Supply Chain Management in AGP Pharma Limited

HAMNA HUMAYUN IM-21082

YUMNA MOIN IM-21083
FATIMA FEROZ IM-21087
FAKHRUNISA AMAN IM-21094
Contents
...................................................................................................................................................................................... 3
Acknowledgment .......................................................................................................................................................... 3
Supply Chain Management in AGP Pharma Limited ......................................................................................................... 4
What is Supply Chain Management (SCM)? ................................................................................................................. 4
...................................................................................................................................................................................... 5
How AGP Pharma's Supply Chain Process Works ......................................................................................................... 6
Planning..................................................................................................................................................................... 6
Procurement ............................................................................................................................................................. 7
Warehouse Management ......................................................................................................................................... 8
Logistics ..................................................................................................................................................................... 8
Principles of SCM at AGP Pharma ................................................................................................................................. 9
Applications Used in SCM ........................................................................................................................................... 10
Supply Chain Perspective of Inventory Management................................................................................................. 11
QUESTION/ANSWERS.............................................................................................................................................. 11
Conclusion ................................................................................................................................................................... 14
 Acknowledgment

I would like to express my sincere gratitude to the Supply Chain Department of AGP Pharma Limited for
their invaluable assistance and support in the completion of this report. Their willingness to share insights,
provide information, and offer a glimpse into the intricate workings of the pharmaceutical supply chain has
greatly enriched the content and depth of this project. The collaborative environment fostered by AGP
Pharma has made it possible to explore the complexities of supply chain management effectively.
Supply Chain Management in AGP Pharma Limited
What is Supply Chain Management (SCM)?

Supply Chain Management (SCM) is a crucial aspect of modern business practices, especially in industries
such as pharmaceuticals, where the effective flow of goods and services can significantly impact overall
operational efficiency. SCM refers to the management of the flow of goods and services, encompassing all
processes involved in transforming raw materials into final products. It involves systematic and strategic
coordination of various business functions that contribute to the production and delivery of goods or
services from the manufacturer to the end consumer.
How AGP Pharma's Supply Chain Process Works
The supply chain management process at AGP Pharma is structured to enhance efficiency and
responsiveness to market demands. This involves several interconnected steps, including planning,
procurement, warehousing, and logistics.

Planning
Planning is a foundational element in the pharmaceutical planning department, requiring a thorough
understanding of both market dynamics and internal constraints. The planning process at AGP Pharma
consists of the following steps:

1. Receive Yearly Budget: The process begins with obtaining the yearly budget from the finance
department, which outlines the financial resources allocated for various operations. This budget
serves as a guide for planning activities throughout the year.
2. Forecasting: Based on historical data, market trends, and budget constraints, the planning team
develops a 3-month forecast. This forecast estimates production needs and product demand,
enabling the company to align its resources accordingly.
3. Stock Inventory Check: The current stock levels of pharmaceutical products are examined to
identify any gaps. This step is critical to ensuring that production can meet anticipated demand
without significant delays.
4. Production Planning: A production plan is developed to meet forecasted demand. This plan must
align with budget constraints and consider factors such as production capacity and available labor.
5. Bill of Materials (BOM): For each pharmaceutical product, a BOM is generated, specifying the
components and raw materials required for production. This document is essential for accurate
procurement and inventory management.
6. Materials Inventory Check: A review of stock levels of materials and components is conducted to
identify shortages. This proactive approach helps avoid production delays.
7. Purchase Requisition: If materials or components are insufficient, purchase requisitions are
generated to order the necessary items. This step initiates the procurement process.
8. Lead Time Assessment: The lead time for each material or component is assessed, considering
supplier delivery times. Understanding lead times is crucial for effective production scheduling.
9. Subject to Arrival: Based on lead time assessments, materials that will not arrive in time for
planned production are identified. This allows for timely adjustments to production schedules.
10. Adjust Production Plan: If certain materials are delayed, the production plan may need to be
modified. This can involve adjusting quantities, schedules, or sourcing alternatives to accommodate
the situation.
11. Communicate: Relevant departments, such as procurement and production, are notified about
changes in the production plan and material requirements. Effective communication ensures that
all stakeholders are aligned.
12. Documentation: All changes, purchase requisitions, and production plan adjustments are
documented and tracked in the system. This documentation is vital for maintaining transparency
and accountability.
 13. Monitor: Continuous monitoring of the progress of material orders and their arrival is conducted.
This enables further adjustments if necessary to maintain production schedules.

