From a set of activities is now considered a part, module, of an integrated system. There has been a change in supply chain management hinging from a push oriented supply chain that emphasizes distribution of a product to passive customers to a pull-oriented supply chain that utilizes the supply chain to deliver value to customers who are actively involved in product and seen. ‘ice specifications. Electronic communications have played a major role in facilitating new models of supply chain management.
Technology applications that have facilitated supply chain management are the E-mail, Intranets, Extranets, Electronic Data Interchange (EDI) and lately interfacing of ERP system with BIB intermediary sites or Exchanges. Our tidied company, Rental Limited, also has got a Distribution Channel Management (DOC) that works in the downstream supply chain arena while upstream one is still managed conventionally with the help of mail or e- commerce solution.
Over competition in the industry and the cost leadership approach have been making the pace of change a bit slower and they are still being led by the existing system, we can say legacy system. They still maintain a good amount of safety level that cost time and hazards. But we see some improvement in database management that works in downstream arena is helping them a lot. Since the market driving force is the marketing to doctors and chemist, any sophisticated system, in their words, is only contributing to curtailed profit.
But some part of the industry is doing better in quality and excellence in export while others whose market share are inside the boundary are adjusting themselves to the situation. Rental Limited is envisaging introducing ERR to strengthen their foothold in and outside Of the country as they are also a recognized one to enter the ELI market. It is now the time and the will to shift them from the legacy to a contemporary system, we understand. Objective of the report General objective is to see that how an organization cope with the information system to effectively make decisions and operate functional activities.
Assess the level of importance of supply chain management of the company and also to determine how well the company meet up the compliance of information system. More specific objective is to provide information on Rental Ltd. & their supply chain management. COMPANY BACKGROUND Rental Limited is a public limited company incorporated in Bangladesh, with more than TX. 2. 3 billion in assets. The company manufactures and sells arioso pharmaceutical products, animal health, animal nutritional, oral saline, hormone products and other medical products in the local and foreign markets.
The company has two subsidiary companies; Rental Agro-Industries Limited and Paranoia Limited. They have manufacturing contract with Safety for Cosponsoring, with EUNICE and SCM for Sprinkles. The trademark of Rental is assigned from Pfizer and Hooch’s with manufacturing technology. In 2007 Rental has received a Certificate of IGMP Compliance for its Potent Products Facility from MORAL, UK and it is the only Bangladesh company to chive it. The compact/s largest subsidiary, Rental Agro Industries Limited, is a private company limited by shares incorporated in 1997.
The principal activities of the company are to carry on business for producing and sale of various agro based products, and poultry breeding and hatching and sale of poultry products. The company commenced its commercial operation from October 1998. Since then it has been operating as successful company. Rental Agro is now financially strong and declared a dividend of 30% on paid- up capital in the last year. Another subsidiary, Purina Limited, was incorporated as a private limited company in 2004 to explore the prospects of entering into Fast Moving Consumer Goods (FMC).
The principal activities of the company are to carry on the business of manufacturing, marketing and distribution of all kinds of consumer goods, consumer durables, food items, sugar confectioneries, edible oils, beverages etc, raw materials, semi-finished items, producers, goods and various other products of local or foreign origin and to engage in the business as traders, importers, exporters, commission agents of all kinds of goods and services including pharmaceutical drugs and destined. But the company has not started production yet. Rental has a relatively flat management structure. S. H. Kabuki is the Chairman of the board and Seed S.
Kaiser Kabuki is the Managing Director of the company. Rental Limited is well known for its corporate social responsibility. Institutional shareholders own as much as 15% Of total share Of the company. Company Description Rental Limited is the holding company for Rental Agro Industries Limited and Purina Limited. Starting in 1 972 as Pfizer Laboratories (Bangladesh) Limited, subsidiary of Pfizer Corporation, USA this company was renamed as Rental Limited” in 1993 after divestment of shareholdings by Pfizer corporation, ASSAI. The company operates by manufacturing pharmaceutical products, animal health medicines, nutritional and vaccines.
