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`Inventory Management System of Beximco Pharmaceuticals limited

Internship Report

Inventory Management System of Beximco Pharmaceuticals Limited

Exam. Roll: 020023

Internship Report on

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`Inventory Management System of Beximco Pharmaceuticals limited

Inventory Management System of Beximco Pharmaceuticals Limited

Prepared For Chairman Internship Placement Committee

Prepared By Exam Roll: 020023 Registration No.: 18113 4th Year, 8th Semester Batch no.: 11, BBA Program Academic Session: 2001-02

Department of Business Administration Jahangirnagar University Savar, Dhaka 1342


January 29, 2007

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`Inventory Management System of Beximco Pharmaceuticals limited

January 29, 2007 Chairman Internship placement Committee Department of Business Administration Jahangirnagar University Savar, Dhaka-1342

Subject: Submission of the Internship report on Inventory Management System of Beximco Pharmaceuticals Limited

Dear Sir:

With due respect and honor I want to place my internship report entitled Inventory Management System of Beximco Pharmaceuticals Limited as part of the internship program. The topic was selected to know the overall inventory management system through the evaluation and to assess the efficacy of inventory management system of Beximco Pharmaceuticals Ltd.

I found the task assigned to me as to fulfill the partial requirement of internship program very interesting. I had to learn and perform several official tasks to know the inventory management system and collect information and relevant data to prepare this report. I thereby express my deep gratitude as you kindly give me the opportunity to successfully prepare the report and fulfill the requirement.

I can assure you that I have provided the most authentic information in the report. This report has perfectly matched my career objective and allowed me to devote my knowledge to gain the practical experience.

Thanking you

Sincerely Yours

Exam Roll No.020023 Registration No.18113 4th Year, 8th Semester Batch No.11, BBA Program Academic Session: 2001-2002

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Acknowledgement
First of all I like to thank the almighty. I am very much grateful to Mr. Kamrul Arefin, chairman of the Department of Business administration, Jahangirnagar University, for his support through out the entire internship program. His comments and advises are most valuable assets to myself. I also like to thank to Mr. K.M Zahidul Islam, batch manager of 11th batch for his excellent direction and support as an supervisor of my total internship program. I gratefully remember the help of Mr. Ali Nawaz, Finance director of Beximco Pharmaceuticals limited. I am grateful to him for giving me the chance to do my internship in this organization. I would like to express my sincere gratitude to Mr. Jamal Ahmed Chouhury, Senior Manager, Accounts and Finance departments, who was my supervisor in the organization and gave me the chance to show my practicability in the organization arena. His valuable suggestion and guidance helps me to complete this report at the best level. Without his help this report might not have been a comprehensive one. Once again I would like to express my sincere appreciation and gratitude to him for his help in the preparation of this report. I am very helpful to all cooperative staffs and officials of the Accounts and Finance Departments of Beximco Pharmaceuticals limited. I especially thank Asstt.Manager, Mr. Syed Rumman, Senior Accounts officer, Mr. Syed Zakir Hossain and Accounts officer, Mr. Abul Basher for their cordial and sincere aid. Finally I would like to thank all my classmates for giving me extraordinary help in every step. I also thank all my friends at my university for giving me support. I would also like to thank all seniors and juniors who assisted me time to time.

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`Inventory Management System of Beximco Pharmaceuticals limited

Executive Summary
The history of Pharmaceuticals business of the company dates back to the early 70s, when it started to import market and distribute medicines from world renowned companies like Upjohn inc. of USA and Bayer AG of Germany. Since the very beginning, the company was highly successful in generating increased demand for its products which eventually justified local production. According, a Pharmaceutical manufacturing facility was designed and constructed in 1980 under the technical supervision of Upjohn Inc. of USA, to manufacturing their products under license. Product made under license of Bayer AG of Germany followed. After its initial years of struggle, Beximco Pharma broke ground with the launching of its own products in 1983. The company aims to build the most robust product portfolio in the domestic market. In 2005, forty nine (49) new products were launched in the domestic market. October 21, 2005 Beximco Pharma opened a new chapter in the corporate business history of Bangladesh by starting trading of its shares in the Alternative Investment Market (AIM) of London Stock Exchange. The objective of this report is to know the overall `Inventory Management System of Beximco Pharmaceuticals Limited through the evaluation of inventory management system and to assess the efficacy of inventory management of Beximco Pharmaceuticals Ltd. In order to make the report more meaningful and presentable the report is based on two sources of data and information called primary and secondary sources of data. Inventory means the number of units and/or value of the stock of goods held. In the midst of the conversation of officials of the purchase department I competent to know about their purchase department purchasing procedure from placing the order to store all the raw or packing materials needed for production. The purchase department is apprehensive with all the purchases (Pharmaceuticals raw material, packaging materials, machinery etc) of the company. Import Authorization Formats are prepared by the planning department for the purchase of pharmaceuticals materials. The format is then sent to the Director (commercial) for approval. After an L/C is opened, all information about its latest status is documented in a ` Purchase Consignment (PC) folder maintained by the purchase department. In case of BPL the company basically uses cycle counting method. Talking with Mr. Jamal Ahmed Choudhury, Senior Accounts manager of Beximco Pharmaceuticals Limited I able to know Beximco Pharmaceuticals Limited does not consider ABC analysis. They impose equal importance to each and every item. This report is estranged into three parts. These parts are; Introduction, Organization and Project part. The first chapter deals with introduction that present the whole report in brief. It includes; Origin of the Report, Objective of the Report, Scope, Methodology, Facility and Report Instruction, Data Instruction, Time Schedule of the Report, Limitations. The second chapter encloses about the organization; Mission and Vission of Beximco Group, Key Financial Data, The Company Profile, Management of the Company, A Brief History of the Company, Divisions of Beximco Group, Departments of BPL, Products Information of BPL, Major New Products that Launched in Domestic Market, Specialized Products, Exports, Winning the Export Trophy Gold, Future Strategies, Listing in alternative investment market on LSM. In third chapter contains the basic about inventory management system. It includes; Introduction, Successful Inventory Management, The Purchasing Plan, Inventory Controlling System, Development of Inventory Management.

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In fourth chapter I try to work on how Beximco Pharmaceuticals Limited manages their inventories, from purchasing of raw materials to finished goods and the distribution process. In the project part of this report I try to focus on how the purchasing department selects the supplier for raw or packing materials, shipment procedure of the product. How Beximco Pharmaceuticals Limited manage their inventories like- maintain the materials using computer software, materials information and stock maintenance, Beximco Pharmaceuticals limited four production department and their product work-in-process. I also try to give some products ordering, carrying and holding cost and but for insufficiency of data I fail to calculate Economic Order of Quantity properly. In this report I also try to show the Beximco Pharmaceuticals limited product distribution process through their I&I (Import and Indent) service limited-from the store to 13 depots of different places.

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Table of Contents Heading Acknowledgement Executive summary Part I, Chapter 1 1.0.Introduction 1.1. Origin of the Report 1.2. Objective of the Report 1.3. Scope 1.4. Methodology 1.5. Facility and Report Instruction 1.6. Data analysis 1.7. Time Schedule of the Report 1.8. Limitations Part II, Chapter 2 2.0.Organization Part 2.1. Mission and Vission of Beximco Group 2.2. 2.3. 2.4. 2.5. 2.6. 2.7. Key Financial Data The Company Profile Management of the Company A Brief History of the Company Divisions of Beximco Group Departments of BPL 4 4 5 6 7-8 9 9 10-11 11 11 11 13 Page Number 1 1 1-2 2 3 3 3 3 Page Number Iv v- vi

2.8. Products Information of BPL 2.9. Major New Products that Launched in Domestic Market 2.10. Exports 2.11. Winning the Export Trophy Gold 2.12. Future Strategies Heading

2.13. Listing in alternative investment market on LSM Part III, Chapter 3 3.0.Project Part :Inventory Management 3.1. Introduction 3.2. Successful Inventory Management 3.3. The Purchasing Plan 3.4. Development of Inventory Management Part III, Chapter 4 4.0. Project Part: Inventory Management System of BPL 4.1. The Purchasing Plan of Inventories

