Supply Chain Management of Square Pharmaceutical Ltd free essay sample

Supply chain management (SCM) is the oversight of materials, information, and finances as they move in a process from supplier to manufacturer to wholesaler to retailer to consumer. Supply chain management involves coordinating and integrating these flows both within and among companies. It is said that the ultimate goal of any effective supply chain management system is to reduce inventory and Communication is the transmission of information from one group or individual to another. Business communication is very essential now days to make contacts with people and for trading. Whenever a business wants to make a good business proposal or introduce a new concept, communication plays a very big role. Communication also helps in the conveying of message among the different employees or customers of the organization. Communication helps to direct employees to attain their goals without any misunderstanding or confusion. This paper discusses the different roles of supply chain management, different role ways of supply chain management . We will write a custom essay sample on Supply Chain Management of Square Pharmaceutical Ltd or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page The studye also tried to find out what is the problem and shortage of SQUARE’s supply chain management system to improve themselves. Keywords: Supply chain, Operations process, Distribution policy, communication process, Forecasting, Planning *Economic Editor, Daily Ittefaq and Adjunct Faculty, Atish Dipankar university of Science and Technology Introduction Supply chain management (SCM) is the oversight of materials, information, and finances as they move in a process from supplier to manufacturer to wholesaler to retailer to consumer. Supply chain management involves coordinating and integrating these flows both within and among companies. It is said that the ultimate goal of any effective supply chain management system is to reduce inventory (with the assumption that products are available when needed). As a solution for successful supply chain management, sophisticated software systems with Web interfaces are competing with Web-based application service providers (ASP) who promise to provide part or all of the SCM service for companies who rent their service. Supply chain management flows can be divided into three main flows: The product flow The information flow The finances flow SQUARE today is a name considering Pharmaceutical world, as well as synonym of quality- be it toiletries, health products, textiles, Agro Vet products, information technology and few more. But in the year 1958 ,the company was originally started with Pharmaceuticals. Now that small company of 1958 is a publicly listed diversified group of companies employing more than 12,000 people. The current yearly group turnover is more than 300 million USD. All these were possible due to Samson H Chowdhury’s innovative ideas, tireless efforts, perseverance and dedication with self confidence which contributed to his successful achievements. The product flow includes the movement of goods from a supplier to a customer, as well as any customer returns or service needs. The information flow involves transmitting orders and updating the status of delivery. The financial flow consists of credit terms, payment schedules, and consignment and title ownership arrangements. There are two main types of SCM software: planning applications and execution applications. Planning applications use advanced algorithms to determine the best way to fill an order. Execution applications track the physical status of goods, the management of materials, and financial information involving all parties. Some SCM applications are based on open data models that support the sharing of data both inside and outside the enterprise (this is called the extended enterprise, and includes key suppliers, manufacturers, and end customers of a specific company). This shared data may reside in diverse database systems, or data warehouses, at several different sites and companies. By sharing this data upstream (with a companys suppliers) and downstream (with a companys clients), SCM applications have the potential to improve the time-to-market of 2 products, reduce costs, and allow all parties in the supply chain to better manage current resources and plan for future needs. Increasing numbers of companies are turning to Web sites and Web-based applications as part of the SCM solution. A number of major Web sites offer EProcurement marketplaces where manufacturers can trade and even make auction bids with suppliers. Basic research question of the study is whether Square Company as a whole can manage supply chain properly? Definition Of Communication Or Sharing Information A modern communications system is first concerned with the storing, processing and sometimes storing of information before its transmission. The actual transmission then follows, with further processing and the filtering of noise. (KENNEDY, 1998) Communication must include both the transference and understanding of meaning. (ROBBINS, 2003). Communication is the transmission of information and meaning from one individual group to another. (GUFFY, 2000). Communication means encoding the idea or concept and getting the feedback of how the receiver is decoding the idea or concept. Therefore without feedback no communication will happen or exist. (HUSSAIN, 2005) We said communication is â€Å"how we share any information with others†. So, we can define communication as a transfer of meaningful message to the receiver with the hope to receive a feedback. AN Overview Of SUPPLY CHAIN MANAGEMENT Supply Chain Management as a concept has been widely accredited to a Booz Allen consultant named Keith Oliver who in 1982 defined the concept as follows: â€Å"Supply chain management (SCM) is the process of planning, implementing, and controlling the operations of the supply chain with the purpose to satisfy customer requirements as efficiently as possible. Supply chain management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point-of-origin to point-of-consumption†. This seems to be the earliest published definition and therefore places the concept of Supply Chain Management at approximately 26 years old. We can see that â€Å"Supply Chain† without the â€Å"Management† is referenced in the definition, so we know that the general idea of a supply flow through a business was recognized prior to Olivers definition. What Oliver really captured was the conscious and deliberate control, integration, and management of the business functions contributing to, and affecting that supply flow through the business, for the purpose of improving performance, costs, flexibility etc, and for the ultimate benefit of the end customer. 