Over View of JALALABAD LTD.
Chapter-1
INTRODUCTION Pharmaceutical companies around the globe are continuously searching for extreme quality and innovation since their only product drug is highly sophisticated and directly related to the alleviation of human sufferings. Inhering this responsibility on shoulder Jalalabad Pharmaceuticals is operating its business as a world-class
research
based
pharmaceutical
company
with
its
excellent
development capabilities, regulatory expertise, global marketing reach, and financial strengths. The augmentation of Jalalabad’s pipeline through in-licensing, co-marketing and co-promotion agreements ensures balance in its portfolio, and provides the basis for sustainable growth in a high-risk business like drug development. Jalalabad has an extensive history of successful collaborations, and it brings a "can do attitude", rapid response times, and a relentless focus on achieving mutual goals. Similarly, the high quality of its various exclusive brands is mitigating successfully the human sufferings throughout the world. Like health sector, Jalalabad’s contribution to the environment and society is also noteworthy. However, the scenario in Bangladesh is a bit different. Jalalabad in Bangladesh is constantly facing high competitive thrust for the last several years. Like other multinationals, the local companies are rapidly improving and generating threat as well. In such a restless situation, the company is taking measures to better up in every area. Like other areas, distribution is one of the foremost concerns. And as an intern I had the opportunity to work for the improvement of distribution system. 1.1 ORIGIN OF THE REPORT As a Graduate from the Regular BBA Program from Department of Marketing of University of Development Alternative, I was required to meet the requirement of internship program as a part of BBA. As I am working at Jalalabad and at the
same time it is one of the Good Pharmaceutical in Bangladesh it is a better option to complete my internship here. Hence this report is proposed and assigned by my academic supervisor Shamim Ahmed,Senior Lecturer. Dept of Marketing in the University of Development Alternative.In this regard, I would like to add that this report is completely
confidential and prepared with a view to expose myself to the practical exposure and knowledge. 1.2 SCOPE OF THE STUDY The survey for the study has been conducted on different pharmacies within the located territories (zones) of Dhaka Metropolitan (DMO). Apart from this all other tasks and information have been collected from surrounding local marketplace. The analyzing and interpretation of the report have been done with the help of my academic supervisor Mr.Shamim Ahmed Senior Lecturer, Dept of Marketing in the University of Development Alternative. 1.3 OBJECTIVES:
The main objective of this study is to identify the channel of distribution pharmaceutical industries in Bangladesh with the help of a study on Jalalabad Limited. The specific components of the research are: •
Analyze the distribution system of pharmaceutical industries.
•
Identify the services of the DMO.
•
Determine the problems of pharmaceutical distribution system.
•
Analyze the distribution system of Jalalabad Limited.
•
The reaction of customers concerning Jalalabad Limited.
•
Propose a solution to improve the overall distribution efficiency.
1.4 APPROACHES TO THE PROBLEM From the flow chart it’s now clear that the medical promotion officers collect he order from the customers then the order process into a computer invoice or receipt. After approval of distribution and store manager the packaging people pack the product and through the delivery van it goes to the customers.
Graphical Model: Medical Promotion Officer
Computer Invoice
Distribution & Store Manager
Packaging People
Delivery Van
Customers
1.5 METHODOLOGY: Research Design: An exploratory research approach has been used to conduct the study. Detailed questionnaires were formulated for collecting data. As the time was very limited to complete this report it was not possible to conduct a descriptive research to collect the primary data. Sources of Data: To carry out the proposed study data has been collected from two sources; Primary and Secondary sources. •
Primary data: Primary data for this study has been collected through a well prepared questionnaire which is combined of both open and close ended questions. Several ways of collecting data have been used like, face-to-face interviews with the respondents, questionnaire survey, etc.
•
Secondary data: Secondary data again are of two kinds, internal and external. Internal secondary data has been collected from its brochures and annual reports of different years. External secondary data gathered from various outlets, research reports, literatures/magazines, and internet and internship reports of other organizations.
Tools for data collection: The major tool for data collection was the questionnaire that includes simple, straightforward, open and close-ended questions. Interview technique: I have followed the Interview for the survey keeping in mind the following advantages: •
Fewer misunderstood questions and inappropriate responses.
•
Fewer incomplete responses.
•
Higher response rates.
•
Greater control over the environment that the survey is administered in.
The data collection instrument was Xerox copy with the different questions at the time of the survey. Sampling plan: The outlined sampling plan is given as below•
Target population: The target population for the study has been taken from the areas, where Jalalabad Limited provides delivery. The population includes all the dispensaries within the territories (areas) that are served by Jalalabad.
•
Sample unit: The proposed samples (dispensaries) have been taken from different areas of Dhaka City. Using ‘Multi-stage Area Clustering Sampling’ under probability sampling technique four zones have been selected randomly. These zones include the following areas:
ZONES
AREAS
Zone-1 Zone-2 Zone-3 Zone-4
Gulistan Agargaon & Shamoli Jatrabari Others including Rampura, Santinagar, Sobujbag, Mogbazar, Malibag, etc.
