At SMG Consulting and Training, we pride ourselves on delivering transformative results across various industries. This case study highlights our successful interventions in the Manufacturing and Pharma sectors, focusing on major players like Ranbaxy Labs and Godrej Appliances.
Challenge:
The Pharma sector offers an exceptional opportunity to learn about planning and operations, with its complex balance of production planning, manufacturing, warehousing, and materials management. Compliance and processes must meet global standards, particularly for FDA approval setups.
Approach:
We conducted an internal audit with a dual focus on ensuring compliance and identifying opportunities for value-addition. The goal was to enhance customer impact and reduce financial exposure, while aligning operations with the highest industry standards.
Implementation:
The company lacked an ERP system, relying on manual processes and Excel.
- Process steps were mapped.
- Risks at each stage were identified, focusing on compliance and financial impact.
- Each stage faced resistance, with inadequate tracking, monitoring, and governance, leading to issues like increased inventory costs (RM and FG), capital asset inefficiencies, and production waste.
Results for Brand:
- A new process for Sales Planning was implemented, focusing on M1+2 months with accountability and policies for change. Percentage variations were introduced for future reporting.
- Material Planning was restructured using A/B/C categorization, shifting the focus from unit value to consumption value, significantly reducing inventory levels.
- Wastages and future inventory costs were drastically reduced. Improved monitoring of A-class items resulted in lower stock days.
- Warehouse planning and storage were optimised.
- Capital expenditure policies were tied to machine output assumptions, linking output and usage to payback periods. This staggered expenditures, reduced early scrapping of machines, and increased accountability in production and finance.
- Branch Operations streamlined cash handling, maximising cash flow to the central pool and introducing factoring where needed.
- Fraudulent stock movements were detected, where FG was returned and credit notes were raised for high-volume samples, leading to unauthorised sales in the open market and product discounting.
Results & Learning (SMG):
- Increased ownership and focus on financial prudence were embedded across all processes.
- Expenditure policies were optimised.
- Leaders and departments were aligned.
- Goals and inter-departmental SLAs/commitments were aligned.
- Transportation and logistics/dispatch rules were modified based on demand and load value, rather than vehicle dimensions alone.
- Storage and stocking norms underwent significant improvements.
- Wastages were reduced, including cross-functional blaming.
- This case study underscores our expertise in optimising Pharma Operations within the Manufacturing and Pharma sectors. Our approach, leveraging comprehensive assessments, process improvements, and robust risk management practices, delivers measurable results and reinforces our understanding of business process optimization for sustainable growth.