Through this structured approach, AGP Pharma’s planning department efficiently manages production and
materials, ensuring that the company can meet demand while adhering to budget constraints.

Procurement
Procurement is a critical function within the supply chain management process, involving the acquisition of
goods and services necessary for production. The procurement process at AGP Pharma includes several key
steps:

1. Vendor Selection: A systematic approach is employed to select vendors. This process involves
assessing the marketing reputation of potential vendors through research and evaluation, which
includes reviewing industry reports, customer feedback, and online reviews.
2. Vendor Data Validation: To ensure reliability, vendor data undergoes a rigorous verification
process. This may include checking business licenses, certifications, and other legal documentation.
3. Competitive Pricing: The pricing offered by vendors is compared with industry standards to ensure
that it is competitive and aligns with the company’s budget constraints.

Steps in Procurement Process for Raw and Packaging Materials

The procurement process for raw and packaging materials follows a detailed workflow:

1. Identifying Material Needs: The concerned person in the supply chain planning department
identifies the need for materials based on sales forecasts and inventory levels.
2. Purchase Requisition (PR): A Purchase Requisition (PR) is raised in the procurement system,
formally requesting the needed materials.
3. Approval by Head of Department (HOD): The Head of Supply Chain Planning reviews and approves
the PR within a specified timeframe. If rejected, the concerned person rectifies and resubmits it.
4. Dashboard Population: Approved PRs are populated in the supply chain procurement dashboard
for further processing.
5. Request for Quotations (RFQ): The buyer issues RFQs to approved vendors, inviting them to submit
their quotations.
6. Collecting Quotations: The buyer collects at least three quotations from approved vendors,
ensuring competitive pricing.
7. Negotiations: If a vendor’s quotation is higher than expected, negotiations are conducted by the
Procurement Manager.
8. Purchase Order (PO) Generation: After vendor selection and negotiations, the buyer generates a
PO within a set timeframe.
9. Approval by Senior Manager Procurement: The PO is submitted for approval by the Senior
Manager of Procurement.
10. CEO Approval Notification: The system sends a notification to the CEO for final approval of the
purchase order.
 11. Free-of-Cost Material Approval: Purchase orders for free-of-cost materials are approved up to the
Senior Manager of Procurement.
12. Rejection of PO: In the event of a PO rejection, it is reverted to the buyer for necessary changes.
13. Final CEO Approval: Once the CEO approves the PO, it is considered final.
14. Communication to Vendor: The buyer communicates the approved PO to the vendor via email or in
person.

This structured procurement process ensures that AGP Pharma acquires the necessary raw and packaging
materials efficiently and effectively.

Warehouse Management
In a pharmaceutical warehouse, handling raw materials is a critical process to ensure product quality and
safety. The following steps outline the process of managing raw materials:

1. Receiving Raw Materials: The first step involves receiving raw materials from the procurement
department. This includes verifying the quantity and quality of materials delivered, which is crucial
for maintaining the integrity of pharmaceutical products.
2. Quarantine: Upon arrival, raw materials are placed in a quarantine area to prevent any potentially
contaminated or substandard materials from entering the production process.
3. Quality Control Testing: The quality control department samples and tests the raw materials to
ensure they meet the required quality and safety standards. This can include tests for purity,
potency, identity, and other relevant characteristics.
4. Quality Control Results: If the quality control tests are satisfactory, the materials are cleared for
further processing. If issues are found, the materials may be rejected, and appropriate actions are
taken.
5. Release Area: Approved materials are moved to a designated release area within the warehouse,
where they are stored under specific conditions (e.g., temperature-controlled areas) as required.
6. Dispensing to Production: When the production department requires specific raw materials for
manufacturing, they request the necessary quantities from the release area. Generally, a "first in,
first out" (FIFO) approach is followed to prevent expiry or degradation.

Throughout this process, strict documentation and record-keeping are maintained to track the movement
of raw materials, test results, and the status of each batch. This level of organization and quality control is
critical in the pharmaceutical industry to ensure the production of safe and effective medications.
Compliance with regulatory standards, such as Good Manufacturing Practices (GMP), is essential to
maintain product quality and patient safety.