•
Sample size: The sample size for the proposed survey is 100. These 100 dispensaries have been taken as samples using ‘Convenience Sampling Method’ from the above stated areas.
1.6 DATA ANALYSIS PROCEDURES: In order to analyze the different findings from the survey different steps was followed to make a competitive analysis. Moreover, to define the findings simple statistical methods were followed for data analysis to identify the average and percentage. All these were done to get a good idea about the pharmaceutical distribution system with the help of a selected case study of Jalalabad Limited. Chapter-2 INDUSTRIAL ANALYSIS 2.1 BACKGROUND In Bangladesh, hardly any studies are available that detail the market concentration of individual firms within specific industries (industry concentration ratios), as well
as the market share of imports in different products. In order to get an idea about market domination by individual firms, it will be necessary to know not only what has been happening to these industries now, but also what has been happening over time – that is to say, whether industry concentration has been increasing or decreasing or remaining constant over the years. A problem in gathering industrial statistics in Bangladesh is that the data is available for broad industry groups at 3-digit SIC level, where several sub-sectors are lumped together; for example food manufacturing (SIC 311) includes dairy products, rice milling, and vegetable oils; food manufacturing (SIC 312) includes sugar, tea, bakery products etc.; textiles (SIC 321) includes jute, cotton, silk, wool and handloom and such. Additional data needs to be obtained for specific subsectors of concerned industries, so that industry concentration ratios can be more meaningful. Attempts without success were also made to collect data on market shares captured by imports. For the moment, however, some idea of the market structure on the basis of the number firms in specific industries can be gained. Table 5 presents the ranking of industry groups by the number of firms and also by output, as a percentage of total industrial production. These industries account for some 84 percent of the country’s total industrial output. Table 5 shows only the number of firms in each industry category. It does not show if any concentration exists in these industries. It is, however, commonly believed that only a small number of firms dominate the market in textiles, apparels, nonmetallic mineral products, drugs and pharmaceuticals, leather, and footwear, even though there is hardly any proof that any of these large firms exercises monopoly power. Table 5: Ranking of industry groups by number of firms and the percentage of total industrial output Industry Code and Sector
321 Textiles 311, 312 Food Manufacturing 323 Apparel 369 Non-metallic Mineral Products 322 Knitwear 342 Printing & Publishing
No. of Rank
%
Firms
Industrial
10794 6094 2353 2051 1263 884
Production 11.0 25.5 27.2 2.9 2.9 1.8
1 2 3 4 5 6
of Rank
3 2 1 8 9 13
351 Drugs and Pharmaceuticals 267 7 3.3 7 385 Transport Equipment 213 8 2.3 12 324 Leather and Leather Products 205 9 2.5 11 371 Iron & Steel Basic Industries 195 10 3.7 6 325 Leather footwear 109 11 4.3 4 352 Industrial Chemicals 42 12 2.7 10 384 Electrical Machinery 27 13 4.0 5 Total 84.1 Source: A competitive scenario of industries in Bangladesh: Institute of Strategic Studies. The pharmaceutical sector is a high-technology and knowledge-intensive industry. The industry has a two-tier structure. The largest firms account for the majority of the R&D investment in the industry and hold the majority of patents. There is a large number of smaller firms producing mostly for local markets. The pharmaceutical industry is heavily regulated. Once a product is brought to market, pharmaceutical companies spend heavily on marketing and promotion. The larger drug companies maintain a large sales force, which makes direct regular contact with individual prescribing physicians and other pharmaceutical decision makers. The sums spent on marketing are large. Pharmaceutical marketing efforts are not only directed at physicians and consumers; drug companies have also sought to directly influence pharmacists, in some cases paying pharmacists to induce customers to change their drug consumption habits. The nature of competition in this industry differs between the two sets of firms. The second tier of firms holds fewer patents and relies primarily on manufacturing off-patent generic medicines or patent medicines under license. Competition between these firms takes the conventional form of competition on price, costefficiency and quality. In contrast, a few large research-based pharmaceutical companies invest heavily in R&D and hold the bulk of the patents, and can often enjoy substantial market power while these patents are in force. For these companies, competition is not primarily on the basis of price, but rather on the basis of marketing and innovation. These companies compete to develop entirely new drugs which treat new medical conditions, improve upon existing drugs, or serve as substitute for existing patented drugs. Some large pharmaceutical companies in this tier export and compete in international markets.
