Improving the supply chain management at Actavis through implementation of an integrated ERP system

IMPROVING THE SUPPLY CHAIN MANAGEMENT AT ACTAVIS THROUGH IMPLEMENTATION OF AN INTEGRATED ERP SYSTEM

2006

Executive Summary

This report will show us about Actavis Pharmaceutical Group and its implementation of Enterprise Resource Planning (ERP ) System . At first it will illustrate short information on Actavis and its global operations , explain about ERP benefits and failures , then clarify about the recent circumstances of Actavis and offer solutions that possible to be conducted to solve the problems . In this report also contains the extensive breakthroughs , suggestions , and examination about implementation of ERP

that conducted before and after integrate with Supply Chain Management (SCM ) in Actavis Pharmaceutical Group

This document includes accurate information and its instruments to create a rational and cautious decision about applying an ERP system . It also contains direction in the selection , implementation , and maintenance of an ERP solution , as well as the inventory control and business process efforts that required to certify recognition of the system and to take full advantage of its function . This report aims to give visionary solution , by showing accurate information and literature review for Actavis Pharmaceutical Group in to achieve its ERP implementation effectively

At conclusion and recommendation , this report will present many suggestions for Actavis Pharmaceutical Group about how to develop ERP System implementation that better than before , and about how to use ERP System as a tools continuously to assess the excellent planning and implementation steps . By some approaches that stated in this report , the potential benefits of the ERP System implementation can be improved with low inventory addition

IMPROVING THE SUPPLY CHAIN MANAGEMENT AT ACTAVIS THROUGH IMPLEMENTATION OF AN INTEGRATED ERP SYSTEM

I . Introduction

As an international generic pharmaceuticals company with maneuvers in five continents , Actavis Pharmaceutical Group is a leading player in the improvement , produce , and trade of high-class generic pharmaceuticals Actavis Pharmaceutical Group has grown in current years as a leading supplier of pharmaceutical intellectual property . They constantly seek to present improved and quicker way into the latest generic products and a broad assortment of inexpensive pharmaceuticals (Actavis , 2006

Actavis Pharmaceutical Group has a vision to become the best company in the trades , improvement , and industrializing of generic pharmaceuticals quality in the international market . Actavis Pharmaceutical Group runs a strategic acquisitions and investment in product advancement to stimulate the Company 's growth and obtain good opportunities in the pharmaceutical industry . This strategy is very important and fundamental aspect to achieve the Company 's success . Actavis Pharmaceutical has operations in international area . They are strong-minded to maintain to develop their sales network , in addition to empower in their expansion and manufacturing capability (Actavis , 2006

Actavis Pharmaceutical Group uses their corporate identity to introduce their corporate inside their worldwide-organized organization , and increase customer and investor responsiveness of Company 's activities performance . To become obvious in a converging existence on the network Actavis is spreading at many countries in the world . Next , they are building their own website in to be accessible to ease their and editors upload information without difficulty (Actavis 2006

Actavis Pharmaceutical manages a well-built development program , which intends to produce new products to pharmaceutical market when the exclusive rights run out . One of key intentions at Actavis Pharmaceutical that very essential is being first to market (Actavis 2006

II . Problems at Actavis

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

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 ought to evaluate their processes for providing services and resolve where those processes can be developed to boost cost effectively

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 . Actavis necessitate 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 III . 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 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

IV . 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 b to other ERP or separate systems for their other application requirements ( Enterprise Resource Planning V . 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

VI . Analysis of ERP at Actavis

VI .1 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

VI .2 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

Process manufacturing

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

VII . 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

Many ERP packages are not planned to maintain customization , as a result , most businesses apply the best practices established in the obtained ERP system . That is why modifying an ERP package can be very costly and complex . Many ERP packages are extremely crucial in their statements and investigation , such that customization is expected in every accomplishment . In the present day , we can find web-based ERP systems . Only if companies have an Internet connection , or a network connection to a system installed on the LAN , they can access web-based ERP system through standard web ( Enterprise resource planning

Table 1 Implementation plan with time scales and milestones

No . Actions Time Schedule Note

1 Discussion about overall strategy at Actavis September-October 2006 The director of a brand team at a Actavis pharmaceutical Group develop messages and support the activities of clinical development and medical affairs with its general strategy

2 Discussion about strategic and tactical plan October 2006 - September 2007 The director of a brand team at a Actavis pharmaceutical Group improve a three-year strategic and a one-year tactical plan for the brand

3 Apply strategic plans June 2007 - December 2007 In to drive sales , Actavis generated brand plans that supported sales activities connected to clinical trials , publications , advocacy , and consultant meetings with overall brand strategy

4 Improving good CRM with clients January 2008 - June 2008 The Actavis 's consultants assisted the client in evaluating existing clinical trials to make certain data would be available to support messaging for each of the three years

5 Advance the services for the costumers July 2008 - December 2008 Actavis also helped the client draft a new sales contract and implement sales force training

6 Evaluation January - February 2009 The client considers the detailed plans a highly valuable blueprint for future action and has reallocated resources to programs that support the three-year brand strategy VIII . Conclusion and Recommendation

Supply Chain Management (SCM ) is widely known as the integrated application that run 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

There are many benefits of implementing SCM . For example , a company like Actavis can manage supply chain partners professionally and continue to be a challenge for many Pharmaceutical companies . The management of these companies needs committed time and energy . Supply chain management controls the policy and the process of industry with the variety of agreement manufacturing organizations that makes it exceptionally complicated . CIO of Actavis must be able to manage supply chain partners all over the world . Those are many effective strategies to manage their networked supply chain better

Actavis should decide the strategic function of an agreement manufacturer in the supply chain and recognizing points of focus when arranging associates commercial supply contracts with agreement manufacturers . Subsequently , they need to investigating strategies to control a complicated networked supply chain in good health and planning an efficient organizational arrangement to advance communication and teamwork with agreement manufacturers . Above all , Actavis should employing an account management process to set up and give details areas of responsibilities and applying key indicators to determine the performance of agreement manufacturers

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IMPROVING SCM AT ACTAVIS THROUGH ERP SYSTEM

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DATE : AUG . 29 , 2006 ...