It was listed in Dacha Stock Exchange in 1979. Products and Services Rental Ltd. Is the market leader of Animal Health in Bangladesh. Together with, Rental Ltd. Is famous for its pharmaceuticals product. Some of those are listed below: a. Anti-bacterial preparation: Cosponsoring are one of the most sold anti-bacterial product of Rental Ltd. B. Anti-ulcerate Preparation: Maypole is one of the most renowned anti-ulcerate product of Rental Ltd. C. Anti-spasmodic Preparation: Attention is the best anti-spasmodic product of Rental Ltd. D. Anti-hemorrhoid’s Preparation: Disdains & Whispering is also an effective anti-hemorrhoid’s Preparation. . UNSAID Preparation: Proximal is also an effective medicine Of UNSAID Preparation. F. Anti-allergic Preparation: Affection HCI is a famous medicine for allergic patients. G. Anti-Diabetic Preparation: Glaciated is used for diabetic patient. Supply Chain Management Us apply Chain Management (SCM) involves the coordination of all supply activities of an organization from its supplier and delivery of products to its customers. It’s essentially the optimization of material flows and the associated information flows involved with an organization’s operations.
Supply Chain Management (SCM) includes not only supplier and buyer, but also the intermediaries such as the supplier’s suppliers and the customers’ customers. It is the coordination of supply activities of an organization from its suppliers and partners to its customers. For most commercial and not for profit organization we can distinguish between upstream supply chain and mainstream supply chain. An organization’s supply chain can be viewed from a systems perspective as the acquisition of resources (inputs) and their transformation (processes) into products and services (outputs) which are then delivered to customers.
Such a perspective indicates that as part of moving to e-business, organizations can review the transformation process and optimize it in order to deliver products to customers with greater efficiency and lower cost. The position of the system boundary for the SCM extends beyond the organization- in involves not only improving the internal recesses, but also processed performed in conjunction with suppliers, distributors and customers. The process perspective has also a strategic importance that provides great opportunities to improve product performance and deliver superior value to the customers.
As a result, Supply Chain Management can dramatically have an impact on the profitability of a company through reducing operating costs and increasing customer satisfaction and so loyalty and revenue. Upstream supply chain is the transactions between an organization and its suppliers and intermediaries, equivalent to buy side e-commerce. On the other hand downstream supply chain is the transactions between an organization and its customers and intermediaries, equivalent to sell side e-commerce.
For the companies that have first-tier suppliers, second-tier and even third-tier suppliers or first-, second- and higher-tier customers maintain a supply chain network. A supply chain network is the link between an organization and all partners involved in multiple supply chain. Developments in supply chain management Over the time modern technology and improved concepts like e-commerce and logistics have contributed to the development of supply chain.
We can shoe it in chronology as following: Physical Distribution Management The Physical Distribution Management (PDP) focuses upon the physical movement of goods by treating stock management, warehousing, order processing and delivery as related rather than separate activities. Although information systems were developed to manage these processes they were Often paper-based and not integrated across different functions. However, some leading companies started using EDI at this time. PDP was essentially about the management of finished goods but not about the management of trials and processes that impacted upon the distribution process.
PDP was superseded by logistics management which viewed manufacturing storage and transport from raw material to final consumer as integral parts of a total distribution process. Material Requirement Planning (MR.) and Just-Len -Time TIT) Logistics Management The Just-in -time (SIT) philosophy is still a relatively recent development of logistics management, its aim being to make the process of raw materials acquisition, production and distribution as efficient and flexible as possible in terms of material supply and customer service.
Minimum order quantities and stock levels were sought by the customer and therefore manufacturers had to introduce flexible manufacturing processes and systems interfaced directly with the customer who could call an order directly against a prearranged schedule with a guarantee that it would be delivered on time. Materials Requirement Planning systems were important in maintaining resources at an optimal level. The design for manufacture technique was used to simplify the number of components required for manufacture. However, none of the above methods looked at the management of total supply chain.
An associated phenomenon s lean production and lean supply where supply chain efficiency is aimed at eliminating waste and minimizing inventory and work in progress. Supply chain management and Efficient Customer Response Effective management of supply chain involved much closer integration between the supplier, customer and intermediaries and in some instances involved one organization in the channel taking over functions that were traditionally the domain of the intermediary. Bottlenecks or underplays/ oversupply can have a significant impact on the organization’s profitability.