Prior to independence, the pharmaceutical sector was dominated by multi-national companies (MNCs) which resulted in high prices and scarcity of those drugs that were less commercially lucrative. Lack of technological know-how, skilled human resources and huge capital investments cost served as barriers to entry for local producers. The Drug Control Ordinance (1982) was enacted to address the situation through the introduction of controls of the manufacture, import, distribution, and sales of drugs. The Ordinance introduced cost-based pricing to guarantee a minimum profit to producers to attract more local firms. As a result of the regulations, the market saw a massive redistribution. In 1982 the top ten companies included seven MNCs and three local companies. Of these the top five were all MNCs, the major ones being FISONS, Pfizer, Rhone Poulenc Rorer (RPR), Glaxo, SK&F, and ICI. These companies controlled more than 50% of the market share, and a major share of their earnings was drained out of the country through equity share, compensation and benefits provided to expatriates, and raw material purchases from their parent company. By 1994, three of the major players Pfizer, SK&F and ICI sold out their operations to local entrepreneurs. 2.2 THE PRESENT CONDITION: The pharmaceuticals sector is a high technology and knowledge-intensive industry in Bangladesh. The industry has two-tier structure. The largest firm accounts for the majority of the R&D investment in the industry and hold the majority of patents. There are a large number of smaller firms producing mostly for local markets. The pharmaceuticals industry is heavily regulated. The nature of competition in this industry differs between the two sets of firms. The second tier of firms holds fewer patents and relies primarily on manufacturing off patent generic medicines or patent medicines under license. Competition between these firms takes the conventional form of competition on price, cost efficiency and quality. A great change was noticeable in the pharmaceutical industry after the drug policy ordinance of 1982. The total national production of pharmaceuticals has risen by a
substantial 63%; the value of essential drugs made in national factories has gone up to 140% over the four years. Chapter-3
COMPANY PROFILE: JALALABAD LIMITED 3.1 HISTORICAL HIGH-LIGHTS: Jalalabad Pharmaceutical (Pvt.) Ltd (1984-2010) has started its new journey with new Management who preserve a noble mission to contribute healthcare support to the distressed people of home & abroad by manufacturing biological and non biological life saving quality pharmaceuticals formulations. The new management of JPL thinks a step ahead of tomorrow.
3.2 OVERVIEW TYPE OF COMPANY:
• •
Turnover: BDT 6 crore
•
Manufacture
Net Asset Value: BDT 20 crore (2011)
MAIN BUSINESS:
•
and
Marketing
of
Human
Pharmaceuticals. Our Factory Plant is located in Kanchpur, Sonargaon, Narayangonj .
QUALITY RECOGNITION
•
ISO 9001:2000 certification under process
NO. OF EMPLOYEES
• 520 Available Products of Jalalabad AMLODIN Tab (Amlodipine 5mg) ALLERGEX Tab (Chlorpheniramine Maleate 4mg) CITROL Tab
(Cetirizine HCl 10mg) CETA 500mg Tab (Paracetamol 500mg) DOMEE-J Tab (Domperidone 10mg) JAMOXIL 500mg Cap (Amoxycillin 500mg FLOXITAB Tab (Ciprofloxacin 500mg) F-CLOX Cap (Flucloxacillin 500mg) INDOR (Nortriptylene 10mg + Fluphenezine 0.5 OMPEE -20 (Omeprazole 20mg) FLOXITAB 500mg (Ciprofloxacin 500mg Tab) LEVOTAB 500 Tab (Levofloxacin 500mg) ULTRANID Tab (Ranitidine 150mg) ALLERGEX 100ml Syp (Chlorpheniramine Maleate 2mg/5ml) SALBO 100ml Syp (Sulbutamol Sulphate 2mg/5ml) EXPORT
•
Human
Pharmaceuticals
to
Myanmar,
Vietnam, Nepal, Srilanka, USA & some
Central
American’s
countries
like-Beles,
Guatamala.
CONTRACT MANUFACTURING
• Contract manufacturing Oral Rehydration
3.3 ORGANIZATIONAL STRUCTURE
Salt formulation for BRAC
For smooth functions of business processes Jalalabad Limited is broadly divided into Seven distinct divisions – (1) Human Resource (2) Medical Affairs (3) Marketing (4) Sales (5) Supply Chain (6) Operation (7) Finance & IT. All heads of aforementioned divisions report to the Managing Director of Jalalabad Limited.
3.4 MISSION & VISION MISSION
•
Our mission is to improve the quality of life of people by manufacturing ethical drugs and medicines at affordable prices and reaching out even to the remotest places through effective and proper distribution net work. JPL is committed to the pursuit of excellence through quality products and provide the highest level of satisfaction to its customers (Doctors, Chemists & all concern to healthcare).
•
To attain a position in the horizon of
VISION
pharmaceuticals market.
•
To provide products and services of high & consistent quality.
•
To develop it’s employs by encouraging empowerment and rewarding innovation.
•
To view itself JPL shares as partner with environment.
VALUES
•
To keep fairness in every step of its operation.
•
To maintain transparency in every sectors.
•
To ensure quality in the highest level.
•
To provide priority in customer services.