13

13 13 14 14

15

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4.2. Supplier of Inventories & Terms of Condition 4.2.1. Supplier of Inventories 4.2.2. Terms and condition 4.3. Inventories of Beximco Pharmaceuticals Limited 4.4. Lead time 4.5. Cycle counting method 4.6. Ordering and Carrying Cost 4.7. ABC analysis 4.8. Types of Inventory Systems 4.9. Inventory Management technique of BPL 4.9.1 Raw materials 4.9.1.1. Receiving and Maintaining of Raw and Packing Materials 4.9.2. Work-in-process (WIP) 4.9.3. Finished goods 4.10. Economic Order of Quantity (EOQ) 4.11. Calculation of Economic Order of Quantity 4.12. Distribution Process 5.0. Conclusion 6.0. Findings and Recommendation Appendix: Bibliography

16 16 16 17 18 18 19 19 20-21 21-22 22-23 23-28 29-30 31 32-36 37-38 39 40 41 42

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List of Tables and Charts Heading Table-1: Key Financial Data Table- 2: Closing Inventories Table- 3: Product Information Table- 4: Material Information and Stock Maintenance Table- 5: Material Received Information Table- 6: Daily Issued Statement Table- 7: Raw Material Requisition Slip Table- 8: Raw material received statement, Sodium Chloride Table- 9: Raw material received statement, Sodium Starch Glycolate. Table- 10: Raw material received statement, Liquid Paraffin Heavy BP. TableTableTableTable11: 12: 13: 14: Raw material received statement, Self Adhesive Lactameal. Holding Cost Ordering Cost, Sodium Chloride Ordering Cost, Liquid Paraffin Heavy BP. Page Number 4 17 24 25 26 27 28 32 33 34 34 35 35 36 36 36

Table- 15: Ordering Cost, Sodium Starch Glycolate. Table- 16: Ordering Cost, Self Adhesive Lactameal

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1.0. INTRODUCTION 1.1. ORIGIN OF THE REPORT: Upon completion of the 7th semester a student of BBA program of Jahangirnagar University has to undertake internship training in business organization as a requirement of academic curriculum. As the classroom discussion alone cannot make students to know about the real life situation, therefore it is an opportunity for the students to know about the practical environment of the real business world through this program. The duration of internship program is three months. The internee student is then required to carry out an extensive analysis of real world business problem and thereby prepare a report on the solution to the problem. In relation to that I have been assigned a report on Inventory Management System of Beximco Pharmaceuticals Ltd. The issue has been assigned by the host organization Beximco Pharmaceuticals Limited and by the internship supervisor Mr. K.M Zahidul Islam.

1.2. OBLECTIVE OF THE REPORT:


The objective of the report is classified into two sections: 1. Primary objective: The academic objective of this report is to fulfill a partial requirement of BBA program. 2. Secondary objective: To evaluation inventory management system in Beximco Pharmaceuticals Ltd. To assess the efficacy of inventory management of Beximco Pharmaceuticals Ltd. To gather some practical knowledge about Beximco Pharmaceuticals Ltd. and its inventory management system. 1.3. SCOPE: During these three months period, I worked at the Accounts Department. So, I acquired knowledge in these departments and my report is based on especially in Inventory Management System. The report covered organizational overview, management and organizational structure and overall Inventory Management System of Beximco Pharmaceuticals Limited

Management of inventory is a vast filed of production management. Here the scope is as follows: Theoretical aspects of inventory management, Inventory management adopted in Beximco Pharmaceuticals Ltd. from raw materials ordering to finish goods delivery, Reasons behind the deviation and weakness in inventory management and some recommendations for the better of inventory management. 1.4. METHODOLOGY: The methodology followed in this report is as under: Overall flow of inventory, their issuing and receiving procedures and record keeping system, To find out and to understand the indicators that reveal an organizations performance in the market and how they can also be used as tools for a presignaling systems, To make comments on the overall findings of the report that the company, if required could resort to mitigate its inefficiencies.

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In order to make the report more meaningful and presentable the report is based on two sources of data and information; The primary Sources of data and informations are; Face to face conversation with the respective officers of the organization, Practical work exposures on different desks of the office, Relevant file study as provided by the officers concerned. The Secondary Sources are as bellow; Annual Repot, Cost Sheet, Books of Accounts, and other records of the company, Internet also used as a theoretical source of information. 1.5. FACILITY AND REPORT INSTRUCTION: Instructions and directions regarding the related article are provided by the academic supervisor and the organizational supervisor. In addition I got this greatest opportunity from Mr. Jamal Ahmed Choudhury, Senior Manager, Accounts and Finance Department, Beximco Pharmaceuticals Limited, to conduct the study as an internship program. 1.6. DATA ANALYSIS: The data obtained through analyzing the information from different cross-functional areas of the Accounts and Finance department of Beximco Pharmaceuticals Ltd. 1.7. TIME SCHEDULE OF THE REPORT: According to the requirement of the internship program the maximum time for the completion of the report is near about three months. So, maximum two months can be taken for collecting and analyzing the data. So, to make the report more effective I try to get testimony to my academic supervisor and the organizational supervisor with their valuable suggestion to make the report a successful one. 1.8. LIMITATIONS: Despite the diligent efforts that have given in preparation of this report, I have only succeeded to skin the surface of the ocean of the subject. Therefore the views expressed in this report are likely to be limited by the lack of extensive knowledge and understanding. As I have worked only three months in the Be ximco P harmaceuticals Ltd, I have got just the overall idea about the Inventory Management System of Beximco Pharmaceuticals Ltd. As I was not the employee of that organization I couldnt get access to all the departments. The followings are the limitations that I have faced during the report: 1. Restriction on internal information availability by the authority of Beximco Pharmaceuticals Ltd, 2. The data that seems insufficient may be suffering from lack of reliability to some extent, 3. Besides these there were some confidential areas that were not provided to me by the organization, 4. Lack of adequate relevant formal report work on Beximco Pharmaceuticals Ltd, 5. My lack of experience also hampered a lot to fulfill my knowledge.

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2.0. ORGANIZATION PART 2.1. MISSION AND VISSION OF BEXIMCO GROUP: Mission: Each of our activities must benefit and add value to the common wealth of our society. We firmly believe that, in the final analysis we are accountable to each of the constituents with whom we interact, namely: our employees, our customers, our business associates, our fellow citizens and share holders. Source: Annual Report of Beximco Pharmaceuticals Limited, in year 2005. Vision: If there is one characteristic that has typified the Beximco approach it is Vision to be the best of our nature and human resources. A vision to establish our group and country as respected and valued regional presence. Source: Annual Report of Beximco Pharmaceuticals Limited, in year 2005. 2.2. KEY FINANCIAL DATA: Key Financial Data (Figure in Million Taka) Table- 01: 2005 Net Sales Domestic Export Gross Profit Net Profit Net Profit on Sales (%) Total Assets (Gross) Total Equity Equity Ratio Earnings Per Share (Taka) 3,327.02 3,238.16 88.86 1,558.50 489.26 14.71 10,945.48 6,820.93 62.32 6.36 2004 2,402.70 2,323.21 79.49 1,023.77 329.38 13.71 8,658.50 4,836.01 55.85 4.71 %Change 38.47 39.38 11.79 52.23 48.54 7.27 26.41 41.04 11.57 35.03

Source: Annual Report of Beximco Pharmaceuticals Limited, In Year2005

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2.3. THE COMPANY PROFILE: Corporate Headquarters

17 Dhanmondi R/A,Road No.2 Dhaka 1205, Bangladesh Phones: 880-2-868220, 861891 Fax: 880-2-863470, 867647 19 Dhanmondi R/A,Road No.7 Dhaka 1205, Bangladesh Phones: 880-2-869151(to 5) Fax: 880-2-863888, 863470 Cherag Ali Market, Auspara, Tongi I/A, Gazipur. 1976 1980 Public Limited Company Manufacturing and Marketing of Finished Pharmaceutical Formulations and Raw Materials Dhaka (DSE), Chittagong (CSE) and London stock Exchande. Pakistan, Myanmar, Singapore, UK, USA, Yemen, Kenya, Nepal, Vietnam, Sri Lanka. Bhutan, Georgia, Germany, Hong Kong, Iran, Kenya, Malaysia, Myanmar, Nepal, Pakistan, Russia, Singapore, South Korea, Taiwan, Thailand, Ukraine, Vietnam, Yemen Iraq, Cambodia, Sri Lanka.

