for some reason, then it is the responsibility of the Mukadam to ensure that all the dabbas that the absentee was responsible for, are duly picked up and delivered back on time. Hence, we see that the Mukadam plays a critical role in this stage of sorting and allocating jobs. The dabbas are collected, sorted out and sent to their destination based on a numerical and alphabetical code. Every station has a numerical code and each place has an alphabetical code. The tiffin carries the code of the source and the destination. The codes help identify tiffin owners. Very simple system of sorting exists with this dabbawala network. Every tiffin carrier has the mark of a circle or a lower of a specific colour and a digital identity number. Take this Tiffin mark for example K-BO-10-19/A/15. Where K is the identity letter of the dabbawala. BO means Borivali i.e. the area from there the tiffin is collected. The figure 10 refers to Nariman point area. 19/A/15 refers to the 19th Building and the 15tj floor in Nariman point area where the tiffin is to be delivered. These codes have been developed over the years and began with simple coloured threads. An employee delivers the dabbas, collected individually from homes at the railway station nearest to the houses. At the station the destination are sorted out, based on the codes, and then by train to respective stations.
  46. 46. JOURNEY TIME10.30 AM – 11.20 AM The time period between 10.34 am to 11.20 am is the journey time for the dabbawalas. They load the wooden cart filled with tiffins into the goods luggage or goods compartment of the train. Generally they try to occupy the last compartment as this help them to avoid the rush at the platforms and is easy to be located and conveniently situated once the train arrives on the platform. Mostly the commuter’s don’t get on this compartment as they are already filled with crates and there is not enough room. This is a common understanding among daily commuters and dabbawalas. In any case the platform is filled with people and dabbawala have to unload the crates on the platform they start a series of loud verbal comments warning everyone to make way of the unloading. The unloading of this particular group takes place at Dadar, Lower Parel, Grant road and finally Churchgate etc. Finally just six out of 10 dabbawala get off at Churchgate. There are also others joining into the group from the station as they have common destination points. The allocation of manpower at each station depends on the number of tiffins that have to be delivered in a particular area. E.g. if 150 tiffins are to be delivered in Grant Road, 4 people are assigned to the station. This is done in keeping in mind that one person cannot carry more than 35 dabbas. They will also be assigned specific codes which are written on the top of the tiffin. This 4 dabbawala can be from any groups and irrespective of any station. Their job is now to deliver these 150 tiffins irrespective of which group they belong to.

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