Chapter-4
THEORETICAL FRAMEWORK: DISTRIBUTION MANAGEMENT SYSTEM 4.1 MARKETING CHANNEL CONCEPT From an operational standpoint, a marketing channel is the path a product or service takes as it moves from the manufacturer to its end users or customers. The very basic channel structure shown in Exhibit 1-1 was the rule in the years following World War 2nd. In those days, the path between manufacturer and consumer was a straight one. A manufacturer faced only one decision: whether to use a direct or indirect channel of distribution (COD). Exhibit 1-1: Basic channel structure Manufacturer----Marketing channel of distribution----Eventual end user/consumer If the manufacturer selected a direct channel, it hired a sales force to get the product on the shelves or into the hands of consumers. If the manufacturer was too small to hire a proprietary sales force, it opted for an indirect channel and hired a distributor to sell to end users. As time passed, the path between manufacturer and end user developed a thousand twists and turns. In fact, today it is less like a path and more like a wheel,
with the manufacturer at the “hub” connected to the end user at the “tire” by dozens of direct and indirect channel “spokes.” Exhibit 1-2 shows how the number and complexity of indirect channel has multiplied. 4.1.1 Importance of using indirect channels Direct-employed sales force is not appropriate for a small company especially in serving smaller customers. Indirect channels minimize marketing costs and since carry products of multiple manufacturers, they spread the same cost of sales over several product lines. The importance can be more specifically understand by scrutinizing why customers buy from indirect channels. They buy because of the following benefits: •
The convenience of one-stop shopping
•
Customer service and technical support
•
Logistical support
•
Ease of doing business
•
Community presence
•
Greater channel efficiency
Exhibit 1-2: A chronicle of distribution marketing showing how the number and complexity of channels has multiplied
Manufacturer
Phase-1 1950s/1960 s
Either a Direct or Distributor Sales Organization Manufacturer
Phase-2 Original Equipment 1960s/1970 Manufacturers s
Manufacturer Phase-3 Direct Employed Sales Force
1980s/1990 sIndirect and Channel of Distribution beyond
Private Label Direct Sales
Retailers
Distributors Wholesalers
Various forms of Resellers
Manufacturers Sales Representatives
New Technologies (Internet, etc.)
Direct Marketing
4.1.2 Selecting a market coverage strategy The channel master needs to decide upon the correct market coverage strategy for his channel. The choices are:
Intensive: Covering a market by authorizing several distributors to sell products in a given geographic area or market segment.
Selective: Selecting only those distributors who meet certain channel selection criteria to sell products in a given market.
Exclusive: Authorizing only one distributor per geographic area or market segment to sell products.
Exhibit 1-3: Three channel market coverage strategies
Intensive
Selective
Exclusive 4.1.3 Push and Pull Strategies A push strategy is any marketing activity that entices the COD (channel of distribution) to sell the products rather than those of the others the channel represents. Examples of push strategies are Travel incentives programs, Merchandise programs, Training programs, Monetary SPIFFS (special promotional incentive factory funds), Special discounts or allowances, Local Cooperating (COOP) advertising efforts. A pull strategy motivates the end user to approach one’s COD and “call out” for the products. Examples are Space advertising, Public relations releases, Rebate programs, Exhibitions, Direct-mail campaigns, End user seminars, Telemarketing efforts, Internet exposure, Radio and TV advertising. A manager may combine these two strategies to formulate the channel-marketing program.
Exhibit 1-4: Push and pull promotional activities
Manufacturer
Deman d Push Strateg y
Sales Promotion and Marketing Activities
Channel of Distribution Deman d End User
Manufacturer
Deman d Pull Strateg y
Sales Promotion and Marketing Activities
Channel of Distribution Deman d End User
4.2 THE CHANNEL DESIGN SEQUENCE: Identify the new market you want to penetrate or new product you need to launch
Verify the need for a new channel of distribution or some form of channel recognition.