Operational Headquarters

Factory Year of establishment Commercial Production Status Type of business

Stock exchange listing

Overseas Offices and Associates

Export activities

Source: Annual Report of Beximco Pharmaceuticals Limited, In Year2005 2.4. MANAGEMENT OF THE COMPANY: Beximco Pharmaceuticals limited is managed by the Board of Directors, an Executive Committee and a Management Committee. Board of Directors is responsible for the corporate governance. The Executive Committee is accountable for both operational and financial performance of the company. This committee is also responsible for changes, new project review, compliance audit etc. the Management committee reviews and manages day-to-day business operation and recommends strategy options to the Executive committed. The Chief Executive Officer (CEO) is responsible for the overall management of the business.

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BOARD OF DIRECTORS Ahmed Sohail Fazlur Rahman Ahmed Salman Fazlur Rahman Iqbal Ahmed Mohammad Abul Qasem O K Chowdhury Dr. Abdul Alim Khan A B S Rahman Dr. Fardia Huq Chowdhury Hafizur Rahman Faheemul Huq Ahsanul Karim EXECUTIVE COMMITTEE Nazmul Hassan Ali Nawaz Afsar Uddin Ahmed Nadim Shafiqullah MANAGEMENT COMMITTEE Lutfur Rahman Rabbur Reza Zakaria Seraj Chowdhury Director, Works Director, Marketing Director, Sales Chief Executive Officer Chief Executive Officer Director Commercial Consultant Chairman Vice Chairman Director Director Director Director Director Director Director Director Director

Source: Annual Report of Beximco Pharmaceuticals Limited, In Year2005 2.5. A BRIEF HISTORY OF THE COMPANY: The history of Pharmaceuticals business of the company dates back to the early 70s, when it started to import market and distribute medicines from world renowned companies like Upjohn inc. of USA and Bayer AG of Germany. Since the very beginning, the company was highly successful in generating increased demand for its products which eventually justified local production. According, a Pharmaceutical manufacturing facility was designed and constructed in 1980 under the technical supervision of Upjohn Inc. of USA, to manufacturing their products under license. Product made under license of Bayer AG of Germany followed. After its initial years of struggle, Beximco Pharma broke ground with the launching of its own products in 1983. This was the beginning of company with a vision to go a long way. YEAR 1976 1980 ACTIVITIES Registration of the company. Started manufacturing and marketing of licensee products of Bayer AG of Germany and Upjohn Inc. of USA. Listing in the Dhaka Limited Company (PLC). Stock Exchange (DSE) as a Public

1985

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1990 1992 1993 1994-1995 1996 1997

Commissioning of Basic Chemical Unit. Started export operation with Active Pharmaceutical Ingredients (APIs). First export market operation with finished pharmaceutical products. Achievement of National Export Trophy (Gold) as the pharmaceutical company of the country. Introduction of sustained release dosage form in the market. first

Commissioning of Metered Dose Inhaler (MDI) plant and introduction of suppository dosage form. Introduction of Metered Dose Nasal Spray. UNICEF approval of BPL as an enlisted supplier. Agreement to manufacture GlaxoSmithKline. Metered Dose Inhaler (MDI) for

1998 1999 2000 2001

Introduction of Small Volume Parenteral (SVP) products; Establishment of Analgesic-Antiinflammatory bulk drug plant.

2002

Won the first prize of ICAB National Awards 2000 for 'Best Published Accounts and Reports' in Non-Financial Sector Category; The first Bangladeshi company to supply pharmaceuticals to Raffles Hospitalthe most prestigious hospital of Singapore.

2003

2004

2005

Received National Export trophy (Gold) for consecutive 2 years (1998-99, 1999-2000).Won the Silver prize of ICAB National Awards 2003for Best Published Accounts and Reports' in Non-Financial Sector Category.Won a tender to supply Neoceptin R and Neofloxin to Raffles Hospital of Singapore for the whole years consumption.Introduced Anti-HIV Drugs for the first time in Bangladesh.Diversification into Anti-Cancer therapeutic class. Signed contract with Novartis to manufacture their liquid , cream, ointment and suppository products under Toll Manufacturing agreement Visit of Saudi Delegates Headed by Honble Health Minister, Kingdom of Saudi Arabia. Merger of Beximco Infusions Ltd. with Beximco Pharmaceuticals Ltd. Admission to Alternative Investment Market (AIM) of London Stock Exchange (LSE).

Source: Annual Report of Beximco Pharmaceuticals Limited, In Year2005

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2.6. DIVISIONS OF BEXIMCO GROUP: Division Textile Division Company Padma Textiles Mills Ltd, Beximce Synthetics Ltd, Beximce Apparels Ltd, Beximce Knitting Ltd, Beximce Textiles Ltd, Beximce Denims Ltd, Beximce Fashions Ltd, Beximce Fabrics Ltd. Chemical Division Beximce Pharmaceuticals Ltd, Beximce Infusion Ltd. Basic Chemical Unit, Land Nitrogen Plant, Pharmtatek Chemicals Ltd, Shuktara Printers, I & I services Ltd. Construction Division Beximce Engineering Ltd, Shinepukur Holdings Ltd. Trading Division Bangladesh Export Import Ltd, Beximce Holdings Ltd Jute division New Dhaka Industries Ltd, Sonali Ansh Ltd. Esses exports Ltd. Marine food Division Beximco Foods Ltd, Fisheries Ltd. Media Division Beximce Media Ltd. Information Technology Division Beximce Softech Ltd, Beximce systems Ltd, Beximce Computers Ltd, Bangladesh onlie Ltd. Others Shinepukur Ceramics, Gammatech Ltd. Source: Annual Report of Beximco Pharmaceuticals Limited, In Year2005. 2.7. DEPARTMENTS OF BEXIMCO PHARMACEUTICALS LIMITED: BPL has highly qualified professional staffs for handling all the condition of the company. Introduction of various divisions are as follows: Central Product Management (CPM) Department Purchase Department Financial System Development (FSD) Department Sales Department Human Resource Department Finance And Accounts Department BPL Factory (Works Department) Management Information System (MIS) Department Multimedia Medical Services Department (MSD) 2.8. PRODUCTS INFORMATION OF BEXIMCO PHARMACEUTICALS LIMITED: Beximco Pharma is manufacturing and marketing various types of pharmaceutical finished formulations covering almost all major therapeutic classes, dosage forms and strengths. BPL is into various therapeutic classes, with major emphasis on : i) Antibiotics, ii) Antiulcerants and Antacids iii) Cardiovascular Drugs, iv) NSAIDs, v) Analgesics and Antipyretics, vi) Vitamins and Iron Supplements, vii) Antidiabetics, viii) Antifungals, ix) Asthma Prophylactics and Bronchodilators and x) Nasal Decongestant and Anti-inflammatory Drugs.Apart from producing tablets, capsules, syrups, suspensions, solutions, drops, creams, ointments, gel etc., currently we are also into specialized products like i) Inhalers, ii) Nasal Sprays and iii) Suppositories.

