The document discusses concepts related to cGMP (current good manufacturing practices) and industrial management. It covers several topics related to cGMP compliance including objectives of cGMP, layout of buildings and facilities, production organization, material management, inventory management, and quality control. It also discusses concepts like plant layout, material procurement, inventory costs, and techniques for inventory management. The overall document provides an overview of various aspects involved in ensuring cGMP compliance and efficient industrial management practices.

1. S.GOKULAKRISHNAN
M.Pharm (Pharmaceutics) – I Year,
Mother Theresa Post Graduate and Research Institute of
Health Sciences,
(A Government of Puducherry Institution)
Puducherry.
cGMP&INDUSTRIAL
MANAGEMENT
GOKULAKRISHNAN cGMP 1

2. Contents
Objectives of CGMP
Layout of buildings, services, equipments &
maintenance
Production organization
material management
handling and transportation
inventory management &control
Production and planning control
Sales forcasting
Budget and cost control
Industrial and personnel relationship
Total quality management
2GOKULAKRISHNAN cGMP

3. CGMP
CGMP refers to Current Good
Manufacturing Practice (CGMP) regulations
enforced by US FDA.
Current Good Manufacturing Practices are the
methods to be used in, the facilities or controls
to be used for, the manufacturing, processing,
packaging or holding of a drug to assure that
such drug meets the requirements of the act,
and has the identity and strength and meets the
quality and purity characteristics that is
represented to possess. 3GOKULAKRISHNAN cGMP

4. Objectives
 Ensure that products are consistently manufactured and
controlled to the specified quality.
 Concerned with all aspects of production and quality control.
 In the manufacture of cosmetic products, overall control and
monitoring
 Ensure that the consumer receives products of specified
quality.
The quality of a product depends on the starting
materials, production and quality control processes,
building, equipment and personnel involved.
 CGMP regulations assures the identity, strength, quality and
purity of drug products
4GOKULAKRISHNAN cGMP

5. LAYOUT OF BUILDINGS 5GOKULAKRISHNAN cGMP

6. Plant Layout
Plant layout is a coordinated effort to
achieve the final objective to integrate
machines, materials, and personnel for
economic production.
Involves location of different
departments and arrangement of
machinery in each department.
6GOKULAKRISHNAN cGMP

7. TYPES OF PLANT LAYOUT
Process layout or functional layout
Product or straight line layout
 Process layout or functional layout
Arrangement of machines of a particular class
doing a particular process as separate department
Advantage
More effective supervision
Division of labour can be provided
Disadvantage
May not be possible as a number of unit operations
have to be performed
7GOKULAKRISHNAN cGMP

8. Product or straight line layout
• The arrangement of machines doing
various operations in a line as one
department
Advantages
Processing of work is quick and smooth
Cost of handling is reduced using conveyers
Manufacturing time can be reduced
Floor space can be properly utilized
8GOKULAKRISHNAN cGMP

9. FACTORS INFLUENCING PLANT
LAYOUT
Basic managerial policies and decisions
Nature of plant location
Type of industry and process
 Intermittent industries
 Continuous industries
Types of methods of production
 Job production
 Batch or lot production
 Continuous or mass production
9GOKULAKRISHNAN cGMP

10. STORES- LAYOUT
Should be planned in the objectives of:
– Achieving minimum wastage of space
– Achieving maximum ease of operations
The layouts should:
 Make optimum utilization of floor space and height
 Should be 1.5- 3m wide to facilitate traffic
 Permit effective and orderly segregation of various
categories of materials and allow raotation of stock (1st
in 1st out)
 Should be ventilated
 Have provisions for storage as per specific conditions
 Adequately protected from waste, damge and
deterioration.
10GOKULAKRISHNAN cGMP

11. SERVICES 11GOKULAKRISHNAN cGMP

12. Lighting.
 Adequate lighting shall be provided in all areas.
Ventilation, air filtration, air heating and cooling.
 Adequate ventilation shall be provided.
 Equipment for adequate control over air pressure, micro-
organisms, dust, humidity, and temperature shall be provided
appropriate for the manufacture, processing, packing, or
holding of a drug product.
 Air filtration systems, including prefilters and particulate
matter air filters, shall be used appropriate on air supplies to
production areas.
12GOKULAKRISHNAN cGMP

13. Plumbing
 Potable Water shall be supplied under continuous positive
pressure in a plumbing system free of defects that could
contribute contamination to any drug product. Potable water
shall meet the standards as prescribed.
Sewage and refuse
 Sewage, trash, and other refuse from the building and premises
shall be disposed of in a safe and sanitary manner.
Washing and toilet facilities
 Adequate washing facilities shall be provided, including hot
and cold water, soap or detergent, air driers or single-service
towels, and clean toilet facilities easily accessible to working
areas.
13GOKULAKRISHNAN cGMP