Evaluate all macro conditions (end user buying behavior, the economy, technology, target channel variables, competitive actions, political factors, international factors, your company consideration, legalities) Conduct a competitive channel analysis Research and rank customer/end user satisfaction requirements Specify and rank the tasks you want your channel partner to perform Investigate all possible COD structures Decide upon eagle channel partners Obtain internal corporate recommitment Approach and sign the selected distributors Monitor and evaluate the channel structure 4.3 COMPETITIVE ANALYSIS AND STRATEGY: The ultimate goal of channel master should not be to meet competition but to beat competition. Without competitive information, one may not implement the effective channel-marketing plan. 4.3.1 Uncovering direct and indirect competition A company’s channel environment is home to both direct and indirect competition. Direct competition is easy to defined and recognized. There are companies that use the same channel to sale similar products to the same end user. Indirect competition consists of all other manufacturers’ product lines carried by the channel members that are sold to the same target audience. Exhibit 1-8 shows the direct and indirect competitors of a company that manufactures power protection products. In this example, the inner most ring
represents direct competition, or all other surge protector companies. One should develop a set of rings for his industry, and determine the importance the distributors place on each ring category that will clearly indicate how much recourse they award. 4.3.2 The three steps of direct competition analysis Direct competition analysis focus on three main activities: A. Developing the profile B. Evaluating each competitor’s strengths and weaknesses C. Anticipating each competitor’s future strategies and tactics Developing the profile There are five basic types of competitor to watch for. It must be analyzed which competitors are: 1. Large 2. Profitable 3. Fast growing 4. Similar to your company 5. A combination of the above Exhibit 1-8: Competitive reporting form Name and location of competitor:---------------------------------------------------Rank importance of threat: Primary-------Secondary--------Tertiary--------Reporting individual:-------------------------------------------------------------------Field information obtained Source Suggested actions to be taken Marketing 4 Ps Product Price Promotion Placement (Channels) Other functional areas Financial Operations Engineering R&D Sales/Marketing Miscellaneous Field Intelligence Signed: -------------------------------------- Date -----------------------------------One can also obtain competitive information from his/her COD through two results-proven approaches such as •
Offer rewards: Offer travel incentives, merchandise and other rewards to the indirect channels.
•
Foster close relationship with those in the know: Developed close relationship with eagle distributors who wield a great deal of political power and market existence.
4.3.3 Rating the competitor intelligence A good channel master should seat for the competitor information IQ test. This includes the following: •
Customers: Who are the competitors’ major customers and where they are located? How much of a product do they buy?
•
Distribution: How do the competitors get their products or services to markets?
•
Marketing: What pricing, product, or regional marketing strategies are the competitors using?
•
Sales: How large are the competitors’ sales forces and what are their sales terms and conditions?
•
Advertising: Where does the competition advertise and how much do they spend?
•
Finance: is the competition profitable? If so, by how much? What is their overhead cost?
•
Operations: What are the size, location, and capacity of their facilities? How efficiently do they produce their products or services?
•
Organization: What is their organizational structure? Are they very decentralized? Who makes the key decisions?
•
Research and development: What patents and trademarks do they own? What new products or services are working on? How much do they spend on R&D?
•
Strategic plans: What are their long terms and short-term plans? Will they retain their core business or expand into other markets? Do they intend to acquire other businesses?
4.4 CHANNEL MANAGEMENT & COMMUNICATION: The more through the communication with the channel members, the better the working relationship with them will be. And the better the relationship, the more business closeness will be achieved. Channel masters communicate with distributors in two basic ways: 1. Through formal management; such as contacts and policies 2. Through informal management of relationships 4.4.1 Ramping up a new distributor
One should start by declaring a ramp-up period of three to six months to let everyone in the company know the importance of treating new distributors like royalty. A few more ways to give the new relationship a positive foundation are as follows:
Introduce the new distributor to your customers.
Help the distributor take over existing accounts.
Build confidence with easy assignments. Provide enough product samples, product literature, price sheets and other collateral materials for all of the distributor’s sales personnel. Set aside your normal policies and be liberal.
Schedule factory visits and joint sales calls to build enthusiasm among the ranks.
Give new distributor plenty of positive feedback on their work. No one can resist a compliment.
4.4.2 Guidelines for a great channel partnership Good relationships do not grow overnight. They are the result of careful tending and communication. “Ken’s Rules for a Great Channel Partnership” is suggested in this regard that are as follows: •
Golden Rule 1: Be honest and accurate-even it is painful.
•
Golden Rule 2: Communicate with every level of personnel to ensure the most complete and accurate transmission of your channel information flow.
•
Golden Rule 3: Consider the needs of your channel before you implement new policies.
•
Golden Rule 4: Use the channel telegraph judiciously.
•
Golden Rule 5: Communicate with other friendly channel-marketing managers in your industry or marketplace.
4.4.3 Effective channel communications mechanisms Four communication tools can definitely help one to nurture relationships with the channel members. These are: 1. Field visits by manufacturer personnel
Always make each visit meaningful to the distributor
Prepare your colleagues before the trip by explaining the basics of channel marketing
Set up visits for key personnel by all parts of your company
Key sales and marketing events are natural reasons to schedule a visit
2. Joint sales calls 3. Channel advisory councils 4. A media communication program 4.4.4 Five channel management mechanisms Not only communicating with the channel but also managing it is equally important. A channel master can use the following five tools to manage a channel: 1. A business policy statement that clearly states how manufacturer and distributor will do business together 2. A mutually agreed-upon contract that legally formalizes the business relationship 3. Compensation 4. Sales force management 5. A mini marketing plan 4.4.5 Sales force management Without question, the ultimate success or failure of the channel-marketing program rests with the field sales people. Sales people are literally the last lines of communication and management between the manufacturer and the distributor, and they are responsible for implementing the business policies and procedures. Salespeople need to be company representatives, channel defenders, trainers, and field sales manager, all wrapped up in one convenient package. •
As company representatives, salespeople must understand, support and execute the company’s business philosophy.
