SAP (SYSTEMS, APPLICATIONS, PRODUCTS IN DATA PROCESSING) IN PHARMACEUTICAL INDUSTRY
Introduction:- SAP system allows a company to share common data and practices across the enterprise and produce and access information in a real time environment and encourages for a competitive business. SAP systems are designed to solve the fragmentation of information in large business organizations and integrate the processes within a company to help managers in making efficient decisions. It is encouraged to use an advanced technology like SAP software solutions for success, to gain both the domestic and international market share. Pharmaceutical industry depends heavily on Patents for generation of revenue with focus on Research & Development and less effort in lean management due to resistant to change, lack of system thinking and poor execution. The most commonly used measurement of leanness is Inventory Turnover.
Rapid advancements in information technology in hardware, software and in particular SAP AG‟s umbrella of solutions provider has an extreme influence on the way enterprises view, access and manage their data. SAP played a pivotal role to transform the application oriented industry and embraced the best of world solution providers as it is still evolving in meeting its customers‟ and stakeholders‟ needs.
SAP customers have to put custom project plans, implementation schedules, management justifications, and identification of consultants. Risk on the business side is high that there is little room for risk in the technical implementation. Organizational changes that accompany an SAP implementation will drive sweeping changes across business applications of the enterprise. Meeting the project ROI, focused goals in a timely fashion will impact from planning, to developing the solution, to testing, to implementation. SAP will necessitate a tight partnership between the business and IT. Information sharing and partnership trust within the organization and between the organizations and its partnering companies is vital..
Only reason a company would implement or upgrade SAP in the first place is purely on business reasons like increase competitiveness, Reduce Costs, Integrated Data, Quality Service to Customers, Enhanced Decision Making Capabilities, Normalize Resource Planning and Efficient Application Processing.
ENTERPRISE RESOURCE PLANNING – ERP:- ERP systems automate and integrate the core functionalities of an organization. ERP facilitates the flow of required information among the different functions of an enterprise, while also permitting information sharing across organizational units and geographical locations. Despite the problems identified in ERP applications, the number of companies opted for ERP systems have grown tremendously in 3 directions.
- ERP vendors integrated their solutions supporting e-business and workflow management.
- ERP applications upgraded to target additional functional niches like CRM, SCM, APS etc.,
- ERP solutions have simplified to target hundreds and thousands of midsize and small companies.
SAP:- SAP offers company a comprehensive solution for managing Financials, Human Resources, Materials and Procurement Management, Production Planning, Sales & Distribution and many Corporate Services. It integrates all departments and functions across a company on single database that can serve the departments’ requirements accessing and sharing common data by all functionalities.
SAP will work in conjunction with the mission of the Organization and satisfy all stakeholders. The effective implementation of SAP system can bring out many benefits, beginning with the most general, such as enterprise management and information flow enhancement. Consequently, improvement of economic indicator is achievable, which finally leads to an increase in enterprise profitability.
SAP Implementation:- SAP system implementation process requires human resources from both the client and consulting companies. Client resources are the key users of the business processes who provide functional knowledge to the consultants and acquire the knowhow needed to manage the system after the implementation of the SAP System. SAP system resources are divided into functional, Technical and System Administrators. There will be multiple operating teams, which takes responsibility for as many implemented SAP modules. The team should be cross-functional with business and technical knowledge. Knowledge of the business functions and products is needed so that they know what needs to be done to support major business processes. Functional and Programmers work along with the Consulting teams. The project is co-managed by a client and a consulting executive and the team should as well have a mix of consultants and internal staff so that the internal staff can develop the necessary technical skills for design and implementation. The implementation effort for the whole project is calculated as the total man months for the project management, operating teams and functional units. Project organizational structure is formally constituted at the beginning of the implementation phase and exists till the completion. Objectives and accomplishments of different teams and functional units along with individual tasks are recorded over time within the project‟s documentation.