3 The concept has been defined in simpler terms since that time and is often captured with five words: Plan, Source, Make, Deliver, and Return. Both of these definitions allude to a manufacturing origin but of course Supply Chain Management is as relevant to service, retail, distribution, and most other types of companies as it is to manufacturing. The area of Supply Chain Management has enjoyed a meteoric rise in significance over the last twenty to thirty years as businesses have tried to establish advantage, and felt the pressure to keep up, in an increasingly homogeneous and competitive global business environment. Japanese manufacturing companies brought great emphasis to the area of Supply Chain Management in the 1980’s and early 1990’s. Awareness of Supply Chain Management tools such as â€Å"Just In Time† and â€Å"Kan Ban† spread rapidly and became globally accepted best practice amongst volume manufacturing businesses. Western businesses raced to keep pace with a rapidly changing environment, dragging their supply bases, and sometimes employees behind them. At the same time companies like SAP and Oracle were developing the complex IT systems that would be essential for enabling large complex businesses to effectively integrate and managing the sub areas that combined to make complex supply chains. Of course the elements of Supply Chain Management have always existed in business. What changed was the willingness of businesses to recognize the inter-relationship of the various sub areas, and to pursue the benefits generated through coordination and integration, both from a strategy / planning perspective and operationally. The sub areas comprising a supply chain include: Forecasting/Planning Purchasing/Procurement Logistics Operations Inventory Management Transport Warehousing Distribution Customer Service Today, Supply Chain Management is an accepted term in our business glossary. However, it is difficult to find a standard model of Supply Chain Management operating in the business community. We continue to see variations on the theme. Some business will refer to and manage their supply chains in a coordinated and all encompassing fashion, including all of the sub areas defined above. Others will integrate some elements of the supply chain, for example purchasing and logistics and call this Supply Chain Management. Many will refer 4 conceptually to Supply Chain Management, but only address it specifically at the general management level. One area of confusion arises because Supply Chain Management is both a horizontal business function (i. e. managing the supply chain in a business), and a vertical industry sector (i. e. businesses involved in managing supply chains on behalf of their clients). A company like TDG operates as a supply chain services provider, within the vertical supply chain industry sector. But each of the clients serviced by TDG will employ supply chain staff within their business operating on a horizontal basis across their organization. The â€Å"supply chain industry† sector as the vertical is often referred to, is largely restricted to transport and storage type operations. Distributing products on behalf of clients. Whereas, the horizontal supply chain functional areas encompass the entire supply chain spectrum across a business. Supply Chain Management has matured from a compelling method of deriving competitive advantage, to a â€Å"ticket to ride†. Its is now a baseline expectation for any company wishing to compete in the 21st Century, and with that the professions and occupations comprising Supply Chain Management are now firmly entrenched in the armory of essential business executives. The sub areas comprising Supply Chain Management are defined further below: Forecasting / Planning All business needs to forecast and plan. To look forward and predict what will be required in terms of resources and materials in order to deliver their product or service to their customer in a timely manner. In this area we find activities such as demand planning, inventory planning, capacity planning etc Purchasing / Procurement The commercial part of the supply chain is purchasing. Otherwise it’s known as Buying or Procurement. This is where a business identifies suppliers to provide the products and services that it needs to acquire in order to create and deliver its own service or product. Costs and terms of business are negotiated and agreed and contracts created. Thereafter the suppliers’ performance and future contractual arrangements will be managed in this area. This area of the business is sometimes referred to as purchasing, sometimes, procurement, buying, sourcing, etc. However, all titles relate to the acquisition of materials and services. The difference between purchasing and procurement is largely academic as, whilst there is a theoretical difference between them, businesses use the titles interchangeably for the two variations of activity. You will for example find manufacturing companies with purchasing departments that are actually doing procurement roles, and you will find service based organizations with 5 procurement departments but in fact doing purchasing roles. In its strictest definition purchasing is limited to the actual commercial transaction and no more, whilst procurement includes the wider elements of the