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Top Brand Successful blending of its scientific knowledge with innovative marketing approaches have positioned these blockbuster drugs as the engine of its drive for the success Blockbuster Products: Napa: Brand in pain and fever since 1990. Neoceptin R: The leader in the antiulcerant market for the last 5 years. Neofloxin: Very powerful weapon against difficult to treat infections. Tycil : A trusted name among amoxycillin preparations. Aristovit M: Aesthetically the most beautiful multivitamin & mineral preparation in Bangladesh. Source: Annual Report of Beximco Pharmaceuticals Limited, in year 2005. 2.9. MAJOR NEW PRODUCTS THAT LAUNCHED IN DOMESTIC MARKET: The company aims to build the most robust product portfolio in the domestic market. In 2005, forty nine (49) new products were launched in the domestic market. Some major new products are: Amdopril, Atralin, Cefida, Iprasol, Odrel Plus, Pantobex, Valcap, Vivis, Vomec, Zolmit, Zybex SR, Bexitrol -F, Azmasol, Napa, Neoceptin R, Amdocal, Atova, Diapro, Bextrum Gold, Aristocal D, Zybex SR etc. 2.10. EXPORTS: In Bangladesh, Beximco Pharma always remained as the pioneer in all its activities and moves towards internationalization. Beximco Pharma was the first company from Bangladesh to fulfill the national aspiration of turning a domestic based pharmaceutical industry into an exporter of quality medicines. As its first move towards internationalization, BPL entered overseas market with the export of Basic Chemicals to Hong Kong in 1992. So far, Beximco Pharma exported its basic chemicals to Germany, Iran, Malaysia, Taiwan, Nepal, Vietnam, Thailand and South Korea. 2.11. WINNING THE EXPORT TROPHY GOLD: Although BPL entered international arena with export of basic chemicals, today Beximco Pharma has become the country's largest exporter of pharmaceutical finished formulation. BPL has so far exported its formulation products to Russia, Georgia, Ukraine, Pakistan, Myanmar, Bhutan, Singapore, Vietnam, Yemen and Kenya. For its outstanding export performance, Beximco Pharma was awarded the NATIONAL EXPORT TROPHY GOLD in the Financial Year 1994-1995, 1998-1999& 1999-2000. Beximco Pharma is the only company to be a record 3 times winner of this highest national recognition for export award by the Bangladesh Government. 2.12. FUTURE STRATEGIES: In Asia, BPL will be entering Phillipines, Cambodia, Sri Lanka and Nepal. BPL has already registered their Inhalers in Phillipines. BPL has also aplied for product registration in Cambodia, Sri Lanka and Nepal. In Africa, BPL is basically considering East African countries

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like Tanzania and Uganda. BPL has also applied for registration in Malawi which is at the sound end of Africa. BPL also intends to enter various countries in Latin America with its Inhalers brands. In the Eastern Europe, BPL will be entering Czech Republic Market and in the near future, BPL also intends to enter Central Europe Market. Once its 50 Million Dollar new solid facility is completed and certified by USFDA, BPL aim to enter the United States Pharmaceutical Market -the largest in the world -to dramatically increase the company growth and profit. 2.13. LISTING IN ALTERNATIVE INVESTMENT MARKET OF LONDON STOCK EXCHANGE: October 21, 2005 Beximco Pharma opened a new chapter in the corporate business history of Bangladesh by starting trading of its shares in the Alternative Investment Market (AIM) of London Stock Exchange. Beximco Pharma became the first and the only company from Bangladesh to get listed in the LSE. Commenting on the listing on that ceremonial opening the British Minister for pension Reforms said, `It is a great day for London and it is a great day for Beximco as well as for Bangladesh. The British government welcomes this milestone, he added further.

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3.0. INVENTORY MANAGEMENT 3.1. INTRODUCTION Good inventory management is indispensable to the successful operation of most organizations for a number of reasons. One is the amount of money inventory represents; another is the impact that inventories have on the daily operation of an organization. A typical manufacturing firm carries different types of inventories including raw materials, workin- process and finished goods as well as spare parts for machines tools and other supplies. Inadequate control of inventories can result in both under and overstocking of items. Under stocking results in missed deliveries lost sales, dissatisfied customers, production bottlenecks and overstocking unnecessarily ties up funds that might be more productive elsewhere. Inventory management has two main concerns. One relates to the level of customer service that is to have the right goods, in sufficient quantities, in the right places and at the right time. The other relates to the cost of ordering and carrying inventories. The overall objective of inventory management is to achieve satisfactory level of customer service while keeping inventory costs within reasonable bounds. 3.2. SUCCESSFUL INVENTORY MANAGEMENT: Effective Inventory Management enables an organization to meet or exceed customers expectations of product availability while maximizing net profits or minimizing costs. Inventory management should be successful when it able to balance the total costs of inventory and the return after using that inventory. For a successful inventory management we should consider the following issues: We should try to Increase inventory turnover but we should not sacrifice the service level of our organization, We should keep our stock low without sacrificing any services or performances, We should obtain inventories with lower prices by making volume purchases but not ending up with slow-moving inventory, For example, computing the inventory turnover ratio is a simple measure of managerial performance. This value gives a rough guideline by which managers can set goals and evaluate performance, but it must be realized that the turnover rate varies with the function of inventory, the type of business and how the ratio is calculated (whether on sales or cost of goods sold). Average inventory turnover ratios for individual industries can be obtained from trade associations. 3.3. THE PURCHASING PLAN: One of the most important aspects of inventory control is to have the items in stock at the moment they are needed. This includes going into the market to buy the goods early enough to ensure delivery at the proper time. Thus, buying requires advance planning to determine inventory needs for each time period and then making the commitments without procrastination. For retailers, planning ahead is very crucial. Since they offer new items for sale months before the actual calendar date for the beginning of the new season, it is imperative that buying plans be formulated early enough to allow for intelligent buying without any last minute panic purchases. The main reason for this early offering for sale of new items is that the retailer regards the calendar date for the beginning of the new season as the merchandise date for the end of the old season. 3.4. DEVELOPMENT OF INVENTORY MANAGEMENT: In recent years, two approaches have had a major impact on inventory management: Material Requirements Planning (MRP) and Just-In-Time (JIT and Kanban). Material requirements planning is basically an information system in which sales are converted directly into loads on the facility by sub-unit and time period. Materials are scheduled more closely, thereby reducing inventories, and delivery times become shorter and more

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predictable. Its primary use is with products composed of many components. MRP systems are practical for smaller firms. The computer system is only one part of the total project which is usually long-term, taking one to three years to develop. Just-in-time inventory management is an approach which works to eliminate inventories rather than optimize them. The inventory of raw materials and work-in-process falls to that needed in a single day. This is accomplished by reducing set-up times and lead times so that small lots may be ordered. Suppliers may have to make several deliveries a day or move close to the user plants to support this plan.

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4.0. INVENTORY MANAGEMENT SYSTEM OF BPL 4.1. THE PURCHASING PLAN OF INVENTORIES: In the midst of the conversation of officials of the purchase department I competent to know about their purchase department purchasing procedure from placing the order to store all the raw or packing materials needed for production. The purchase department is apprehensive with all the purchases (Pharmaceuticals raw material, packaging materials, machinery etc) of the company. Import Authorization Formats are prepared by the planning department for the purchase of pharmaceuticals materials. The format is then sent to the Director (commercial) for approval. After an L/C is opened, all information about its latest status is documented in a ` Purchase Consignment (PC) folder maintained by the purchase department. Such documents are indispensable for the monitoring (current status and information record) of all the L/Cs. The function of the department for purchasing materials from abroad is shown below: Find out the source/supplier Receiving requirement from different department Contract with the vender Opening LC in favor of vender Shipment along with information and documents to the bank Document retirement from bank Contract with the clearing agent Transfer the materials to the go down Materials receiving and inspection report from the store

4.2. SUPPLIERS OF INVENTORIES AND TERMS OF CONDITIONS: 4.2.1. Supplier of inventories: Main suppliers of inventories are; Germany India Singapore Republic of Korea UK and Republic of China 4.2.2. Terms and condition: 1. Materials: Must conform to the specification as described the above-referred indent. 2. Packaging statement: To meet the documents as per the LC terms. 3. Shipment: To be made from any EUROPEAN SEAPORT to Chittagong port by sea. 4. Delivery: To be made by specific date. 5. LC validity: LC remains valid for shipment and negotiation till (made upon agreement). 6. Product label: To be labeled in the container of goods as per the instruction stipulated in the LC. 7. Marine insurance: Will be covered by us soonest on receipt of your shipment advice under the open Marine policy NO RIC/DB/MC- 262/10/2006 dated (specific date).