Logistics
Logistics is a vital function in supply chain management, particularly in the pharmaceutical sector, where
timely and compliant delivery of products is essential. The logistics department at AGP Pharma is
responsible for several key functions:
 1. Inventory Management: Logistics professionals manage inventory levels efficiently, ensuring that
adequate stocks of finished products and packaging materials are available to meet production and
distribution demands.
2. Distribution and Transportation: The logistics department coordinates the transportation and
distribution of pharmaceutical products to wholesalers, distributors, retailers, and healthcare
providers. They ensure that products are delivered on time and in compliance with regulations,
including maintaining necessary temperature conditions for sensitive products.
3. Quality Control and Compliance: Logistics professionals work closely with regulatory bodies to
ensure that the transportation and storage of pharmaceutical products comply with quality and
safety standards. This includes maintaining product integrity, labeling requirements, and adherence
to Good Distribution Practices (GDP).
4. Cold Chain Management: For temperature-sensitive products, AGP Pharma maintains strict cold
chain management practices. This involves utilizing specialized transportation and storage solutions
to ensure that products are kept at required temperatures throughout the supply chain.
5. Documentation and Record Keeping: Accurate documentation is critical for traceability in the
pharmaceutical industry. The logistics department maintains comprehensive records of product
movements, including shipping documents, temperature logs, and compliance reports.
6. Risk Management: Identifying and mitigating potential risks in the supply chain is a key
responsibility of the logistics department. This includes assessing vulnerabilities related to
transportation, regulatory compliance, and potential disruptions.
7. Packaging and Labeling: Logistics teams ensure that products are packaged appropriately for
distribution. This includes compliance with labeling requirements and ensuring that packaging
protects products during transit.
8. Optimizing Efficiency: Logistics professionals work to optimize transportation routes and minimize
costs while ensuring timely deliveries. This can involve leveraging technology for route planning and
utilizing data analytics to improve decision-making.
9. Demand Forecasting: Collaboration with other departments, such as sales and marketing, is
essential for accurate demand forecasting. The logistics team uses data analytics to predict future
demand patterns and adjust inventory levels accordingly.
10. Collaboration with Suppliers and Customers: Building effective relationships with suppliers and
customers is critical for enhancing logistics operations. The logistics department engages in
continuous communication to address any challenges and ensure smooth product flow.

Through effective logistics management, AGP Pharma ensures that products reach their intended
destinations safely and efficiently, ultimately contributing to patient health and satisfaction.

Principles of SCM at AGP Pharma

AGP Pharma follows several key principles to guide its supply chain management practices. These
principles help the company enhance its operational efficiency and maintain a competitive edge in the
pharmaceutical industry:

1. Improve Inventory Visibility: AGP Pharma utilizes advanced inventory management systems and
RFID technology to enhance visibility across the supply chain. This allows for real-time tracking of
inventory levels and minimizes stockouts or excess inventory.
 2. Flexibility: The company embraces agile methodologies and dynamic inventory management
systems to respond quickly to changing market demands. This flexibility enables AGP Pharma to
adjust production schedules and procurement strategies as needed.
3. Customer Focus: AGP Pharma prioritizes customer satisfaction by employing customer relationship
management (CRM) systems. These systems help manage customer interactions, track orders, and
respond promptly to inquiries.
4. Innovation: AGP Pharma continuously seeks innovative solutions to enhance supply chain
processes. This includes adopting Internet of Things (IoT) technologies, blockchain for traceability,
and artificial intelligence (AI) for predictive analytics.
5. Collaboration: The company promotes collaboration among various stakeholders, including
suppliers, distributors, and customers. Collaborative platforms facilitate real-time information
sharing and improve overall supply chain efficiency.
6. Global Perspective: AGP Pharma maintains a global perspective in its supply chain operations. The
company utilizes global trade management systems to navigate complex international regulations
and optimize cross-border operations.
7. Risk Management: Implementing effective risk management tools and scenario planning allows
AGP Pharma to identify potential disruptions and develop contingency plans to mitigate risks.
8. Visibility: AGP Pharma employs track-and-trace systems and real-time monitoring technologies to
enhance visibility throughout the supply chain. This enables the company to respond swiftly to any
issues that may arise.

