Glaxo Smith Kline India Ltd.

Glaxo Smith Kline India Ltd. is one of the most important and growing parts of
the
pharmaceutical manufacturing giant Glaxo Smith Kline, UK (known as GSK,
worldwide).
Glaxo Smith Kline India Ltd. manufactures medicines and vaccines for Indian
domestic
market. It has more than 20% of the market share of pharmaceutical products in
India. Glaxo
Smith Kline India Ltd. has its own 4 manufacturing units and rest of its
manufacturing is out
sourced to 23 partner pharmaceutical manufacturing companies throughout
India. It has 5
warehouses strategically located to cater to distributors (CFAs) who are located
in widely
scattered geography of India. The total number of distributors (CFAs) is 31.
Almost all of the sales of GSK India is done indirectly through these CFAs.
Primarily there are 2 groups of products:
Product1: Medicine
Fast moving Medicine
Slow moving Medicine
Product2: Vaccines
In all Glaxo Smith Kline India Ltd. produces more than 550 different
pharmaceutical products.
Transportation part of the whole distribution system is outsourced to many
independent private
goods carriers. These carriers are grouped as trucking (with varying carrying
capacities of 32
Ton, 17 Ton, 9 Ton, 3.5 Ton); railroad, surface couriers and air couriers. The
lead-time varies
from 15 days for a railroad connection from the western part of India to the far
eastern part of
India to 5 – 7 days for most road connections for trucks to 2 days for air courier.
Glaxo Smith Kline India Ltd. had implemented ERP system from vendor JD
Edwards.
While this system has been proving very useful for there manufacturing
processes, they did not
had a satisfactory solution for their product transportation and distribution
processes.
Glaxo Smith Kline India Ltd.
1. Planning used to take at least 2 weeks and required input from many people.
A lot of
effort was required to make these plans.
2. By the time the plan was made, it became obsolete as initial requirements
got changed.
When any change in plan was required, it was impossible to incorporate these
changes
in the plan.
3. The whole product distribution system was inefficient.
4. Service levels were very low.
5. Stock outs were occurring.
6. There were many under fill movements of trucks.
7. No visibility across the whole distribution system.
8. Very difficult to Control distribution system.
9. Late orders were creating a lot of problems.
10. Solution should be able to consolidate orders, regional forecasts, and
additional orders.
1. When Optimization Engine is implemented in an organization where there is
already an
implementation of any ERP system, Optimization Engine works as the brains
behind the
business operations whereas the ERP system works as the business enabler.
2. Our Optimization Engine software takes care of all sales orders and sale s
forecasts. It
consolidates all sales demand forecasts made by different sales units as well as
the
purchase orders; the company receives. Based on this consolidated figure, the
company
can do any supply chain related planning.
3. Our Optimization Engine Software is based on Genetic Algorithm based
computation.
The plan it generates is the most optimal solution for the given scenario and no
other
solution can easily beat it.
4. Optimization Engine software takes into account stock out cost (loss of order
due to
unavailability of stock), inventory cost and transportation cost, raw material
costs,
human resources costs, inventory costs, machine change over costs and it
generates a
plan to minimize all of these costs. User has a choice to assign weight age and
the
software generates the most optimal plan accordingly.
5. Optimization Engine software takes into account lead time and other
constraints. It
takes them into account completely when it generates the most optimal plan.
6. Optimization Engine takes into account service levels for items, business
units, clients
and orders. User has a choice to give weight age to these services levels
individually and
the software generates the most optimal plan accordingly.
7. Our experience shows that even at places like big and reputed multinational
companies;
the efficiency of their business processes is not optimal even after good
implementation
of ERP systems. In most cases our software can improve their business
processes by at
least 10% and it can go even to 300%. This translates to corresponding cost
savings for
the company.
Benefits of the solution:
1. When the company is experiencing inefficiencies even after successful
implementation
of ERP systems and supply chain systems.
2. When a company is looking to cut its operational costs to be competitive.
3. When a company is looking to expand and wants to make capacity planning
for the new
facilities.
4. When a company wants to revise the capacities for the merged facilities after
acquisitions.

Highlights of implementations:

All costs components of distribution costs got reduced (Stock out Costs,
Transportation
Costs, and Inventory Costs). The total distribution cost savings experienced by
the company
stood at more than 150% compared to their earlier distribution costs. The
service levels were
achieved more than 95% for all products.
1. Creating distribution planning for all regions at national level takes only half
an hour.
2. The planning process is now always current as the input data taken for
planning is most
current.
3. Changes in orders, forecasts, production or any unforeseen event are taken
care of
easily and are incorporated in the plan.
4. Product distribution system has become very efficient.
5. Service levels are being achieved at more than 95% for all categories of
products (from
the slowest moving to the fastest moving).
6. No stock outs are occurring.
7. Now trucks are always loaded to the most optimized way.
8. Clear visibility into the whole distribution system.
9. Very easy to control the whole distribution system.
10. Even orders coming minutes before the planning are taken care of.
11. Costs savings in distribution are to the tune of 150%.
1. To update the JD Extracts which need to be in a format that is specified as per
the
system requirements, a specified naming convention needs to be follo wed for
e.g.
Purchases should be named as PO, Transfers as TO, Sales as SL, stocks as csi,
and
receipts as RTD. All these files need to be stored in the Integrate folder on D:
drive
of the machine. To start replication user needs to select replicate option from
the
Optimization Icon in the Start button Programs list. The application can either
use
the current stock as the opening stock for the whole month if the stocks are
updated
at the start of the month or just let the daily update run as per the regular
routine.
2. After running the Replication model, user can create a new plan.
3. To create a new plan, user can select the Optimization Engine icon and login
into the
application. Planning for some selected products or all the products depends
upon
the users choice, he may also select the option of medicines or vaccines before
creating the plan and accordingly the product, source and destination lists are
handled. Planner also has the option of setting the objectives of the plan by
selecting the Advanced button where the constraints like optimizing on high or
low
stock out costs, what percent of excess quantity of products at various locations
should be considered for movement on the basis of availability, and the kind of
weekly distribution pattern that needs to be followed for logistics of goods.
Week
wise distribution describes the shipment of products over the month.