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8. Shipping document PMT: By your sight draft on the opener JANATA bank, local officer, Dilkusha, C/A, Dhaka, BD under their LC no.(xxxxx) dated (specific date) issued against documentary LC has already been sent by openers to their advising Bank AMEX, FRANKFURT. 9. Certificate of origin: certificate of origin by local chamber and/or any other similar institutions of the exporting counts must accompany the negotiator documents. 10. Shipping mark: Each pack, containing the material, should prominently be labeled to appear the following shipping marks. Beximco Pharmaceuticals Ltd. Chittagong port by sea LC NO: Material: Origin: 4.3. INVENTORIES OF BEXIMCO PHARMACEUTICALS LIMITED: Inventories of Beximco Pharmaceuticals Limited consist finished goods, work in process, raw materials, packing materials, laboratory chemical, literature and promotional materials, physician sample, spares and accessories etc. With the information of Annual report of Beximco Pharmaceuticals Limited (Financial Year 2005), items of closing inventories are given below: Closing Inventories of Beximco Pharmaceuticals Limited (In financial year 2005 and 2004) Table-02: ITEMS CLOSING INVENTORY (IN YEAR 2005) CLOSING IVENTORY (IN YEAR 2004)

FINISHED GOODS WORK IN PROCESS RAW MATERIALS PACKING MATERIAL LABORATORY CHEMICAL LITERATURE&PROMOTIONAL MATERIAL PHYSICIAN SMAPLE RAW&PACKING TRANSIT MATERIAL IN

378,744,903 156,374,814 695,165,382 229,060,186 2,145,268 18,745,269 12,998,593 107,063,860 1,874,526 81,549,258 TK. 1,683,722,059

294,831,219 113,067,980 631,820,233 212,162,685 465,253 9,456,983 8,236,593 64,806,398 1,569,863 58,377,700 TK. 1,394,794,907

STOCK OF STATIONARY SPARES&ACCESSORIES TOTAL

Source: Annual Report of Beximco Pharmaceuticals Limited, In Year2005.

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4.4. LEAD TIME: The pattern of an items lead time determines the amount of time allowed to get the item into stock after the order has been issued. The lead time in weeks for imported raw material comprises: processing of purchase requisitions (i.e., sourcing, placing order, and opening LC shipment including suppliers lead time). Getting the information from the Beximco Pharmaceuticals Limited purchase department from Marketing department, production department prepares a purchase order. The department used to take help from procurement department to calculate the time to receive the order on time. After that time analysis purchase department place the order and make a time frame for the supplier to receive the order. Purchase department take account of all other formalities like opening of LC, insurance and fixed a time of receiving of raw or packing materials. Senior manager, Accounts and Finance Department, Mr. Jamal Ahmed Choudhury informed me Beximco Pharmaceuticals Limited calculate lead time depends on necessity of that particular item. Most of the imported raw or packing materials are from Europe, China and India and the approximate lead times are; for Europe 45-50 days, China 30-35 days, India 25-30 days. 4.5. CYCLE COUNTING METHOD: Cycle counting method is a physical inventory taking technique performed continuously rather than periodically. It is a crucial step towards controlling the accuracy of inventory records and maintaining it at a high level. Major profit improvement can be achievement by effective cycle counting through a reduction in production disruption improved customer service reduce obsolescence elimination of the annual physical inventory and less inventory shrinkage. Frequently the cycle count is less expensive than the disruptive periodic count method. This method involves a continuous counting of stock through out the year. A limited number of items interval. Personnel can be assignment to cycle on a full time or part time basic. The stock items to be checked may be selected at random or according to a predetermined plan. Periodic and cycle counting both are important for any manufacturing company. In case of BPL the company basically uses cycle counting method and through BPL distribution unit I&I (Import and Indent) services ltd. get everyday sales from every depot through their medical representative so to have the inventories enough into the store the continuous inventory counting method is important for smooth production.

4.6. ORDERING AND CARRYING COST: After the selection of the supplier the next thing is to place the order and it includes some ordering cost plus carrying cost. The materials Beximco Pharmaceuticals Limited is going to order that may be imported or locally purchased. If the products are imported Beximco Pharmaceuticals purchase department first gets the insurance policy for that product, Beximco Pharmaceuticals Limited gets the insurance by the Pragati Insurance Limited. The next thing is opening of the L/C (Letter of Credit) in the bank and the bank takes a margin with the opening of the L/C (Letter of Credit) and takes some other charges like courier services charges, opening document charges. After the document retirement the rest of the money will return to the bank. The next thing is to get the order and transfer to the production plant. All customs related works, transfer the product into the production plant is done by the C & F (Carrying and Forwarding agent) agent. For any product there is certain percent of VAT, custom Duty Charge, transportation cost, these charges are nor fixed for every item. C & F (Carrying and Forwarding agent) agent pay all the bills for the company and it is their responsibility to transfer the materials to the production plant. At the end C & F (Carrying and Forwarding agent) agents charge their bill with the entire bill they paid including their commission. Before all this Beximco Pharmaceuticals Limited paid some advance to the C&F (Carrying and

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Forwarding agent) agents and the remaining amount paid after the C&F (Carrying and Forwarding agent) agents bill submission. 4.7. ABC ANALYSIS: ABC analysis means the classification of items in an inventory according to importance defined in terms of sales volume, purchase volume etc. in other words, items were assigned to three groups according to an appropriate criterion. The most important items were placed in the A group and B and C classifications were used for items of less importance. Talking with Mr. Jamal Ahmed Choudhury, Senior Accounts manager of Beximco Pharmaceuticals Limited I able to know Beximco Pharmaceuticals Limited does not consider ABC analysis. They impose equal importance to each and every item. 4.8. TYPES OF INVENTORY SYSTEMS: There are two general types of inventory systems: fixed-order quantity (Also called the Qsystem) and fixed-time period (also referred to as P-system). Fixed-order quantity is a System where the order quantity remains constant but the time between orders varies. Fixed-time period is a System where the time period between orders remains constant but the order quantity varies. With the conversation of Mr. Jamal Ahmed Choudhury, Senior Accounts and Finance manager of Beximco Pharmaceuticals Limited, I able to know Beximco Pharmaceuticals Limited follows fixed-order quantity system. Mr. Jamal Ahmed Choudhury informed me practical business world and academic experience are not similar in various aspects. Mr. Jamal Ahmed Choudhury told me it is really difficult to success in modern business world with using only one particular system. In fixed order quantity system order quantity remains constant but the order quantity of Beximco Pharmaceuticals Limited are not constant. It depends on the requirement of materials. And also the time between orders varies in Beximco Pharmaceuticals Limited.

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`Inventory Management System of Beximco Pharmaceuticals limited

Fixed-Order Quantity Model:

Number of Units on Hand

Q Q

R L L L L

R = Reorder Point Q = Quantity L = Lead Time


14-9

Time

Based on following assumptions I able to draw the basic Fixed-Order Quantity model that provided me by Mr. Jamal Ahmed Coudhury: Demand for the product is known and constant, Lead time (L), which is the time from ordering to receipt, is constant. Price per unit product is constant (no quantity discounts) All demands for the product will be satisfied (no back order are allowed).

4.9. INVENTORY MANAGEMENT TECHNIQUES OF BPL: Inventory is defined as the stock of any item or resource used in an organization. An inventory system is the set of policies an controls that monitors levels of inventory and determines (a) what levels should be maintained, (b) when stock should be replenished, and (c) how large orders should be. Manufacturing facility