acquisition, including logistics and performance management. Logistics In its strictest definition logistics refers to the movement of goods or materials, whether inbound, through, or outbound. In some manufacturing businesses forecasting and planning will be found within a logistics department, in other businesses logistics will be exclusively managing the movement and transportation of goods and materials. Operations Operations are a general management type activity ensuring that a business uses its resources effectively to meet its customer commitments. Usually referring to the conversion activity of the business, i. e. the point where the acquired resources and/or materials are converted into the product or service that the business is selling on to its customers. Inventory Management Sometimes found within Logistics Management, or Demand Planning or Operations, Inventory Management typically takes responsibility for both the replenishment of physical stock, the levels of physical stock, and of course storage and issue of physical stock. Stock may be materials and goods sourced from suppliers, work in progress, or finished goods awaiting sale/dispatch. Transport Transport management can involve the control of a company owned fleet of vehicles, collecting, moving, or delivering materials and goods, or managing transport services sourced from a 3rd party transport provider. Warehousing Like transport management, warehousing can involve the control of company warehouse space, or managing warehouse space sourced from 3rd party providers. 6 Distribution Distribution involves the physical distribution of the company’s products to the sub-distributor or directly to the customer base. Typically this is a combined transport and warehousing operation, responsible for storing and delivering products to meet the customer’s needs. Again this combined activity will often be placed with a 3rd party service provider who will control and implement the processes. Customer Service Most people do not recognize customer service as part of supply chain management, but it is in fact the final piece in the jigs aw. Having taken the business inputs, created and delivered a product or service, the final element is to check that the customers expectations were achieved, and manage any actions necessary to meet your customer obligations and commitments. Supply Chain Management System In Square: For any organization supply chain management communication process is very important. At present every company is trying to grab the latest supply chain management communication method to get the best benefit. Before going to discuss the supply chain management communication system of SQUARE I want to discuss a little about the company. An Overview Of SQUARE: The company was founded in 1958 by Samson H. Chowdhury along with three of his friends as a private firm. It went public in 1991 and is currently listed on the Dhaka Stock Exchange. Square Pharmaceuticals Ltd. , the flagship company, is holding the strong leadership position in the pharmaceutical industry of Bangladesh since 1985 and it has been continuously in the 1st position among all national and multinational companies since 1985. Square Pharmaceuticals Ltd. is now on its way to becoming a high performance global player.. The quality of SQUARE and environmental concerns are clearly stated through declared policies . In the year of 1992 it had only 80 million turnovers but in the year 2004 it was around 2400 million. 7 SQUARE has 3 Strategic Business Unit: Pharmaceuticals Consumer Brands Agro Business Crop Care Public Health Animal Health SQUARE has 4 subsidiaries: SQUARE Formulations Ltd. SQUARE Trading Ltd. Square Pharmaceuticals SQUARE consumer goods LTD 8 CORPORATE OPERATIONAL RESULT Figure in thousand : BDT 2006-07 2005-06 2004-05 2003-04 2002-03 Turnover (Gross) 8,711,0357,085,553 6,199,1355,482,0885,482,088 Value Added Tax 1,210,223 995,648 867,088 760,536 663,892 Turnover (Net) 7,500,8116,089,905 5,332,0474,721,5524,065,851 Gross Profit 3,232,3642,564,503 2,172,5931,906,5921,466,282 Net Profit before Tax 1,722,9061,533,043 1,513,0191,151,636 929,604 Net Profit after Tax 1,303,2431,165,865 1,255,848 970,044 764,885 Shareholders Equity 7,333,2586,402,015 5,568,7904,590,1423,851,098 Total Assets 10,486,9409,298,987 7,907,9336,021,4975,164,320 Total Bank 2,536,5242,334,925 1,902,331 988,6111,070,163 Borrowings Total Current Assets 3,682,5114,031,685 3,242,5022,016,0561,441,552 Total Current 2,555,5662,260,755 1,949,9491,250,6761,247,967 Liabilities Current Ratio 1. 44 1. 78 1. 66 1. 62 1. 16 Source: www. SQUARE-bd. com Vision of SQUARE To realize the mission SQUARE will: 1. Endeavour to attain a position of leadership in each category of its businesses. 2. Attain a high level of productivity in all its operations through effective and efficient use of resources, adoption of appropriate technology and alignment with our core competencies. 3. Develop its employees by encouraging empowerment and rewarding innovation 4. Promote an environment for learning and personal growth of its employees 5. Provide products and services of high and consistent quality, ensuring value for money to its customers. 6. Encourage and assist in the qualitative improvement of the services of its suppliers and distributors. 7. Establish harmonious relationship with the community and promote greater environmental responsibility within its sphere of influence. 9 Value of SQUARE 1. 2. 3. 4. 