The two primary goals of supply chain management are to maximize the efficiency and effectiveness of the total supply chain for the benefit of all the players, not bust one section of the channel, and to maximize the opportunity for the customer purchase by ensuring adequate stock levels at all stages of the process. These two goals impact upon the sourcing of raw materials and stockholders. A recent phenomenon has been the rapid in global sourcing of supplies from preferred suppliers, particularly amongst multinational or global organizations.
The internet will provide increased capability for the smaller players to globally source raw materials and therefore improve their competitiveness. The internet will revolutionize the dynamics of international commerce and in particular lead to the more rapid initialization of small and medium sized enterprise. The web will reduce the competitive advantage of economies of scale in many industries, making it smaller companies to compete on a worldwide basis. New integrated information systems such as the SAP Enterprise Resource Planning (ERP) system have helped manage the entire supply chain.
Represents include modules which are deployed throughout the business and interface with suppliers. Technology has enabled the introduction of faster, more responsive and flexible ordering, manufacturing and distribution systems, which has diminished even further the need for warehouses to be located near to markets that they serve. Technological Interface Management The challenges facing suppliers, intermediaries and customers in the supply chain will shift from a focus on physically distributing goods to a process of collection, collation, interpretation and dissemination of vast amounts of information.
Enterprise resource planning systems are continuously being updated to support direct data interfaces with suppliers and customers, for example to support EDIE more recent development is interfacing of ERP yester with Penetrability sites or exchanges such as Commerce One. SAP has also created My SAP Facility to help customers manage and personalize their interactions with these exchanges. XML is increasingly used as the technical means by which technological interface management is achieved. (The critical resources possessed by these new intermediaries will be information rather than inventory.
This stage has been taken a bit further by suggesting that customer information capture will serve customers rather than vendors in future. Currently customers leave a trail of information behind them as they visit sires and make transactions. This data can be captured and then used by suppliers and agents to improve targeting offers. However, as customers become more aware of the value of information and as technology n the internet enables them to protect private information relating to site visits and transactions, then the opportunity grows for intermediaries to act as customer agents not supplier agents.
Practice by Rental Limited Rental Limited has got a Distribution Channel Management (DOC) that primarily works for the downstream supply chain that we can relate to Physical Distribution Management (PDP), the earliest phase of supply chain management. This is responding to the need of the market from the front end, the distribution channel, and back end, the procurement of raw materials. The Block list, total procurement needed for a year, is usually made at the beginning of a year with minor adjustment afterwards.
This is determined by a forecasting based on previous years sale with adjustment for the micro factors, every single response from the field force who visit doctors and chemists. The technology used here are simple mail communication for the overall supply chain while keeping track of every movement of inbound and outbound logistics are kept in custom database. Since the procurement is designed for once in a year there are tenders to bid by the suppliers, the management is simple and largely done by the suppliers.
For the local supplier the complication is less and supply can happen as per order at anytime. On downstream supply chain the communication is web. Every performance on delivery of goods is communicated through web to update database. So present stock level, the delivered lot and present demand from the customer can be traced at every moment. Supply Chain Models Two prominent models are very widely used. They are illustrated below: Push us apply chain The push model is illustrated by a manufacturer who perhaps develops an innovative product and then identifies a suitable target market.
A distribution channel is then created to push the product to the market. Pull supply chain This model emphasizes on using the supply chain to deliver the value to customers who are actively involved in product and service specifications. Here the supply chain is constructed to deliver value to the customer by reducing costs and increasing service quality. Rental Limited is following the pull model of supply chain as they are demand oriented and this model has been the strategy for many organizations.
Setbacks in Supply Chain Management The practice by Rental Limited for its supply chain, the Goods Distribution Process (GAP), has been suffering from many problems that a future participant in pharmaceuticals arena should have been eliminated. We can list the shortcomings as following. The system is comparable to the earliest model of supply chain management like Physical Distribution Management (PDP). Here the information management and coordination is least and it disintegrated within the organization. They need to maintain a safety level Of inventory in front end for period of 8 weeks and in the back end for a period of 8 weeks.