Supplier

Step 1

Step 2

Customer

In-Transit

Raw Material

WIP

Finished Goods

`Inventory Management System of Beximco Pharmaceuticals limited

In its complete scope, inventory can include inputs such as human, financial, energy, equipment, and physical items such as raw materials; outputs such as parts, components, and finished goods; and interim stages of the process, such as partially finished goods or work-in-process (WIP). The choice of which items to include in inventory depends on the organization. Inventory in Beximco Pharmaceuticals Limited exist basically in three forms: Raw materials, Work-in-process and Finished goods. But before starting production or at first acquisition of raw materials the company decide how much to order, select a supplier, negotiating contracts, place the order, receive the order, transportation system/delivery system. As well as BPL perform other important activities like how or where the finished goods will store, distribution process of the finished goods, finished goods transportation mode selection and so on. 4.9.1 Raw materials: After discussion with Mr. Abul Basher, Accounts officer, Beximco Pharmaceuticals Limited, able to discern how the company buys the raw materials and select their supplier. The first thing is to buy raw material, which includes deciding which supplier to select, negotiating contracts, and deciding whether to buy locally or centrally. But before all these Beximco Pharmaceuticals Limited has to decide how much to buy and this buying decision of raw materials they know basically from the marketing department. Marketing department do the market research of their product demand in future after doing that the marketing department give their decision and then the planning department revised the future demand of the product and make plan how much to order. The next thing is to select a supplier. In terms of Beximco Pharmaceuticals Limited, after deciding how much to order they get the approval from the drags and narcotic department for the production of the particular product. After that purchase department asked from different suppliers to give their sample, after testing the sample if the standard qualities are approved by their quality assurance and quality control department, Beximco Pharmaceuticals Limited then checked those suppliers profile. After satisfying with all these BPL enlisted those suppliers. Like in this way they enlisted some supplier and when they need raw materials they asked those enlisted suppliers to give their price code and from those the lowest will get the order. In this way BPL select their supplier. Some examples of raw material: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. PYRANTEL PAMOATE, USP XANTHAN GUM, USNF SORBITOL SOLUTION (70%), BP (NON CRYST) POLYSORBATE 80 (TWEEN 80), BP CITRIC ACID MONOHYDRATE, BD SODIUM CITRATE, BP METHYL PARABEN (METH. HYD. BENZOATE), BP PROPYL PARABEN (PROP. HYD. BENZOATE), BP SACCHARIN SODIUM, BP LEMON OIL, BP METHYL SALICYLATE BP MENTHAL CRYSTALS, USP TRIETHANOLAMINE, BP PROPYLENE GLYCOL, BP GLYCEROL(GLYCERIN), BP CARBOMER 940 (CARBOXYUINLY POLYMER) USNF

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4.9.1.1. Receiving and Maintain of Raw and Packing Materials: To maintain information about the raw and packing material, Beximco Pharmaceuticals Limited use different system in different stages. Here are some examples which I came to know with the help of Md. Abul Basher, account officer of Beximco Pharmaceuticals Limited. Beximco Pharmaceuticals Limited check the following situation carefully when they receive and maintains inventories: Receive: 1. 2. 3. 4.

Material information after received, QA (Quality Assurance)Authority Approval & Stock Updating, Locating Materials after QA(Quality Assurance) Report, Include Sample/Reject/Un-useable/Short/Excess Quality.

Maintenance: 1. Updating product, material, batch requirement, id-code information, 2. Updating suppliers/manufactures/information, 3. Monthly closing, 4. Employee register & password maintenance (protected), 5. Date sheet maintenance. Beximco Pharmaceuticals Limited Product Information Table-03 SL. NO 1 2 3 4 5 6 7 8 9 10 11 12 PRATICULARS COMPANY CODE PRODUCT CODE PRODUCT NAME MEASURING UNIT PRODUCT TYPE PACK SIZE BATCH SIZE BATCH WEIGHT TRADE PRICE YEARLY SALES FORECAST FINISH GOODS STOCK NO. OF BATCHES TO BE PRODUSED AS PER PRODUCT PLAN TYPE C C C C C N N N N N N N WIDTH 1 3 20 2 1 4 8 15-4 8-2 9 9 3

Source: Inventory Section, ,Accounts and Finance department ,Beximco Pharmaceuticals Limited To maintain product information Beximco Pharmaceuticals Limited use their own technique .Here C means character and N means numeric number. For an example in case of company code it should be a character and width should be one. In case of batch size it should be a numeric number and width should be eight digits.

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Beximco Pharmaceuticals Limited Material information & stock maintenance Table-04: SL. NO 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

PRATICULARS MATERIAL ID-CODE MATERIAL NAME PROCUREMENT TIME(IN MONTHS) UNIT COST ECONOMIC ORDER SIZE MEASURING UNIT(NO/KG/LB/LT) MONTHLY REQUIREMENT MATERIAL TYPE(RAW/PACK) PURCHASE (LOCAL/IMPORT) USABLE FOR DEPARTMENT OPENING STOCK RECEIVED OUANTITY ISSUED QUANTITY BOOKING QUANTITY UN-USABLE EXCESS QUANTITY SHORT QUANTITY LOSS QUANTITY OPENING VALUE

TYPE C C N N N C N C C C N N N N N N N N N

WIDTH 6 40 2 12-2 12-2 2 14 1 1 15 17-4 15-4 15-4 15-4 15-4 13-4 14-4 15-4 13-2

20 RECEIVED VALUE N 12-2 Source: Inventory Section ,Accounts and Finance department ,Beximco Pharmaceuticals Limited As I mention earlier C means character and N means numeric number. For an example in case of Material ID Code: it should be a character and width should be six. In case of Monthly Requirement it should be a numeric number and width should be fourteen digits. . Beximco Pharmaceuticals Limited Material received Information Table-05: SL. NO 1 2 3 4 5 6 7

PRATICULARS MATERIAL CODE INVOICE QUANTITY RECEIVED QUANTITY ISSUED QUANTITY MRR NO. DATE INVOICE NO.

TYPE C N N N C D C

WIDTH 6 15-4 15-4 15-4 5 8 15

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`Inventory Management System of Beximco Pharmaceuticals limited

8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

DATE INVOICE NO. DATE BATCH/LOT NO. CONSIGNMENT NO. SUPPLIER/MANUFACTUER EXPIRE DATE RE-TEST DATE BOOKING QUANTITY LOSS QTY. UN-USEABLE/REJECT QTY. EXCESS QUANTITY SHORT QTY. SAMPLE QTY. CONFIRMATION STATUS PURCHASE TYPE

D C D C C C D D N N N N N N C C

8 10 8 10 10 4 8 8 15-4 15-4 15-4 10-4 15-4 8-4 1 1

Source: Inventory Section ,Accounts and Finance department ,Beximco Pharmaceuticals Limited Here also C means character and N means numeric number. For an example in case of Material Code it should be a character and width should be six. In case of Booking Quantity it should be a numeric number and width should be fifteen to four digits. Beximco Pharmaceuticals Limited Daily Issue Statement, Raw Material Table-06: NAME OF THE PDT. BATCH SRP TRAN. ID CODE QUAN. MATERIAL CODE NO. NO. NO.

PYRANTEL PAMOATE, USP METHYL SALICYLATE BP METHYL SALICYLATE BP PARACETAMOL, BP PARACETAMOL, BP RIBOFLAUIN, USP MAGNESIUM SILICATE, USNF LEVOCARNITINE

MES

LPJ040

1938

109

BA1061

29

IMC IMC NAS NEX ABT ULS

CPJ036 CPJ038 LPJ035 SPK003 SPK009 SPK257

1973 1977 1985 5233 5236 5238

144 143 13893 13900 2842 11263

BA4277 BA4277 BA1082 BA1082 BA1598 BA1490

60 60 120 200 10 10

CNT

SPK025

5263

31

BA3928

Source: Daily Issue statement, Raw material, Beximco Pharmaceuticals Limited.

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Beximco Pharmaceuticals Limited Raw Materials Requisition Slip Product: Bxxtrum Gold Tab Batch: SPK015 Table-07: SL. NO 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 ID CODE BA1630 BA1066 BA3277 BA1274 BA2087 BA1183 BA1699 BA1591 BA1520 BA1927 BA2063 BA3278 BA3276 BA2083 BA2084 BA1578 BA1481 BA1731 BA3727 BA1152 NAME OF THE MATERIAL VITAMIN A ACETATE, USP ASCORBIC ACID (97% DC) DRY VITAMIN D3 (CHOLECALCIF,850000 IVIG ) DRY VITAMIN E ACETATE USP (DL ALP TO 50%) DRY VITAMIN K1 5% ITHIAMINE MONONITRATE, USP RIBOFLAVIN, USP PYRIDOXINE HCL, USP FOLIC ACID, USP VITAMIN BIZ 0.1% (CYANOCOBALAMIN) BIOTIN USP CALCIUM PANTOTENATE USP DIBASIC CALCIUM PHOSPHATE (ANHYDROUS), SUP MAGNESIUM OXIDE CHROMIC CHLORIDE, USP CUPRIC OXIDE ANHYDROUS DRIED FERROUS SULPHATE, BP MANGANESE SOLPHATE, USP BORON CITRATE BLEND 5% NICKEL SULPHATE HEXAHYDRATE REQUIRED QUANTITY ISSUED QUANTITY -