5. Quality Customer Focus Fairness Transparency Continuous Improvement Mission of SQUARE SQUARE’s mission is to enrich the quality of life of people through responsible application of knowledge, skills and technology. SQUARE is committed to the pursuit of excellence through world-class products, innovative processes and empowered employees to provide the highest level of satisfaction to its customers. The Role Of Supply Chain Management Sharing Information For any organization Supply chain management and sharing information is the mortar that holds organizations and the entire knowledge. Without sharing, information could not be processed or exchanged; words and data would remain isolated facts. So it is easily understandable that the success of SQUARE depends a lot on their supply chain management system. The present success of SQUARE is the result of their successful supply chain management system. With the help of well organized SCM system SQUARE takes the satisfaction from their suppliers and also from the consumers. SQUARE can transmit properly what they are looking from the suppliers and marketers; SQUARE also makes a friendly environment with their sharing process. To tell about the role of sharing we can remember another example, when the Sara Lee Corporation wants to determine customer product satisfaction, it conducts a survey. The survey is useless, however, until the data are analyzed and the results shared to management. Only when words and data are translated into meaningful knowledge and shared to decision-makers do they become valuable to the economy. So it is very clear that role of sharing is very important for SQUARE. To supply the goods properly SQUARE uses their own logistics and transportation system. The Process Of Information Sharing And Its Barriers In SQUARE Sharing is the transmission of information and meaning from one individual or group to another. Sharing information has its central objective -The transmission of meaning. The process of sharing information is successful only when the receiver understands an idea as the sender intended it. Both parties must agree 10 not only on the information transmitted but also on the meaning of that information. Sending and Receiving Messages: In the process of sharing information in SQUARE involves five steps: Sender has idea: The sharing process of information in SQUARE begins, when the idea will be influenced by complex factors surrounding the sender: mood, frame of reference, background, culture, and the position or the dignity of the employees, as well as the context of the situation and many other factors. Usually SQUARE starts with Good morning, good evening. Sometimes SQUARE is also using Hi, Hello. Message to be sent Encoding Message Channel Message Receiver Message decoding Noise Feedback Source: www. SQUARE-bd. com Fig: The Communication Process Sender Encodes Idea in Message: The next step in the information sharing process involves encoding, converting the idea into words or gestures that will convey meaning. A major problem in sharing any message verbally is that words have different meanings for different people. When misunderstandings result from missing meanings, it’s called bypassing. In selecting proper symbols, senders must be alert to the receiver’s sharing skills, attitudes, background, experiences and culture. How will the selected words affect the receiver? To solve these sorts of problems SQUARE Chooses appropriate words or symbols is the first step. 11 Message travels over channel: The medium over which the message is physically transmitted is the channel. Messages are delivered by computer, telephone, letter, memorandum, report, announcement, picture, spoken word, fax, or through some other channel in SQUARE. Because sharing channels deliver both verbal and nonverbal messages, senders must choose the channel and shape the message carefully. SQUARE uses its annual report, for example, as a channel to deliver many messages to stockholders. The verbal message lies in the report’s financial and organizational news. Nonverbal messages, though, are conveyed by their appearance, layout, and tone. Receiver decodes message: The individual for whom the message is intended is the receiver. Translating the message from its symbol form into meaning involves decoding. Only when the receiver understands the meaning intended by the sender, that is, successfully decodes the message. Such success, however, is difficult to achieve because unlikely two people share the same life experiences and because many barriers can disrupt the process. In this case we can tell that in SQUARE a memo that refers to all the women in an office as â€Å"girls,† so it may disturb its receivers so much that they fail to comprehend the total message. Feedback travels to sender:. The verbal or nonverbal response of the receiver is feedback. Feedback helps the sender know that the message was received and understood. If as a receiver you hear the message â€Å"How are you†: your feedback might consist of words (â€Å"I’m fine†) or body language (a smile or a wave of the hand). SQUARE is always trying to avoid the feedback from body language as in our culture it is not fair. Function of information in the sector of Supply Chain Management in SQUARE: Functions: On the job one can share information internally and externally. Internally, SQUARE is exchanging ideas with superiors, coworkers, and subordinates. When these messages must be written, SQUARE chooses emails or a printed memorandum. When SQUARE is sharing information externally with customers, suppliers, government, and the public, SQUARE will generally send letters on company stationery. 12 Internal functions in SQUARE: 1. Issue and classify procedures and policies 2. Inform management of progress 3. Persuade employees or management to make changes improvements 4. Coordinate activities and provide assistance 5. Evaluate, compliment, reward, and discipline employees 6. Get to know individuals personally or External functions in SQUARE: 1. Answer inquiries about products of services 2. Persuade customers to buy products or services 3. Clarify supplier specifications and quality requirements 4. Issue credit and collect bills 5. Respond to regulatory agencies 6. Promote a positive image of the organization Flow Of Informention Sharing Selecting the best process for sharing information form demands some understanding of how messages and information flow through organizations. Both formal and informal sharing channels exist. A free exchange of information helps SQUARE to solve problems , cut costs , better serve the public and take full advantage of today’s knowledge workers. All the following channels are used in SQUARE with the demand of situation, Formal channels: Formal channels of sharing information generally follow an organization’s hierarchy of command. Whether an organization has developed such a sharing policy or not, official information among workers typically flows through formal channels in three directions: downward, upward, and horizontally. 