This signals more investment done for the working capital. Once a safety level of inventory is maintained, it cost more for storage and management. Just in Time (SIT) eliminated this problem that they are yet to introduce. Their supply chain is dependent on some intermediaries in back end and their own multistage distribution channel in front end. So they aren’t able to order directly for inputs and supply directly to customers. They haven’t yet employed any high performing supply chain management software like ERP system. They only rely on the database for the performance judgment and forecasting the future needs based on it.
The time lag in back is high as it needs several steps for ordering the new materials and coordination with different agencies. Options for Restructuring Supply Chain As part of strategy definition for e-business, managers will consider how the structure of the supply chain can be modified. These choices aren’t primarily based on internet technology choices; rather they are mainly choices that have existed for many years. What internet technology provides is a more efficient and enabler and lower cost communications within the new structure.
Supply chain management options can be viewed as a continuum teen internal control of the supply chain elements and the external control of supply chain elements through outsourcing. The two end elements of the continuum are usually referred to as ‘vertical integration’ and ‘virtual integration’. Supply chain elements through outsourcing. The two end elements of the continuum are usually referred to as ‘vertical integration’ and ritual integration’. Vertical integration: Refers the extent to which supply chain activities are undertaken and controlled within the organization.
Virtual integration: Refers the majority of supply chain activities ate undertaken and enthroned outside the organization by the rid parties There was a general trend in during the second half of twentieth century from vertical integration through vertical disintegration to virtual integration. A good example is provided by the car manufacturing industry where traditionally car plants would be located near to a steelworks so that the input to the car plant would be raw materials, with finished cars produced as the output. Other components of the car such as engine and passenger equipment would also be manufactured by the company.
In addition other value chain activities such as marketing would also largely performed in- souse. There has been a gradual move to sourcing more and more components such as lights, upholstery and trim and even engines to third parties. Marketing activities such as web site development, brochure fulfillment and advertising campaigns are now largely outsourced to marketing agencies. Another example is the purchase by pharmaceuticals companies of pharmacy benefit managers (companies that manage drug distribution with private and company health schemes).
By acquiring these companies which are part of Pharmaceuticals Company’s downstream supply chain the aim into ‘get closer to the customer’ while at the same time favorably controlling the distribution of the company’s own drugs. Hayes and Wheelwright provide a useful framework that summarizes choices for an organization’s vertical integration strategy. The three main decisions are: 1 . The direction of any expansion: Should the company aim to direct ownership at the upstream or downstream supply chain?
The pharmaceuticals companies referred to above have decided to buy into the downstream part of the supply network (downstream vertical integration). This is sometimes referred to as an Offensive Strategic move since it enables the company to increase its power with respect to customers. Alternatively, if the pharmaceuticals company purchased other research labs this would be upstream-directed vertical integration which is strategically defensive. 2. The extent of vertical integration: How far should the company take downstream or upstream vertical integration?
Originally car manufacturer had a high degree of vertical integration, but more recently they have moved from a wide process span to a narrow process span. This change is the main way in which e-business can impact vertical integration by assisting the change from wide to narrow process span. 3. The balance among the vertically integrated takes: To what extent does each stage of the supply chain focus on supporting the immediate supply chain? For example, if a supplier to a motor manufacturer also produced components for other industries this would be an unbalances situation.
Combining these concepts, we can refer to the BIB Company. If it owned the majority of the upstream and downstream elements of the supply chain and each element was focused on supporting the activities of the BIB Company, its strategy would be to follow upstream and downstream directions of vertical integration with a wide process span and a high degree of balance. Alternatively, if the strategy were to focus on core competencies it could be said to have a narrow process span. How, then, often can electronic communication support these strategies?
Through increasing the flow of information between members of the supply chain, a strategy of narrower process span can be supported by e-commerce. However this relies on all members of the supply chain being e-enabled. If only immediately upstream suppliers have adopted e-commerce then the efficiency of the supply chain as a whole will not be greatly increased. It may be difficult for a manufacturer to encourage companies further up the supply Hahn to adopt e-commerce. So companies undertaking offensive strategies will be in a better position to stipulate adoption of e-commerce, and so increase the overall efficiency of the supply chain.