14. Sanitation.
 Any building used in the manufacture, processing, packing, or
holding of a drug product shall be maintained in a clean and
sanitary condition, Any such building shall be free of
infestation by rodents, birds, insects, and other vermin (other
than laboratory animals). Trash and organic waste matter shall
be held and disposed of in a timely and sanitary manner.
 Sanitation procedures shall apply to work performed by
contractors or temporary employees as well as work performed
by full-time employees during the ordinary course of
operations.
14GOKULAKRISHNAN cGMP

15. EQUIPMENTS & MAINTENENCE
15GOKULAKRISHNAN cGMP

16. Equipment should be designed and located to
suit the production of the product.
Design and Construction
The equipment surfaces coming into contact with any
in-process material should not react with or adsorb
the materials being processed.
Equipment should not adversely affect the product
through leaking valves, lubricant drips and through
inappropriate modifications or adaptations.
Equipment should be easily cleaned.
Equipment used for flammable substances should be
explosion proof
16GOKULAKRISHNAN cGMP

17. Installation and Location
Equipment should be located to avoid congestion and
should be properly identified to assure that products do
not become admixed or confused with one another.
Water, steam and pressure or vacuum lines, where
applicable, should be installed so as to be easily
accessible during all phases of operation. They should
be clearly identified.
Support systems such as heating, ventilation, air
conditioning, water (such as potable, purified,
distilled), steam, compressed air and gases (example
nitrogen) should function as designed and identifiable.
17GOKULAKRISHNAN cGMP

18. Equipment cleaning and maintenance
Equipment and utensils shall be cleaned, maintained,
and sanitized at appropriate intervals to prevent
malfunctions or contamination that would alter the
safety, identity, strength, quality, or purity of the drug
product
Written procedures shall be established and followed
for cleaning and maintenance of equipment, including
utensils, used in the manufacture, processing,
packing, or holding of a drug product.
18GOKULAKRISHNAN cGMP

19. MATERIAL MANAGEMENT
119GOKULAKRISHNAN cGMP

20. Introduction
Definition :- It is an organizational concept which has
the authority & responsibility of all activities,
principally concerned with the flow of materials in
the organization.
Material management works continuously with
production, marketing, sales & quality control.
It has the responsibility of determining the amount of
inventory & its accountability.
It is concerned with planning, directing & controlling
the kind, amount, location, movement of the various
flows of materials used in & produced by a business
enterprise.
320GOKULAKRISHNAN cGMP

21. Functions of Material management
Material planning & programming.
Simplification, standardization & value analysis.
Inventory control & management.
Purchasing of materials in desired quantities without
delays.
Receiving of incoming materials.
Storage, preservation & administration of materials.
Production planning & scheduling.
Transportation (internal & external) & material
handling.
Disposing of rejects & obsolete materials.
Improving operation efficiency through training. 521GOKULAKRISHNAN cGMP

22. Vendor Customer
Material management
Value analysis,
Inventory control,
Production
planning Purchasing,
Vendor development
& Buying
Material handling
Store - keeping
Recycling or
Disposal
Raw
material
Manufacture
Finished
goods
Functions of Material management
622GOKULAKRISHNAN cGMP

23. Materials – Quality & Quantity
 Four factors are considered to be essential…
1. Quality,
2.Quantity,
3.Price
4.Delivery date.
1.Quality :-
 It is defined as the suitability of an item to accomplish the intended
purpose.
 The best is not necessarily the highest quality.
 A quality standard is the description of an acceptable quality of a
particular item.
 Size reduction equipment, punches, dies, filling equipment, size
separation equipment etc. should comply with quality specifications.
 The quality of the material used has direct relationship with the end use
of the product.
723GOKULAKRISHNAN cGMP

24. 2.Quantity :-
From the inventory point of view, quantity standards are
decided on the following parameters…
- Maximum inventory
- Minimum inventory
- Standard order
- Reorder point.
The quantity is mainly based on the calculation of
Economic order quantity (EOQ).
3.The prices of materials are negotiated with the firms
based on certain procedures.
4.Delivery dates are finalized based on the needs of
organization.
824GOKULAKRISHNAN cGMP

25. Value analysis
 It is a systematic study of every element for its cost in a part, material or
service to make certain that it performs its function at the lowest possible
cost.
Benefits of Value analysis :-
 Cost of existing product or services decreases.
 Unnecessary expenditure can be identified & eliminated in products,
processes or services.
 Product value gets improved for new materials & processes.
 Greater profits acquired
i.e. higher returns on investment.
925GOKULAKRISHNAN cGMP