SAP Customization:- Company seeking to adopt an ERP system can customize and use the system as required to the business processes and generic solution to the company‟s specific needs, this facility is provided by the ERP vendor through tools and utilities which will allow the firm‟s in house IT personnel or independent consulting firms manipulate the software. The degree of functional fit of the out of box features determines the amount of customization needed of the adopted ERP. The higher the fit, the lower are the implementation and customization costs and the faster is the implementation time.
Two levels of customization:-
High level customization:– High level customization is carried out by manipulating and editing readable and understandable data instead of intervening at the level of the written code. Functional users with knowledge of the business and no programming experience should be able to customize the system. This shortens the learning path and therefore accelerates the implementation and gives more freedom to the company to continuously adapt the system to the processes and the business needs.
Low level customization:- Low level customization involves developers modifying the code. This allows more flexibility of the ERP systems provision for custom operations at the software architecture.
PHARMACEUTICAL INDUSTRY:- Indian Pharmaceutical industry has a wide range of capabilities in the complex field of drug manufacture and a highly organized sector. Vast ranges of medicines are manufactured from simple pills to sophisticated antibiotics and complex cardiac compounds and every type of medicine is now made in India. It is a highly fragmented sector with severe price competition and government price control. India Pharma sector is front runner in wide range of specialties in complex drug manufacture, development and technology. Following are advantages and challenges encountered in the India Pharma Industry.
SAP Pharmacy:- The Indian Pharmaceutical industry is undergoing huge growth. It has touched double digit growth in 2014 with more than 10,000 manufacturing units and close to 3000 Pharmaceutical companies. The Indian Pharmaceutical industry is among the top six producers in the globe. In Pharma industry when patents get expired, generic drug producers can easily reverse engineer and sell them at much lower price.
Branded manufacturers have to focus on cost reduction on those drugs with expiring patents in order to compete with generic drugs or invent more new drugs. Another challenge the Pharmaceutical industry has to face is the demand for drug projected to increase at a much faster pace than capacity.
Many Pharma‟s have implemented a state of the art SAP based pharmaceutical manufacturing solution incorporating electronic signatures and intrinsically safe RF computers for quality approvals & production confirmations.
- SAP Production Planning has inputs in Sales Forecast and Sales Database. Sales Forecast information will be sent to Demand Forecast which in turn will utilize Sales Database to generate a Statistical Forecast and will be compared with the Sales Forecast to determine the Demand Forecast. This info is entered in APO (Advanced Planning & Optimizer) which will conduct mix integer optimization using capacity and other resources constraints to determine the Production Schedule. APO will provide the Production Planner information such as what, when and how to produce. This schedule will define prodcution divisions to produce the products in specific quantity at specific production cycle.
- Once a production schedule is generated a BOM is developed for Vendors to provide material for production. The schedule does not contain the Production sequence whereas the Production Planner minimize the changeover cost and produce a detail schedule with Production Sequence called a Planning driven Planning Process. The Production Department will produce based on the detailed schedule. Once the Production Process is finished, product will either be stored or ship out for replenshments. API will be supplied to each production site based on BOM generated through SAP.
- Production Wheel is used to simplify the Planning and Production Process and the Production Managers know exactly what is to be produced in the next production cycle. At component level, KPI, Delivery Performance, Supply Chain Responsiveness and Cost can be used as benchmark when comparing different systems. Most commonly used KPI‟s for delivery performance are fill rate, number of stock outs, cycle time and forecast measurements.
- Supply chain responsiveness describes about the ability of the supply chain to deal with the unexpected changes in raw materila supply, production capacity and maket demand. The supply chain cost has to be measured, suggests supply chain performance is the sum of order cost, management cost, material acquisition cost, planning cost, inventory cost, IT cost, return mangement cost and cost of goods sold. Assets and Inventory of a supply chain is another important measurement, in accounting common measurements for Assets and Inventory includes Asset Utilization, Inventory Turnover, Average Inventory Value and Average Inventory Level.
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