•
As trainers, they must teach, coach, and train the channel members in how to proficiently sell company’s products.
•
Finally as field sales managers, they manage their assigned territories.
Chapter-5
DISTRIBUTION MANAGEMENT OF PHARMACEUTICAL PRODUCTS 5.1 MARKETING OF PHARMACEUTICAL PRODUCTS
In is the business of selling pharmaceuticals, marketing of medication has a long history. The selling of miracle cures, many with little real potency, has always been common. Marketing of legitimate non-prescription medications, such as pain relievers or allergy medicine, has also long been practiced. Mass marketing of prescription medications was rare until recently, however. It was long believed that since doctors made the selection of drugs, mass marketing was a waste of resources, when specific ads targeting the medical profession would be cheaper and just as effective. This would involve ads in professional journals, and visits by sales staff to doctor’s offices and hospitals. Since the 1980s new methods of marketing for non-prescription drugs have become important. Patients are far less deferential to doctors and will inquire about, or even demand, to receive a medication they have seen advertised on television. In the United States recent years have seen an increase in mass media advertisements for pharmaceuticals. Still the marketing of pharmaceuticals is controversial. Some feel it is better to leave the decision wholly in the hands of medical professionals. Due to these concerns, some areas impose limits only on pharmaceutical marketing. In some areas it is required that ads for drugs end with a list of possible side effects, so that consumers are informed of both facets of a medicine. Canada has especially harsh limitations on pharmaceutical advertising. Commercials that mention the name of a product cannot in any way describe what it does or that mention a medical problem cannot also mention the name of the product for sale; at most, it can direct the viewer to a website or telephone number operated by the pharmaceutical company.
5.2Distribution System for Pharmaceutical Products Distribution system for pharmaceutical products is significant than distribution of any other goods. Usually, special handling of the products during preservation, storing and transportation, speedy and time distribution, maintaining continuous flow of supply are some of the important feature that makes the difference from distribution system of other products. . In Bangladesh, the pharmaceutical companies employ either separate company or use separate management for distribution work. In both cases it has seen that company’s prospect is largely on the performances of the distribution network. Several communication method i.e. road, river, rail and air can be used for distribution work amongst these the combination of road and river communication
is the most popular methods of distribution in Bangladesh. Because this less costly than air and less complicated but faster than rail network. Most of the distribution companies have developed their network accordingly. However, depending on the necessity rail and air communication is also used. Whatever the method is speed remains the prime factor of distribution. Unfortunately, the road communication network in the country remains vulnerable due to reasons like bad road condition, inadequate and ineffective traffic system, lack of security, communication disruption caused by political reason etc. Even though the system is popular as it provides flexibility in terms of mobility, maintaining of move schedule and amount products to be transported. The system also ensures the distributio0n to maximum destination within the reasonable turndown time. This the reason why major companies prefer to develop their own distribution network as a subsidiary concern of the principal organization From the flow chart it’s now clear that the medical promotion officers collect he order from the customers then the order process into a computer invoice or receipt. After approval of distribution and store manager the packaging people pack the product and through the delivery van it goes to the customers. Medical Promotion Officer
Computer Invoice
Distribution & Store Manager
Packaging People
Delivery Van
Customers Figure: Flow chart of distribution
5.3 Functions of a DMO
•
Order Taking from Sales Team: Every DMO has its sales team those who collect orders from the chemists. They also visit the doctors for promoting them to write the company’s products in the prescription of the patents. If the doctors prescribe the company’s products then the patents are bound to buy these products from the chemist or chemists. And the sales teams also collect the orders from the chemist or chemists according to their requirements. A sales team works in a particular territory and the chief of that team is called Field Manager (FM) and under a FM there are a few employees and they are called Medical Promotion Officer (MPO). MPOs basically collect the orders and the FM monitors the MPOs’ activities. Medical Promotion Officers (MPOs) know or inform about the orders of the chemists to the DMO office so that the products can be supplied. And it is the duty of the DMO to receive the orders from the MPOs. MPOs give the orders with the help of telephone or mobile. Most of the time the DAs receive these orders in an order form which is formatted by the office that means they write down the orders in the order form according to the chemist’s name and address with his ID number and territory code. The orders are taken according to the product’s code and name and also with the quantity of that particular product.