26. Types of value :-
User value
Esteem value
Cost value
Exchange value.
Value ratio :-
FUNCTION
TOTAL COST
 The value can be improved by the following ways…
Reducing the costs
Improving the function
Achieving both the above.
9
VALUE
26GOKULAKRISHNAN cGMP

27. Value analysis technique:
 The value of an item can be improved by…
What must it do?
What else does the item do?
What does it cost?
What else will do the job?
What will be the alternative cost?
o Value analysis – what to buy?
o Purchasing analysis – how to buy?
1127GOKULAKRISHNAN cGMP

28. Purchasing – Centralized & Decentralized
Purchasing is an activity directed towards securing
the materials, supplies, equipment & services
required in the operations of an enterprise.
Functions of Purchasing department :-
 Ordering section places orders with the vendors
 Service section fallows the progress of the purchase orders, its
shipment by the vendor and its final receipt by the company
 Records-section maintains all records of quotation, costs,
purchases.
1228GOKULAKRISHNAN cGMP

29. Types of purchasing :
1.Centralized purchasing :
Advantages :
 It is an efficient system
 It permits a greater degree of specialization for buying
 Bargaining capabilities are better
 Procuring becomes uniform & consistent materials are
procured without price differentiation
 Duplication of efforts is eliminated
 Purchasing procedure & payment of invoices become simple.
1329GOKULAKRISHNAN cGMP

30. 2.Decentralized purchasing:
Advantages :
 Purchasing system becomes more flexible & efficient
 Procurement is faster
 When purchases are made in a local place, it promotes better public
relations
 Control over purchases is no longer remote.
Disadvantages :
 Quantity of discounts offered is less
 It involves duplication of efforts.
1430GOKULAKRISHNAN cGMP

31. INVENTORY MANAGEMENT
31GOKULAKRISHNAN cGMP

32. INTRODUCTION
DEFINITION:
The „inventory‟ can be defined as stock of
items(includes raw materials, in process goods,
finished goods, packaging, & other spares ) in order to
meet an unexpected demand / distribution in the future.
(OR)
Inventory is defined as an itemized list of goods with
their estimated worth, specifically , annual account of
stock taken in any business.
32GOKULAKRISHNAN cGMP

33. Category
 PRODUCTION INVENTORY
Special items manufactured to company specification.
 MRO INVENTORY
Maintenance, repair & operating supplies which is
consumed in production process.
Do not become part of the product.
 IN-PROCESS INVENTORY
Semi finished products found at various stages in the
production operation.
 FINISHED GOODS INVENTORY
Complete product ready for shipment. 33GOKULAKRISHNAN cGMP

34. OBJECTIVES
To reduce dependence of one another
 To enable each organisation schedule its operation
independently of another.
 To reduce material handling costs.
To obtain a reasonable utilization of people &
equipment.
 Maximize customer service
 Longer production runs
 Flexibility in production scheduling.
To avoid stock out and shortage.
34GOKULAKRISHNAN cGMP

35. Benefits
Inventory control ensures an adequate supply of
material & stores , minimizes stock out & shortage &
avoid costly interruption .
It keeps down the investment in inventory.
Eliminate duplication in ordering / replenishing
stocks.
 better utilization of available stocks by facilitating
inter –dept transfer within a company
Serves as means for the location and disposition of
inactive & obsolete item of services.
 provide a consistent and reliable basis for preparing
financial statement. 35GOKULAKRISHNAN cGMP

36. INVENTORY COSTS
 Cost factors must be considered while taking any
decision regarding inventories.
 Includes ordering costs , carrying cost, out of
stock/shortage cost and set up cost.
1.ORDERING COST:
Costs of placing an order with a vendor of material
such as preparing a purchase order(receiving and
ordering calls), processing payments(typing costs),
transportation, receiving & inspecting the material.
This cost does not depend on or vary on the number
ordered.
36GOKULAKRISHNAN cGMP

37. 2 .CARRYING COSTS/HOLDING COSTS:
 Costs connected directly with material such as
deterioration, pilferage, storage facilities, obsolescence.
 Financial costs includes taxes, insurance ,handling
charges & interest
3.OUT OF STOCK/SHORTAGE COST:
Back ordering
 Lost sales
 Customers goodwill
4.COST OF ITEM:
 Direct cost of item
5. SET UP COST:
 It include production charge- equipment change over,
report preparation etc. 37GOKULAKRISHNAN cGMP

38. ROLE OF PHARMACIST IN DRUG
PROCUREMENT
The hospital pharmacist should be in collaboration
with the purchase officer, assuming the following
duties:
 Maintaining a list of names, addresses, and telephone
numbers of drug manufacturers,wholesalers and local
representatives.
 Preparing detailed specifications for drugs, chemicals,
and biologicals.
 Preparing request for purchase form.
 Preparing receipt memo, if the drugs are received
directly by the pharmacy.
 Preparing return goods memo whenever applicable.
38GOKULAKRISHNAN cGMP