Source: Raw material requisition slip, Beximco Pharmaceuticals Limited. 4.9.2. Work-In -process: At any summit in a continuous production process some units are not completely processed. The cost of the raw material on which production has been started but not completed, plus the direct labor cost applied specifically to this material and a ratable share of manufacturing overhead cost, constitute the work in process inventory. In case 1. 2. 3. 4. of Beximco Pharmaceuticals four production departments are as follows: Solid (tablet, capsule) Liquid (cream, ointment) Antibiotic Inhaler

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`Inventory Management System of Beximco Pharmaceuticals limited

These four departments work-in-process are: Solid: Stage 1: Mixing all the ingredients of that particular product is mixed carefully. For every pharmaceutical product there is a batch size and also thee is fixed amount of raw materials to be used for production. So the exact amount of raw materials is mixed together. Stage 2: Granulation -this is also a kind of mixing process but in this stage ingredients are mixed very sharply. Stage 3: Compression-in this stage the fine mixture of all the ingredients are placed into the dice to give them a shape. Stage 4: Coating-sometime the taste of the tablets is not good. So for that, those tablets are coated with sugar or other flavors. Stage 5: Packing-the final stage is packing. Products are packed in with different materials like-aluminum foil, leaflet. Liquid: Stage 1: Manufacturing-like in the solid department all the ingredient are mixed carefully Stage 2: Filling-in case of liquid item the mixtures are going to fill in the bottle. If the product is syrup item or if the product fixed is for cream or ointment the mixture will go to the tube. Stage 3: Packing-finally the syrup, cream and ointments are going for packing. Antibiotic: Stage 1: Manufacturing like in the solid department all the ingredients are mixed carefully. Stage 2: Filling- in antibiotic production case there is filling stage, the mixture of the production fill in the capsule. Stage 3: The final stage is packing the productions are packed in with different materials like-aluminum foil, blister foil, leaflet. Inhaler: Stage 1: Manufacturing-all the raw materials are mixed carefully in this stages. Stage 2: Filling-the second stages is filling the mixture in the container. Stage 3: Weighted checking-for the production of inhaler weight checking is very important. After filling the inhaler kept in a place for 28 days and after again the inhaler was weighted to check that the weighted of the inhaler was as same as before. Stage 4: Packing-the product finally labeled and packed

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`Inventory Management System of Beximco Pharmaceuticals limited

4.9.3. Finished Goods: The completed or final products of any organization, which is ready for sale, are called finished goods. The inventory of such goods consists of items that have been produced but are to be sold. Raw Materials Mixing/Granulation Compression Filling Packing Finished Goods in Store I & I services for Distribution Distribution in 13 depots

In Beximco Pharmaceuticals Limited, every stage of productions are carefully inspected by their Quality control and Quality Assurance departments experts. So after the end of the production there is less chance of defected item or rejected item. There are fields on each line for plan date, actual date, batch, quality, comment, signature and quality control. The quality control field contains signature by the quality control section in the production department. After all these checking the finished goods are going into the store of Beximco Pharmaceuticals Limited and authorized staff from the store signed the document with the clear mention of the production quality and sent this document to the Accounts department and I & I (Import and Indent) services. Then I & I (Import and Indent) service department distribute the product into 13 depots of Beximco Pharmaceuticals Limited. 4.10. ECONOMIC ORDER OF QUANTITY (EOQ): Economic order of Quantity is an inventory model that determines optimal quantity to order taking into consideration both the cost to carry inventory and the cost to order the item. Mr. Jamal Ahmed Choudhury, Senior Accounts Manager of Beximco Pharmaceuticals Limited asked me not to calculate Economic Order of Quantity for the limitation of internal data availabity But in this report, I try to calculate some Beximco Pharmaceuticals limited product Economic Order of Quantity (EOQ) with the help of Accounts officer Mr. Abul Basher who provide me the information of some raw materials which Beximco Pharmaceuticals Limited used to import from abroad and other information like the product ordering cost, holding cost, demand and from which I calculate Economic Order of Quantity (EOQ) of those products. Formula: 2 DS EOQ = H

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`Inventory Management System of Beximco Pharmaceuticals limited

Here, D = Demand, S = Order Cost, H = Holding cost. Beximco Pharmaceuticals Limited Raw material received statement Sodium Chloride Table-08: MONTH PC NO. MRR NO. DATE CODE NAME OF THE MATERIALS QTY (kg) A-VALUE

Feb 05

PC-8957

10404

9/2/05

BE1784

SODIUM CHLORIDE SODIUM CHLORIDE

973600

126376.27

May 05

PC-9198

10650

31/05/05

BE1784

1919000

238251.13

Sep 05

PC-9445

11119 21/09/05 BE1784 SODIUM CHLORIDE 999500 139810.76

Yearly Demand: 432456 kg (Approximately) Source: Raw material received statement, Beximco Pharmaceuticals Limited. Beximco Pharmaceuticals Limited Raw material received statement Sodium Starch Glycolate Table-09: MONTH

PC NO.

MRR NO.

DATE

CODE

NAME OF THE MATERIALS

QTY (kg)

A-VALUE

Mar 05

PC-8930

10456

01/03/05

BE1858

SODIUM STARCH GLYCOLATE SODIUM STARCH GLYCOLATE SODIUM STARCH GLYCOLATE SODIUM STARCH GLYCOLATE SODIUM STARCH GLYCOLATE

1999.9

426823.37

Mar 05

PC-8930

10457

03/03/05

BE1858

1199.9

256072.95

May 05

PC-2002

2002

17/05/05

BE1858

162.68

33494.19

May 05

PC-9029

10659

29/05/05

BE1858

2999.95

614902.55

Jun 05

PC-9029

10660

02/06/05

BE1858

2999.95

614953.43

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`Inventory Management System of Beximco Pharmaceuticals limited

Jun 05

PC-9310

10703

10/07/05

BE1858

SODIUM STARCH GLYCOLATE SODIUM STARCH GLYCOLATE

20

4223.6

Sep 05

PC-9493

11176

29/09/05

BE1858

2999.9

614534.09

Dec 05

PC-9512

11457

15/12/05

BE1858

SODIUM STARCH GLYCOLATE

2999.9

622275.84

Yearly Demand: 1282 Kg (Approximately) Source: Raw material received statement, Beximco Pharmaceuticals Limited.

Beximco Pharmaceuticals Limited Raw material received statement Liquid Paraffin Heavy BP Table-10: MONTH

PC NO.

MRR NO.

DATE

CODE

NAME OF THE MATERIALS

QTY (kg)

A-VALUE

Feb 05

PC-9068

10407

06/02/05

BE1915

LIQUID PARAFIN HEAVY BP LIQUID PARAFIN HEAVY BP LIQUID PARAFIN HEAVY BP

199.92

337770.9

Jul 05

PC-9235

10830

19/07/05

BE1915

99.97

166964.78

Oct 05

PC-9426

11193

06/10/05

BE1915

199.92

326665

Yearly Demand: 50 Kg (Approximately) Source: Raw material received statement, Beximco Pharmaceuticals Limited. Beximco Pharmaceuticals Limited Raw material received statement Self-adhesive (Lactameal) Table-11: MONTH PC NO. MRR NO. DATE CODE NAME OF THE MATERIALS QTY (kg) A-VALUE

May 05

PC-2002

2002

17/05/05

BA10075

Self Adhesive (Lactameal) Self Adhesive (Lactameal)

828

Jun 05

PC-9093

10742

24/06/05

BA10075

2339 9

26058211

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Nov 05

PC-9437

11383

22/11/05

BA10075

Self Adhesive (Lactameal)

7799

863627

Yearly Demand: 2837 Pcs (Approximately). Source: Raw material received statement, Beximco Pharmaceuticals Limited.