•
Order Invoicing by IT Department: Once receiving the orders from the MPOs of different territories, the DAs distribute those orders among them on the basis of their market area for the distribution of the products. One particular DA supplies the ordered products in particular area (such as Mrpur-1 for one DA). Only for the Dhaka City this area separation is applicable and for this task the Distribution Officer (DMO in Charge) also helps them Once distribution of the orders among them, one DA gets the distribution duty of a particular area and then the DA submits his area’s chemist wise orders to the computer section (IT Department) for preparing the chemist wise invoices and a chalan (top sheet) which is the summary of all invoices. For doing this work, the company has a pre-set up or formatted software system where the computer operator only has to input the data according to the format. In that format, for every customer there is an ID no. and if the operator inputs that ID no. then with all information of that customer a page comes
and then the operator has to input the ordered product’s code and quantity and then print. According to the orders of the chemists, invoices are prepared in the computer section. Invoices are made for every chemist individually. Every chemist’s required product’s name, quantity, value etc. with his name, address, territory etc. are included in an invoice. At a time three copies of every invoice are printed out, one is for the DA, another one is for the store in charge and the other one is for the particular chemist. Retailing top sheet or chalan are prepared according to the all invoices under a particular DA because some invoices are made for a particular DA for a particular area’s delivery. In a top sheet, cumulative product wise orders with value of those invoices are mentioned. •
According to the Invoice and Chalan, Stock out from Store: Before stocking out the products for distribution, the store in charge has to check the top sheet (chalan) and invoices quantity and value by comparing every invoice’s quantity with top sheet quantity. According to the invoices and chalan of every DA, the products are stocked out for retailing (distribution) and it is another important duty of store in charge. Based on the every day’s sales orders, invoices are made for retailing the products to the customers. Particular DA abides by to supply the products to a particular region’s customers. The store in charge gives them products according to their chalan. Every DA has to receive products from the store in charge for the supply of those products to the chemists. According to the invoices the particular DA has to collect products from stock for the distribution of those products to a particular area’s chemists according to their orders. After receiving the products form the store in charge the particular DA has to sign in the stock out record keeping book as the evidence of their receive.
•
Distribution to the Customers: This is the ultimate distribution function of a DMO. Basically this is the delivery of the products to the chemists according to their orders. This distribution is very important for the company because this is the sale of the company and the profits of the company depend on this delivery.
Actually this is the main task of the DAs. When a particular DA gets the duty of delivering the products to a particular market area, he is bound to deliver those products to the particular chemists who have given the orders for the products to the MPOs. The DAs go out for Man Delivery that means they go manually without any van or other vehicle of the company to deliver the products. They go to deliver in a particular area’s customers’ shop according to the invoices such as; one DA may go to old Dhaka for delivery to twenty chemists according to their ordered quantity. And they may also go for Van Delivery that means they go with a van of the company to deliver the products if the DMO has any Van and if the particular DMO in charge thinks that the Van delivery is more profitable than Man delivery. •
Collecting Invoice Value and Deposit to the Accountant: DAs go out for delivery of those products which are sold the basis of cash payment. So, the DAs have to collect the money or value (Trade Price with VAT) from the chemists according to their buying amount at the time of delivering. The chemists receive the ordered products from the DAs and then they pay to the DAs and if they buy partial from their orders they pay for that quantity. So, the DAs collect only the value of the sold amount. A particular chemist may return the products for cash short, for the over writing in the order form by MPO or his unwillingness to buy the products or any other reasons. The particular shop may stay close at the time of delivery. Why the products are being returned has to be noted by the DA who faces the above situations and that has to be written on invoices. Why the products are being returned has to be noted on the invoices by the DA who faces the above situations. At the time of delivery what the DA collects from the chemists, coming back to the office he has to submit that to the account section according to the invoices and this money also include the VAT. This is a very important duty of the DAs.
•
Transfer the Money to the Assigned Bank: The account section has to keep accounts for the collected money. After receiving the money from DAs the accountant has to write down the amount in an account book and also in the computer. In the computer
there is a software system for keeping the accounts for sales value and the accountant just puts the value in the pre-set up software. It is also the duty of account section to deposit the collected sales money or revenue from the DAs which is also collected from customers by DAs to the specified bank (like Dhaka DMO’s assigned bank is HSBC Bank). Every DMO has an account in their particular or assigned Bank and the accountant of that DMO deals with that bank and for this reason he deposits the collected revenue to the bank and this money is the ultimate revenue of the company.
5.4 Management of Logistic Support Logistics support for smooth distribution and delivery of products are managed by the DMO in charge (Local Distribution Manager). For efficient management, Local Distribution Manager plans the route map. Preferably, route map is planned on the basis of the quantity of products to be delivered. In the city where a particular DMO office is located, the DMO does not maintain any Van delivery. They adopt a monthly delivery schedule for the delivery in the outside of the city. To attain cost effectiveness and efficiency in distribution system the company strictly follows the delivery schedule.