39. TECHNIQUES IN INVENTORY
MANAGEMENT
 ABC Analysis
 VED Analysis
 EOQ Analysis
 Perpetual Inventory System
 Lead time
 Buffer Stock
39GOKULAKRISHNAN cGMP

40. ABC ANALYSIS
Always Better Control
It is an inventory categorization method used
for the analysis of range of items that have
different levels of significance and should be
controlled differently.
As per the analysis, the inventories is grouped
into 3 categories based on cost of the material
and money value of consumptions
40GOKULAKRISHNAN cGMP

41. A ITEMS B ITEMS C ITEMS
10 % of total inventories 20 % of total inventories 70 % of total inventories
Consumes about 70% of
total budget
Consumes about 20% of
total budget
Consumes about 10% of
total budget
Requires very strict
control
Requires moderate
control
Requires low control
Requires low or no
safety stocks
Requires low safety
stocks
Requires high safety
stocks
Needs maximum follow
up
Needs periodic follow
up
Needs maximum close
follow up
Handled by senior
officers
Handled by middle
management
Handled by any official
of management
41GOKULAKRISHNAN cGMP

42. ADVANTAGES:
The investment in inventory can be regulated
and funds can be utilized in best possible
manner.
There is a closer and strict control on those
items which represent a major portion of total
stock value.
It helps in enough safety stock of C categories
of items.
The scientific and selective control helps in
maintainence of high stock turnover rate.
42GOKULAKRISHNAN cGMP

43. VED ANALYSIS
This system is based on utility of the material .
The different brands of the drug formulation is
classified as:
V= VITAL ITEMS
E=ESSENTIAL ITEMS
D=DESIRABLE ITEMS
Vital Items:
 They are very useful and important in daily patient
care.
 Maximum levels of such drugs should be maintained
always in order to have a continuous supply. 43GOKULAKRISHNAN cGMP

44. Essential items:
 These are such items which can affect the pharmacy
services to some extent. They require a lesser stock
level when compared to vital drugs.
 Essential items are those items whose stock – out cost
is very high for the company.
Desirable items:
 These are required by the pharmacy but they donot
effect the quality of service to the patient.
 Desirable items are those items whose stock-out or
shortage causes only a minor disruption for a short
duration in the production schedule.
44GOKULAKRISHNAN cGMP

45. EOQ ANALYSIS
 EOQ is the quantity of materials to be ordered at one time,
which minimizes the cost.
 The correct quantity to buy is the quantity at which the
ordering cost and inventory cost is minimum.
EOQ = √2AB
C
A- annual requirement
B- ordering cost
C- carrying cost
45GOKULAKRISHNAN cGMP

46. PERPETUAL INVENTORY
SYSTEM
 The method of recording the store balance after every receipt
and issue to facilitate regular checking and to prevent closing
down for stock taking.
 It comprises of :
1.BIN CARD
2.STORE LEDGER
3.CONTINUOUS STOCK TAKING
i. BIN CARD:
 Is a document maintained by the store keeper in his store .
 It serves the purpose of ready reference.
46GOKULAKRISHNAN cGMP

47. It shows quantity of each material received, issued and
in stock.
ii. STORE LEDGER:
 It is kept in the accounting department.
 Generally maintained in form of loose leaf cards, so
that they can be easily removed and inserted.
iii. CONTINUOUS STOCK TAKING:
 Only a limited no. of items are verified on a day.
 Selection of the item should be such that each item
gets checked at least a certain no. of times in a year,
and checking is evenly distributed during the period.
47GOKULAKRISHNAN cGMP

48. LEAD TIME
It is the time taken between the placing of
order and receipt of drugs to the department.
The longer the lead time, longer the safety
stock, resulting in excess of investment in
inventory
48GOKULAKRISHNAN cGMP

49. BUFFER STOCK
Is used in emergency to meet the unseen demands
,i.e, the minimum quantity of particular item which
must be kept in the stock at all the time.
Buffer stock needs the following factors to be taken
into consideration like:
- lead time
- nature of items, rate of consumption
- availability of substance
- re-order level
- stock out cost
49GOKULAKRISHNAN cGMP

50. REFERENCES
FDA “Guidance for Industry: Q7A Good
Manufacturing Practice.
Guidance for Active Pharmaceutical Ingredients,”
Section 19.
ICH Q7 Good Manufacturing Practice Guide For
Active Pharmaceutical Ingredients. Current step 4
version; November 2000 Website. Available from:
http://www.ich.org/LOB/media/MEDIA433.pdf
[Last cited on 2010 Jan 1].
50GOKULAKRISHNAN cGMP