1. Downward Flow: Information flowing down generally moves from decision – makers, including the CEO and managers, through the chain of command to employees. One problem in downward communication is distortion resulting from long lines of communication. 13 CEO 1. Upward flow: Information flowing upward provides feedback from employees to management. Ideally, the heaviest flow of information should be upward with information being fed steadily to decision-makers who can react and adjust quickly. Lower Level Employee 2. Horizontal Flow: Lateral channels transmit information horizontally among workers at the same level, such as between the training supervisor and maintenance supervisor. These channels enable individuals to coordinate tasks share information, solve problems, and resolve conflicts. 3. Informal Channels: Not all the information within an organization passes through formal channels; often, it travels in informal channels is called the grapevine. These channels are based on social relationships in which individuals talk about work when they are having lunch, jogging. Employees using the â€Å"Grapevine† also consider it valuable for two reasons: a. Employees can get information without formally having to admit that they need it. b. Employees can â€Å"think out loud† about problems, thus increasing their selfconfidence and problem-solving ability. 14 The grapevine has three main characteristics: First, management does not control it. Second, it is perceived by most employees as being more believable and reliable than the formal communiques issued by top management and third, it is largely used to serve the self-interests of the people within it. At present there is a change in the flow of sharing information. Now we can define the above three flow in different way, Chain SQUARE is not following this method now. Wheel SQUARE is not following this channel also. All Channel 15 SQUARE is trying to follow this channel though SQUARE can not implement this channel completely in their organization. This the best flow of sharing information channel for any organization. Recommendation for the Supply Chain Management and communication system of SQUARE: Though SQUARE is trying to follow the best method to maintain supply chain management and communicate, SQUARE has some problems. The recommendations for the problems are as follows, 1. SQUARE follows all the channels of communication in their organization downwards and upwards and the employee can switch off any hierarchy in the immediate situation, which is the great advantage for communication. But the company does not follow the specific method of the letter and memo writing. They follow a single method to write the memo and letter, which may confuse the employees, and the external people who are related to the companies continue operation (Suppliers, customer etc. ). Because memo is written for the employees and letters are written for the external people like suppliers and customers. So, SQUARE should follow the traditional method to write the letters and memo. 2. SQUARE follows LAN in the organization’s computer systems. But they don’t use the Intranet in the system, which is a great disadvantage for the organization because anybody from the company can access another to the company’s restricted web site . So, SQUARE should introduce intranet in their company. 3. SQUARE cannot follow the all channel method totally. As a result it is not getting the 100% benefit of all channel method . So; SQUARE should try to implement it as early as possible. 4. SQUARE has not yet introduced extranet facilities for the suppliers. As a result the suppliers cannot get enough information about the companies or organizations demand. So, SQUARE should introduce extranet in their company 5. SQUARE should give more concentration to improve the quality of workers in the floor of Shopno. Because, they are the person who directly deals with the people suppliers directly. Which is very much important for maintaining supply chain management. 16 6. SQUARE also should be more concern about their transportation system for the supply. Because, they usually bring their agro based products from the very rural area. Their roads are not that much standard. So beside, trucks and covered van they also should take care of the transport which can be used on water. Refrigerating system is also important. Conclusion The request for excellent communication skills is probably the most frequently seen requirement in job ads today. Employers and employees alike consistently rank communication skills at the top of the job skills list. Even in technical fields, communication skills are demanded. The chief executives of corporations spend huge sums of money on trainers and consultants to improve employees’ supply chain management skills. Organizations value these skills because good organizations successfully (1) Make money (2) Save money. Good communicators make money by performing well themselves and by motivating others to achieve. They are persuasive in promoting the organization’s products, services, and reputation. Employees, too, appreciate the value of excellent communication skills. Such abilities enable them to complete their work efficiently and effectively – and to earn recognition and advancement. As individuals ascend the career ladder, oral and written communication skills become more important than technical skills. That’s because managers spend most of the time communicating-supervising, delegating, evaluating, clarifying, and interacting. Even though writing on the job is an important skill, myths and misconceptions about it persist. So I think not only SQUARE every organization should emphasize on the proper way of communication.