Supply Chain Management (SCM) known as the perform of running the flow of goods, services and information in the length of a supply chain from suppliers, manufacturers, wholesalers, distributors, stores, on down to consumers and end users. SCM comprises business strategy, information flow, and system compatibility. Supply chain management combine skill and knowledge that runs into developing the approach of company to finds the raw elements it requires to create a product or service, makes that product or service and distributes it to consumers (“Supply Chain Management”).
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Supply chain management can do many things. However, it will have little meaning if it does not transform to effectual management for pharmacy. The problem is the lightning rapidity of pharmacy’s professional is changing. Nowadays, pharmacy’s professional no longer only add up medicines into packages but they also analyze patients and managing pharmacy activities whereas technicians and computerization accomplish the packaging and labeling. By the arrival of medication therapy management, pharmacy’s professional are becoming much more experimental and no longer doing conventional pharmacy operations (“Pharmacy supply chain project”).
Actavis have implemented supply chain management for years, but it is never sure that the executives of these organizations understand the difficulty of the SCM concept, particularly with high opinion to pharmaceuticals. Typically, their spotlight is on standardization for equal pharmaceuticals and supplies and member fulfillment. Unfortunately, “one-size-fits-all” method become their focus results a for member organizations through volume-purchasing agreements that profit lower-volume organizations in particular (Actavis, 2006).
So far, Actavis have an excellent opportunity to reinvent themselves. This pharmaceutical industry needs to redesign its accountability and make new relationships with wholesalers, drug manufacturers, and individual customers. Services that offered by them must be prioritized internationally and adapted for individual accounts, conditional on a customer’s requirements (Actavis, 2006).
As expenses rise and payment declines, Actavis are challenged to find innovative ways to improve services cost-effectively without cooperating quality services are preferably suited for cost control. The problem is costs cannot be solved only by decreasing expenditures, because doing so can guide to inappropriate outcomes and higher total costs. Actavisought to evaluate their processes for providing services and resolve where those processes can be developed to boost cost effectively.
Page 2 Improving The Supply Chain Management At Actavis Through Implementation Of An Integrated Erp System Essay
Accurate value can be optimized if Actavis increase knowledge in collaborating with other pharmaceutical industry to extract their own information and then offer factual benchmarking information for evaluation. Actavisnecessitate opposing aggregation of information and data by pharmaceutical industry type or size and as an alternative concentrating on benchmarking business segments. Service approaches observed could start with an organization’s middles of quality and with high-quantity or high-expense pharmaceutical care.
Actavis have to give awareness to their customer’s needs, in spite of the variety of their needs, and give supportable benefit to the pharmaceutical activity. Personally, this extra value will happen throughout expanding partnerships with healthcare and mutually developing supply chain management that is surrounding.
Solutions to SCM issues
To obtain successful SCM, O’Brien and Springman (2004) suggests that companies should balance supply and demand since focusing entirely on the supply side may result in unnecessary capital expenditures, inventory investments or suboptimal solutions. Therefore, to best optimize the total supply chain, supply chain managers must have a detailed understanding of customer demand and then to manage this demand patterns of their customers
Concerning the suggestion, Actavis can utilize the best part of supply chain management by line up an organization’s internal and external systems with those of their suppliers and customers to advance the stream of products, services, data, and duty across the supply chain. Actavis have a problem from a lack of consistency, tardiness in applying mechanization technology and a lack of high-quality information to support significant strategic decisions.
Development in these fields can bring Actavis to outstanding pharmaceutical management, improved inventory management, better seller associations, more satisfied patients, and more successful workflow for company’s employees. Supply chain management becomes more effective with improved planning. Effective forecasting will optimizes Actavis’s supply chain operations.
Within ERP software, some SCM appliances are dependent ahead the type of data that is supplied in the most quantity. Supposedly, Actavis could bring together the data they need to nourish the SCM functions from inheritance systems, but it can be frightening to try to obtain that data streaming on a rapid, dependable root from all the areas of the company. ERP is the beating force that combines all that data collectively in a particular application and SCM appliances profit from having a particular main foundation to move to for modern information (Actavis, 2005).
Actavis should install ERP first before install SCM applications. By ERP projects, they are becoming organized. Certainly, ERP is high-priced and complicated. However, Actavis should always try to supply their SCM functions by doing ERP first. Most recently, ERP sellers generally have SCM modules, thus doing an ERP development possibly an approach to achieve success effectively. Actavis should make a decision if these products meet their requirements or if they require a more particular system (Actavis, 2005).
Literature Review of ERP System
Enterprise Resource Planning (ERP) system put together all information and processes of a company into a single integrated system. A standard ERP system applies several components of computer software and hardware to accomplish the integration. A main component of most ERP systems is the value of a single, integrated database to collect data for the diverse system modules (“Enterprise Resource Planning”).
In the beginning, ERP system involved systems designed to set up the operation of company’s resources. Conversely, nowadays, ERP systems have wider capacity in their application. In general, ERP system challenges to deal with all fundamental functions of a company, despite the organization’s business or agreement. Business, non-profit organizations, non-governmental organizations, governments, and other large organizations operate ERP systems (“Supply Chain Management Research Center”).
By deeper observation at ERP systems, we can find that the important factor is the assimilation of data from all aspects of an organization. The ERP system usually operates on a single database with multiple software modules as long as the diverse business functions of a company to complete this. Remarkably, some companies decide to merely put into practice portions of an ERP system and develop a border to other ERP or separate systems for their other application requirements (“Enterprise Resource Planning”).