Beximco Pharmaceuticals Limited Holding cost Table-12: RATE($) QTY. PKG DAY. PORT VAT (15%) TOTAL YEARLY COST

1.5 6

1 1

15 1

1326.37 353.7

198.95 53.05

1525.32 406.75

36607.68 146430

Source: Cost sheet, Beximco Pharmaceuticals Limited. Beximco Pharmaceuticals Limited products holding cost calculation depends on how the company imports the raw or other materials from abroad or what will be the mode of transportation the company use. The modes of transportation Beximco Pharmaceuticals Limited may use are Sea, Air and Track. Based on the transportation mode it can vary. Here the holding cost what I used for EOQ calculation is Sea. If Beximco Pharmaceuticals Limited use the mode of Sea for import of materials than they have some charges like-port dues, shipping agent charge. Depending on how long the materials will stay to the port and whether the product container is full with Beximco Pharmaceuticals Limited materials its called FCL (full container lot) or coming with other companys materials LCL (low container cost) port dues and shipping agent charges will be different. And Beximco Pharmaceuticals Limited always calculates VAT 15%. Beximco Pharmaceuticals Limited Ordering Cost Sodium Chloride Table-13: PARTICULARS Opening charge C&F commission Insurance Premium AMOUNT 2684 2561.4 2495

TOTAL Source: Cost sheet, Beximco Pharmaceuticals Limited.

7740.4

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Beximco Pharmaceuticals Limited Ordering Cost Liquid Parafin Heavy BP Table-14: PARTICULARS Opening charge C&F commission Insurance Premium TOTAL Source: Cost sheet, Beximco Pharmaceuticals Limited. Beximco Pharmaceuticals Limited Ordering Cost Sodium Starch Glycolate Table-15: PARTICULARS Opening charge C&F commission Insurance Premium TOTAL Source: Cost sheet, Beximco Pharmaceuticals Limited. Beximco Pharmaceuticals Limited Ordering Cost Self Adesive (Lactameal) Table-16: PARTICULARS Opening charge C&F commission Insurance Premium TOTAL Source: Cost sheet, Beximco Pharmaceuticals Limited. AMOUNT 740 47.13 1438.2 2225.3 AMOUNT 4062 698.33 8545 13305 AMOUNT 2691 122.62 4603 7416.6

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4.11. CALCULATION OF ECONOMIC ORDER OF QUANTITY (EOQ): SODIUM CHLORIDE: Yearly demand (D) = 432455.56 kg Yearly ordering cost (S) = 7740.42 Tk. Yearly holding cost (H) = 36607.68

2 DS EOQ = H

2 X 432455.56 X 7740.42 EOQ = 36607.68

EOQ = 427 kg SODIUM STARCH GLYCOLATE: Yearly demand (D) = 1281.85 kg Yearly ordering cost (S) = 13305.33 Yearly holding cost (H) = 146430

2 X 1281.85 X 13305.33 EOQ = 146430

EOQ = 15 kg

LIQUID PARAFIN HEAVY BP: Yearly demand (D) = 49.981 kg Yearly ordering cost (S) = 7416.62 Yearly holding cost (H) = 146430

2 X 49.981 X 7416.62 EOQ = 146430

EOQ = 2 kg SELF ADESIVE (LACTAMEAL): Yearly demand (D) = 2837.035 Pcs Yearly ordering cost (S) = 2225.33

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Yearly holding cost (H) = 36607.68

2 X 2837.035 X 2225.33 EOQ = 36607.68

EOQ = 19 Pcs. Economic Order of Quantity (EOQ) is essentially an accounting formula that determines the point at which the combination of order costs and inventory carrying costs are the least. The result is the most cost effective quantity to order. So after calculation of Economic Order of quantity of Beximco Pharmaceuticals Limited, it can be conclude that if Beximco Pharmaceuticals limited order 427 kg of Sodium Chloride, 15 kg of Sodium Starch Glycolate, 2 kg of Liquid Parafin Heavy BP, 19 pieces of Self Adesive Lactameal in per order time, it will carry least cost and as a result Beximco Pharmaceuticals Limited will able to use maximum benefit of cost effectiveness. 4.12. DISTRIBUTION PROCESS: Beximco chemical divisions all finished goods distribution program is done by one of their unit I&I services ltd. I&I (IMPORT AND INDENT) SERVICES LTD

I&I (Import and Indent) services ltd. is the distribution network of Beximco chemical division. It was established during the inception of Beximco pharmaceuticals ltd. in 1980. This network is a forward integration of Beximco chemicals division to expedite the distribution of all the products throughout the country. Beximco pharmaceuticals ltd. is the only company in the pharmaceuticals industry that has a country wide distribution network of its own. The organ gram of the I&I services ltd. is shown below.

Manager (1) Assistant Manager (2) Sr. Distribution Officer (9) Distribution Officer (9) Asst. Distribution Officer Supervisor

The head office of I&I (Import and Indent) services is located at paribag, Dhaka. It has 13 depots: Dhaka, Bogra, Comilla, Kushtia, Barisal, Khulna, Chittagong, Sylhet, Mymensingh, Faridpur, Rajshahi, Noakhali and Rangpur. As per requirement of the regional depots, the supplier of the products are sent to them from the head office. This is done on regular basis depending on the information available from them.

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The medical representatives generate the demand and get the orders of individual product. Then they submit the order to their respective distribution depots. Distribution depots generate invoice through which they collect the required products and supply them to individual drug store. They generate a daily sales report which contains quantity as well as monetary value of each products sold every day. It also prepares sales journals which are a summary of the amount and type of products sold in a month.

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5.0. CONCLUSION: Despite the diligent efforts that have given in preparation of this report, I have only succeeded to skin the surface of the ocean of the subject. Therefore the views expressed in this report are likely to be limited by the lack of extensive knowledge and understanding. As I have worked only three months in the Be ximco P harmaceuticals Ltd, I have got just the overall idea about the Inventory Management System of Beximco Pharmaceuticals Ltd. As I was not the employee of that organization I couldnt get access to all the departments. But definitely I able to gathered experiences in the practical job environment. My psychiatry about Beximco Pharmaceuticals Limited is that, it is a leading pharmaceuticals company in Bangladesh they serve much more to the society. BPL produces a good number of pharmaceuticals products and which are affordable to every level of the people. While doing the report on inventory management system of Beximco Pharmaceuticals Limited I came to know that how well and how much attention the company pays to maintain their production level under definite order and try to do better in future.

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6.0. FINDINGS AND RECOMMENATIONS: Total inventory management of Beximco Pharmaceuticals is splendid .For the reason Beximco Pharmaceuticals able to reach in this extraordinary position. As a result on October 21, 2005 Beximco Pharma opened a new chapter new chapter in the corporate business history of Bangladesh by starting trading of its shares in the Alternative Investment Market (AIM) of London Stock Exchange. Beximco Pharma became the first and the only company from Bangladesh to get listed in the LSE. But there are certain things which the organization should change or adopt for more improvement in future. In case of raw materials Beximco Pharmaceuticals Limited using approximately 1500 raw materials (local and imported) and give to equal importance to every item is taking a lots of managements time. In that case the company might classify the raw materials in different categories. Holding cost is not appropriate in case of Beximco Pharmaceuticals Limited products. Beximco Pharmaceuticals Limited does not calculate the actual holding cost of the product. So if the company wants to calculate the products Economic order of Quantity (EOQ) the result might not give the actual EOQ of the product. Beximco Pharmaceuticals limited also not considering ABC classification. The main purpose of this method is to concentrate upon those items of materials that demand particularly attention rather than all the items indiscriminately. Thus the items under the `A category are of high value, `B category needs only routine control measures and control may be diluted in the case of `C category items. In case of classification considering lead time; lead time varies for importing from each of the places or company. So according to the amount and frequently use the inventory item can be classified. Whatever it is, in case of management of raw materials, work-in-process and finished goods the company doing well with its computer based software and efficient work forces.

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BIBLIOGRAPHY: Books and Articles: Mark M. Davids, Nicholas J. Aquilano, & Aichard B. Chase, Fundamentals of Operation Management, 3rd edition. John J. Coyle, The Management of Business Logistics, 3rd edition. Lee J. Krajewski & Larry P. Ritzman, Operations Management, 2nd edition. Floyd D. Hedrick, Inventory Management, Internet Article. Tony Wild, Best Practice in Inventory Management, 2nd Edition. Annual Report, Beximco Pharmaceuticals Limited (2005)

Web sites: www.beximcopharma.com www.beximco.net

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