Applications Used in SCM

AGP Pharma employs various applications and technologies to support its supply chain management
principles:

 Inventory Management Systems: These systems enhance inventory visibility and enable real-time
tracking of stock levels. They help AGP Pharma manage its inventory effectively and reduce excess
stock.
 Agile Supply Chain Methodologies: By implementing agile methodologies, AGP Pharma fosters
flexibility in its operations. This allows the company to respond quickly to changing market
conditions and customer demands.
 Customer Relationship Management (CRM) Systems: CRM systems align supply chain processes
with customer expectations, enabling AGP Pharma to better manage customer interactions and
track orders.
 Predictive Analytics: The use of predictive analytics supports innovation and risk management by
providing insights into future demand patterns, allowing for proactive decision-making.
Supply Chain Perspective of Inventory Management
QUESTION/ANSWERS

1. How does the supply chain perspective influence inventory management at AGP Pharma?

The supply chain perspective at AGP Pharma ensures seamless coordination across various stages such as planning,
procurement, warehousing, and logistics. By maintaining alignment across these functions, AGP Pharma is able to
optimize inventory levels, meet production demands, and respond to market fluctuations. This integrated approach
helps to reduce stockouts, prevent overstocking, and ensures that inventory is available where and when needed to
meet production and distribution goals.

2. How do internal processes at AGP Pharma impact the management and flow of inventory?

Internal processes at AGP Pharma, such as production planning, stock inventory checks, procurement, and lead time
assessments, directly influence the flow of inventory. Efficient planning ensures that materials are available when
needed, while the procurement process ensures vendor selection, competitive pricing, and timely orders. Inventory
levels are closely monitored, and adjustments are made based on actual demand and lead times, ensuring that
production schedules remain uninterrupted.

3. What are the key roles and responsibilities of different departments in inventory management at AGP
Pharma?

 Planning Department: Responsible for forecasting demand, developing production plans, checking stock
inventory, and initiating purchase requisitions.
 Procurement Department: Handles vendor selection, approval of purchase requisitions, issuing RFQs,
negotiating prices, and finalizing purchase orders.
 Warehouse Management: Manages the receipt, quarantine, quality control, and storage of raw materials
and finished goods, ensuring compliance with safety and regulatory standards.
 Logistics Department: Oversees inventory management, transportation, cold chain management, packaging,
and ensuring timely delivery to customers.

4. What key performance indicators (KPIs) are used by AGP Pharma to measure the effectiveness of
inventory management?

AGP Pharma likely tracks KPIs such as:

 Inventory Turnover: Measures the rate at which inventory is used and replenished.
 Stockouts and Overstocking Rates: Indicators of inventory availability and management efficiency.
 Lead Time: The time taken from ordering materials to their arrival for production.
 Order Accuracy: Measures the accuracy of order fulfillment in terms of quantity and delivery.
 Cost of Goods Sold (COGS): Tracks the costs associated with inventory and production.
5. What inventory policies are in place at AGP Pharma to ensure optimal stock levels and prevent
stockouts or overstocking?

AGP Pharma follows a set of inventory policies such as:

 Safety Stock and Buffer Stock: These policies ensure that there is a reserve stock available in case of
unexpected demand spikes or supply chain disruptions.
 FIFO (First In, First Out): This inventory management method is applied to prevent inventory from becoming
obsolete or expiring.
 Inventory Monitoring and Documentation: Continuous monitoring of stock levels and regular updates in the
system ensure that inventory levels remain optimal.

6. How does AGP Pharma manage inventory at an aggregate level, and what strategies are used to
optimize stock across various departments?

At an aggregate level, AGP Pharma uses centralized inventory management systems to track stock across multiple
departments. This allows for visibility into overall inventory levels, enabling timely procurement and distribution of
materials. Strategies such as demand forecasting, stock inventory checks, and coordination across departments help
ensure that the right materials are available to meet production needs without overstocking.

7. How is inventory managed at the item level at AGP Pharma, and what criteria are used to prioritize
items for procurement or stocking?

