Inventory Management (Interview Based)

CONTENTS

1-    History of GSK (GalxoSmithKline

2-    Inventory management

a.     Introduction of Inventory management

b.     Objectives of Inventory management

c.      Inventory management process used by GSK

d.     Explanation of dataflow diagram

e.      Inventory management system used by GSK

f.       Inventory management studied during course

3-    Our experience at GSK

4-    Conclusion

HISTORY OF GLAXO SMITH KLINE (gsk)

ORIGIN OF GSK:

GSK means GlaxoSmithKline Pharmaceutical Company. Glaxo being a self representative Company merged with Wellcome in 1995 to form Glaxo Wellcome. Further SmithKline & Beecham merged. Afterwards Glaxo Wellcome and SmithKline Beecham merged and formed GlaxoSmithKline. Now they have acquired Cooper and Stiefel.

VISION:

GlaxoSmithKline vision is exciting:

“The opportunity to make a difference to the lives of billions of people”.

MISSION:

Their mission is to advance the quality of human lives by enabling people to DO MORE-FEEL BEETER-LIVE LONGER.

WORLD OF GSK:

GSK employs over 99000 people in 114 countries. They have manufactured over 4 billion packs per year in 28000 different presentations, which are then supplied to over 160 markets. They currently make more than 100 prescription medicines and vaccines. GSK is the global leader in respiratory, anti-virals and vaccines. Every second GSK distributes more than 35 does of vaccines.

EXTRA:

The manufacturing site visited by us has occupied 26 acre land but now 4 to 5 acre is active. They are running 2 plants BPM (Basic Pharma Manufacturing) and the other one is Cephalosporin Plant in which cephalosporin is a life saving drug and is an active ingredient.

GSK’S HEAD & PERSONNEL’S

CEO is Andrew Witty 

Site Head Dr. Amjad

Planning Manager Mr. Shahzad Akhtar

Finance Manager Mr. Amjad

Assistant Finance Manager Mr. Azeem

GSK believes in mending lives and healing hearts.

INVENTORY MANAGEMENT

1- INTRODUCTION:

Inventory means stock/goods where as management means coordinating and oversight the work activities of others that their activities are completed efficiently and effectively. So we can say it is managing of stock in a systematic way.

Successful inventory management involves creating a purchasing plan that will ensure that items are available when they are needed (but that neither too much nor too little is purchased). Manufacturing businesses will general call its inventory as raw material, work in process and finished goods.

2- OBJECTIVE OF INVENTORY MANAGEMENT:

The objective of inventory management is to provide continuous production, sales, and customer-service levels at the minimum cost. In business management, inventory consists of a list of goods and material held available in stock.

3- INVENTORY MANAGEMENT PROCESS USED BY GSK:

1-    Stock Policies > Sorting materials categories.

2-    Safety Stocks > Buffer stock which means to plan for extra stock in order to avoid shortage e.g. 1000 units are produced and 100 units are wasted/damaged so in that case should plan before for safety stock that will cover the wasted/damaged stock.

3-    ABC Classification > means 75% high value and comes under A classification, 10% B classification and remaining C classification which is given to different stock at GSK.

4-    Manage Stock forward cover > means Forecasting or planning out future demand.

4       PROCESS FLOW AT GSK:

Commercial demand

NRQ

RMS

MPS

BOM                                                 RCCP

MRP                                     

                                                                            INV

                                                          Supply review

FPO                                                        FPO

                   ASP meeting

      PO                                                           SO

Electronic ASP transfer

EXPLANATION OF DATA FLOW DAIGRAM

     Net Requirement: Under net requirement stock requirement is calculated by 2+22 months means 2 months are frozen in which order is placed. Where as in 22 months material is planned & fluctuation occurs.

     RMS: RMS stands for Release Management System which is used to evaluate cost through software e.g. JD Edward and not only forecast cost but also display the available and more needed stock.

     Production plan: In which production is planned on daily, weekly, monthly and annually.

     MPS: MPS stands for Master Production Schedule and is same like that of 22 months in which material is planned and fluctuation occurs.

     MRP: Means material resource planning which is used to plan the current resources or current requirements and here with controlled by ERP (enterprise resource planning) software.

     SUPPLY REVIEW:

      Capacity, DSPL (disposable location) which are decided in meeting, slow moving items e.g. turmeric used in cooking same like some child items included in medicine  and rejected items are reviewed by senior managers in order to assure that supply of resources are being handled properly.

     Capacity Plan: In which demand is forecasted on capacity basis means if maximum stock is required/demanded maximum is provided

     ASP: ASP stands for Agreed Supply Planning in which supply agreement is made from customers.

    ELECTRONIC ASP TRANSFER: Agreed supply planning controlled through electronic process which includes JD EDWARD software.

    FPO:  Refers to firm planned on which includes SO (shop order) and PO (purchase order) in which sale and purchase are processed.

    RCCP: Rough cost capacity plan in which rough idea of cost is given.

    BOM: Means bill of material which is used in warehouses as an evidence that required material is being collected on time.

5- INVENTORY SYSTEM USED BY GSK:

GSK neither uses LIFO nor FIFO or AVERAGE method. Why because GSK is a Pharmaceutical Company and prefers FEFO for managing their stock.

FEFO means First Expire First Out as name shows that it is concerned with expiry and due to medicines they have to adopt FEFO method because expiry of medicines matters a lot. Secondly they use ERP (Enterprise Resource Planning) which is a software used to manage inventory. This sort of software not only reports before the stock is going to end but also updates stock Receiving, Issuance and deliverance.

Following is the format of keeping stock at GSK.

GSK Pakistan Limited

  Stock Status Report

  FOR THE PERIOD 2010/05/01 TO 2010/05/31                                                                                                                                                                                                                           Page: 0001

                                                                                                          Date: 2010/05/31

                                                                                                          Time: 12:13:11

                                                                                                          Code: BAMD04

S. no	ITEMS	OPENING	DESCRIPTION	TOTAL RECIEPTS	REJECTED	MISC ISSUED	TOTAL ISSUED	BALANCE
1	11201	Nil	A	32965	12	32953	32965	0.00
2	11202	Nil	B	47206	8	47198	47206	0.00
3	11203	Nil	C	254427	279	250368	250647	3780
4	11204	Nil	D	78281	94	77977	78071	210
5	11205	Nil	E	42056	270	29918	30188	11868
6	11206	8400	F	101140	575	49875	50450	59090