Following are two examples of the manufacture of personal computers also illustrate the concept of the two different supply chain products well. Approach 1 (IBM practice): Manufacture of many components by IBM plants in different locations including IBM processor, IBM hard disks, IBM cases an IBM monitors and envenom mice. Distribution to companies by IBM logistics. Approach 2 (DELL Practice): Manufacture of all components by third parties in different locations including Intel processors, Seagate hard disks, Sony monitors and Microsoft mice. Assembly of some components in final product by third parties, e. G. Adding appropriate monitor to system unit for each order. E-Supply Chain Management E-business can be used to improve supply chain management in a number of ways. In those cases challenges were Reduce order-to -delivery time. Reduce costs of manufacturing. Manage inventory more efficiently. Improve demand forecasting. Reduce time to introduce new products. Improve aftermarket/ post-sales operations. The typical benefits that BIB companies have from e-SCM are as following 1 . Increased efficiency of individual processes: Here the cycles time to complete a process and the resources needed to execute it are reduced.
If the BIB Company adopts e-procurement this will resulting a faster cycle time and lower cost per order. Benefits: Reduced cycle time and cost per order. 2. Reduced complexity of supply chain: This is the process of disintegration. Here BIB Company will offer the facility to sell direct from its e-commerce site rather than through distributor’s retailers. Benefits: Reduced cost of channel distribution and sale. 3. Improved data integration between elements of the supply chain: The BIB Company can share information with its suppliers on the demand for its products to optimize the supply process. Benefits: Reduced cost of paper processing. . Reduced cost through outsourcing: The Company can outsource rouse virtual integration to transfer assets and costs such as inventory holding costs to third companies. Technology is also enabler informing value networks, and in making it faster to change supplier son the basis of cost and quality. Benefits: Lower costs wrought price competition and reduced spend on manufacturing capacity and holding capacity. Better service quality through contractual arrangement. 5. Innovation’s-SCM should make it possible to be more flexible in delivering a more diverse range of products and to reduce time to market.
For example, the BIB Company may use e-commerce tenable its customers to specify the mixture of chemical compounds and additives used to formulate their plastics and refer to a history of previous formulations. Benefits: Better customer responsiveness. Flexibility in adapting to new business requirements is a key capability of e-SCM systems. For example, in 2006, e- business system supplier and integrator SAP explained the three key capabilities of its SCM solution as I) Synchronize supply to demand: Balance push and pull network planning processes. Replenish inventory and execute production based on actual demand. I) Sense and respond with an adaptive supply chain network: Drive distribution, transportation, and logistics processes that are integrated with real-time planning processes. Iii) Provide network wide visibility, collaboration, and analytics- Monitor and analyze your extended supply chainman alternative perspective on the benefits is to look t the benefits that technology can deliver to customers at the end of the supply chain. Forth BIB Company these could include: (a) Increased convenience through 24 hours a day, 7 days a week, days a year ordering. B) Increased choice of supplier leading to lower costs. (c) Faster lead times and lower costs through reduced inventory holding. (d) The facility to tailor product more readily. (e) Increased information about products and transactions such as technical data sheets and order histories. IS infrastructure for supply chain management Information systems need to deliver supply chain visibility to different parties ho need to access the supply chain information of an organization, whether they are employees within the organization, suppliers, logistics service providers or customers.
Information systems have a key role in providing this visibility. Since a huge volume Of information defines supply chain processes for each organization, users of this information need to be able to personalize their view of information according to their need- customers want to see the status of their order, suppliers want to access the organization’s database to know when their customer is next likely to place major order. Security is also important – of a company has differential pricing, it will not want customers to see price differences.
These requirements for delivering supply chain information imply the need for an integrated supply chain database with different personalized views for different parties. A typical integrated information systems infrastructure for delivering supply chain management is illustrated in above figure. It can be seen that applications can be divided into those for planning the chain and those to execute the supply chain process. A key feature of modern supply chain infrastructure is the use of a central operational database that enables information to be shared between supply chain process and applications.