At the item level, AGP Pharma relies on accurate forecasting, stock inventory checks, and the Bill of Materials (BOM)
to manage inventory. Items are prioritized based on production needs, criticality to the manufacturing process, and
lead time for procurement. Additionally, ABC analysis is likely employed to categorize inventory based on value and
usage frequency, helping prioritize procurement efforts.

8. What functions do safety stock, buffer stock, and other types of inventory play in AGP Pharma’s
supply chain, and how are they managed?

Safety stock and buffer stock are critical for mitigating risks such as supply chain disruptions or unexpected demand
increases. AGP Pharma likely manages these types of inventory by regularly reviewing stock levels and lead times,
ensuring that adequate reserves are maintained. The warehouse management team ensures that these stocks are
stored under optimal conditions and are rotated appropriately using methods like FIFO.

9. What are the key inventory-related costs at AGP Pharma, and how are these costs controlled to
maintain cost-efficiency?

Key inventory-related costs include:

 Holding Costs: Costs associated with storing inventory, including warehousing and handling.
 Ordering Costs: Costs of placing and receiving orders, including transportation.
 Stockouts and Overstocking Costs: Costs incurred when there is a shortage or excess of inventory. AGP
Pharma controls these costs through efficient inventory management practices, such as accurate demand
forecasting, regular stock checks, and negotiations with vendors to ensure competitive pricing.
10. Does AGP Pharma use centralized or decentralized inventory planning, and what are the advantages
and challenges of the chosen approach?

AGP Pharma uses a centralized inventory planning approach, as indicated by its system of monitoring inventory
across various departments and coordinating procurement activities. This approach allows for better visibility, more
efficient use of resources, and easier management of stock levels. However, it may face challenges related to
flexibility and responsiveness, especially in the case of urgent supply needs or unexpected demand fluctuations.

11. How does AGP Pharma use Pareto analysis (ABC analysis) to categorize inventory items and prioritize
procurement or stocking decisions?

AGP Pharma employs ABC analysis to prioritize inventory items based on their value and usage frequency. Items
classified as A are high-value and critical, requiring close monitoring and frequent procurement, while B and C items
are lower in value and can be managed with less frequency. This analysis helps AGP Pharma focus on the most
important inventory items and optimize procurement efforts.

12. How does AGP Pharma calculate the Economic Order Quantity (EOQ) to determine the optimal order
quantity for inventory?

The EOQ is calculated by AGP Pharma using the standard formula that considers ordering costs, holding costs, and
demand. By calculating EOQ, AGP Pharma ensures that it orders the optimal quantity of materials, balancing the
costs of ordering and holding inventory to minimize total costs.

13. What processes or models does AGP Pharma use to determine how much inventory to order and
when to place orders to maintain efficient operations?

AGP Pharma uses a combination of forecasting, demand planning, and lead time assessments to determine order
quantities and timing. By analyzing historical data, market trends, and stock levels, the planning department can
decide when and how much to order to prevent stockouts or excess inventory. EOQ and safety stock calculations are
used to refine these decisions.

14. How are warehouse operations structured at AGP Pharma to ensure efficient inventory
management, including inventory flow, storage methods, and best practices?

Warehouse operations at AGP Pharma include several key steps:

 Receiving and Quarantining: Raw materials are inspected for quality before being released for production.
 FIFO: Inventory is managed using FIFO to ensure that older stock is used first, preventing expiration or
degradation.
 Temperature Control and Storage: Sensitive products are stored under optimal conditions, including cold
storage for temperature-sensitive items.
 Documentation: Strict record-keeping is maintained for traceability and compliance with regulatory
standards such as Good Manufacturing Practices (GMP).
Conclusion
The insights gained from studying the processes and principles of supply chain management at AGP
Pharma Limited highlight its critical role in the pharmaceutical industry. The integration of planning,
procurement, warehousing, and logistics underscores the importance of a well-coordinated supply chain in
ensuring the timely delivery of high-quality products to customers.

The experience at AGP Pharma has equipped us with essential professional skills, including effective
communication, problem-solving, and adaptability in a dynamic environment. The lessons learned will
serve as a foundation for our future endeavors in supply chain management and related fields.

We express our sincere gratitude to AGP Pharma for this opportunity to learn from their exemplary supply
chain practices. The knowledge gained from this experience will undoubtedly contribute to our
professional growth and development in the field of supply chain management.

-----Thank you