New Situation at Actavis after used integrated ERP Implementation
By using ERP software among other things, Actavis can integrate the data of previously dissimilar applications. The suspicions of Actavis about keeping employee numbers in management across multiple systems are gone by this implementation. ERP implementation standardizes and reduces the number of software areas that necessary in larger companies. ERP implementation shows that spanned multiple systems are much easier. Moreover, it acceptable for the improvement of higher-level analysis functions facilitating larger companies to recognize developments in the company and make suitable regulations faster (Actavis, 2005).
Analysis of ERP at Actavis
Justification of Change
In Actavis pharmaceutical company, the actual and expected rates of consumption for each of the drugs need to be compared next to the recent stock levels to approximate how long supplies will survive. The amounts of drugs needed to deal with the obtainment and supplier lead times must also be analyzed and included in the obtainment request.
By ERP system, the probable return on investment (ROI) gives the cost rationalization and intention for investing. There are scientific profits over and above insubstantial advantages in the ERP system investment decision. The proven benefits have an end result influence on productivity and benefit income. By evaluating Actavis implementation before and after applying ERP system, the scientific and the insubstantial advantages of an ERP system can be observed. The most important scientific reimbursement includes decreasing in inventory, material costs, labor and overhead costs, on top of developments in customer service and trades (“Enterprise resource planning”).
By using ERP system, Actavis pharmaceutical group may find itself with many software applications that inform other companies and interface successfully. Computer protection is built-in inside an ERP system to defend next to both outsider and insider crime, such as industrial spying and fraud. A data-interfering scenario can engage a radical changing a Bill of Materials to put sabotage. In addition, ERP system protection assists to avoid mistreatment (“Enterprise resource planning”).
All concepts of Front office, Customer relationship management, Back end, and Supply chain can be combined through an ERP system, even though some systems have differences in extensiveness and efficiency. It can be relatively difficult for a company to manage these matters without an ERP system that integrates all these.
Cost Benefit Analysis
The major principle of cost benefit analysis is to offer helpful information to decision makers by deciding whether the net value of goods and services that produced increases or decreases when a definite project is assumed. Actavis should approach the analysis from a societal perspective, whereby all costs and benefits-direct and indirect, as well as measurable and non-measurable are considered, or from a budgetary perspective, whereby only costs and benefits with direct effects on short-term budgets are included.
In this case, Actavis must decide whether to put into practice a pharmaceutical care services program. As a result, their appropriate perspective is the financial or institutional method. This method to cost benefit analysis is affected only with the direct costs/benefits used up or increased by the budgetary sponsor.
Actavis pharmaceutical company gets the benefit from the extensive cost advantage over their branch office in all over the world. On the other hand, against the accepted opinion, the Actavis cost advantage expands healthy further than low labor costs and guarantees that the cost reduction process is a constant process. Those are many factors, which conducted by Actavis to obtain cost advantage, such as:
Capital and Resources Efficiency:
Actavis pharmaceutical companies are capable to decrease the sincere capital cost of arranging a development to produce equipment and high-class local technology or manufacturing skills nearby. Actavis have been competent to set up standard plants at about 50 per cent lower capital costs.
Reduce filing costs:
Usually, generic filings require complex technical and legal documentation, which takes about 8 quarters. However, the cost of filing in Actavis is at least 50-60 per cent lower compared to the other companies.
Actavis have to work continuously because the have to face the great competitive pharmacy market and lack of pricing power force. By doing this, Actavis can obtain better profits and more cost effective manufacturing processes. In general, the customer and supplier allocate such advantages in an encoded ratio, consequently giving the profit of permanent cost reduction.
Labor cost advantage:
Actavis has a great talent group of skilled pharmacists. Labor costs in Actavis offer an obvious cost advantage.
Actavis pharmaceutical group are very strong in chemistry driven drug innovation research activities, for example medicinal chemistry, organic synthesis, analytical chemistry and process chemistry etc. Actavis combines these strengths with low cost of operations, experienced systematic workforce, and capability in IT to present a powerful value suggestion to pharmacy companies internationally.
Those are some approaches to evaluate the financial aspects of medical involvements. Comparability is important if cost-effectiveness analysis is to help decision makers assess transactions and choose among alternatives. Levels for measuring comparative costs and value of medical diagnostics and interventions must be suitable, dependable, and approachable to modify. Actavis pharmaceutical group could downplay the cost of medications by announcing an evaluation of medicine costs.
ERP Implementation Plan
By their broad scope of application within the Actavis, ERP software systems depend on some of the largest bodies of software ever written. Applying such a large and complicated software system in Actavis Company accustomed to engage a soldier of analysts, programmers, and users. As a minimum, it was until the development of the Internet allowed external consultants to increase entrance to company computers with the intention of installs standard updates.
Choosing and applying a new ERP system, and the process transformation that work with it, is conclusively a difficult responsibility. Despite of Actavis size and supposed capital, an ERP system implementation is not something that should be managed without a great agreement of reasonable setting up (“Enterprise resource planning”).
However, with no professional help, ERP implementation can be a very high-priced project for bigger companies, particularly international companies. On the other hand, companies that have specializing in ERP implementation, can accelerate this process, and can accomplish the task concretely. Commonly, ERP systems are directly tied to supply chain management and logistics automation systems. As we know, supply chain management software can expand the ERP system to comprise connections with suppliers (“Supply Chain Management Research Center”).
Usually, companies look for the help of an ERP seller or of intermediary consulting companies to apply ERP systems. ERP systems have three levels in consulting. A systems architect plans the general dataflow for the activity as well as the future dataflow preparation. A business consultant learns a company’s recent business processes and harmonizes them to the matching processes in the ERP system, then “configuring” the ERP system to the company’s requirements. Frequently, technical consulting contains programming. Most ERP sellers permit adjustment of their software to go well with the business requirements of their consumer (“Supply Chain Management Research Center”).See More on Actavis, Problem