5.5 Functions of the Central Warehouse Authority A. Receiving the Requisition from DMO in charge: The central warehouse authority receives the product requisition from the DMO stock in charge. At the beginning of a month, the store in charge gives requisition for products for the whole month and that requisition is given according to the sales record of a particular product. Based on the past sales record of a particular product, he forecasts the future sales of that product and according to that estimation he gives written requisition to the central warehouse for the estimated quantity or units of that product. B. Justify or Verify the requisitions: Once getting the requisition from DMO store in charge, the central warehouse authority check or verify the product wise requisition comparing with the sales record of that particular DMO. After their judgment, they decide the product allocation for the DMOs. That means the central warehouse authority take the ultimate decision about the product allocation for the DMOs. C. Distributing the Products According to the Allocation:
According to the product allocation, the products are packed according to the grade (A & B) and then distributed to the DMOs for the whole month if the products are available in the warehouse; otherwise the products are distributed several times in a month according to the production but without creating problems in the sales distribution. D. Knowing about the Product’s Requisition to PMD: The central warehouse authority has to inform the Product Management Department (PMD) about the product requisition for the production. For the distribution of the products to the different DMOs, the central warehouse needs the supply from the factory and for this the production is urgent. The PMD knows the production sector what and how many have to be produced to fulfill the demand and the MPD is informed by the central warehouse. E. Sending Products According to the Sudden Requirements: Sometimes a depot in charge may require some particular products suddenly because of their sudden increase in sales of those particular products. Then the central warehouse has to send that products to the particular DMO. F. Keeping Accounts for the Stock: The central warehouse has to maintain the accounts for the stock. They maintain daily accounts on the basis of daily receive and send amount. For every day’s transaction they keep records and ultimately they write down that record in a ledger book. This accounting system is kept for getting the current information anytime. G. Maintain In and Out Invoices File: The management of the warehouse also has to maintain their products’ in and out invoices in a filing system. They maintain this file so that they can know about their products receive and send quantity and also value. H. Inform the Daily Condition Higher Management: The central warehouse authority has to transfer the information about the stock and related matters to the higher management daily. Today’s requisition and send volume and also receive amount etc. information have to be shared with the higher management.
5.6 Role of Distribution Manager in Distribution System The national distribution manager plays a great role in the distribution system of the company. He is the head of the distribution sector of the company. His duties
are not a pre-set up working schedule; he has to do many extra ordinary things because the efficiency of the whole distribution system of company depends on him. It is impossible to find out the whole duties of him. So I can divide his activities in the following categories: •
Duties as a Coordinator: He plays a role of coordinator by coordinating among all the DMOs and developing a communicative system of distribution in the whole nation.
•
Duties as a Distributor: He plays a role of distributor by distributing the products of the company to the all DMOs according to their requirements and product allocation.
•
Duties as a Idea Generator: He has to generate new and unique idea about the distribution system of the company and has to evaluate them and implement them in the distribution system.
•
Work as a Controller: He also works as a controller by controlling the total distribution system and the distribution network around the whole country.
•
Work as a Adviser: He also works as an adviser of the local distribution managers and in terms of worse situation he suggests them what should be done.
•
Work as a Communicator: He plays a role of communicator by communicating with the higher authority of the company and coordinating the distribution sector with other sectors of the company.
•
Duties as a planner: He has to plan about the whole distribution system of the company that means what the total distribution personnel will do in the future and how they will do these; this planning is done by the distribution manager.
•
Work as a leader: He also works as a leader that means he guides the distribution personnel, motivates them, leading them, suggests them, takes punishing actions, gives rewards and directs them.
•
Maintain solidity in distribution: He has to keep a consistency in the distribution system by coordinating with the production sector and the distribution sector and also with the sales
department by supplying their requirements and giving or sending requisition to the production sector. •
Duties as a overall Manager: He plays a serious role as a manager. He analyses the distribution system, sets plan for efficient distribution, evaluating the plans or ideas in the context of the company, implementing the best suitable plan, for implementing the plan takes the related actions that means who, how, when implement the plan, evaluate the works by comparing the real situation with the estimated curriculum, if any problem or gap arises in the planning and implementation then take corrective actions to overcome the inequality between the actual and forecasted result.
5.7 Duties of Store in Charge and Assistances • Giving Requisition for Products to the Central Warehouse: The store in charge gives requisition for products to the central warehouse and those orders are given according to the sales record of a particular product. Based on the past sales record of a particular product, he forecasts the future sales of that product and according to that estimation he gives written requisition to the central warehouse for the estimated quantity or units of that product. • Receiving the Sent Products of Central Warehouse: Once getting the requisition from DMO store in charge, the central warehouse authority check or verify the product wise requisition comparing with the sales record of that particular DMO. After their judgment, if they think that the particular DMO needs that amount of products for their future sales, they send that amount of products or if they think more or less amount is needed or enough, then they send that amount. To receive the products according to the chalan is another important task of store in charge. Receiving the products and keeping them in storehouse perfectly and smoothly totally depend on him. He does this duty with the help of his assistances. • Keeping the Accounts for Every Products: To keep the account of every product in a ledger book is the most important task of a store in charge. In the ledger book, there are four main columns; those are, opening stock, receive, issue and closing stock.
At the time of starting a working day, the amount of a product which is present or available in storehouse, is the opening stock of that product. Through the whole day any kind of receive of that product that may be from central warehouse or from any sales return or from any other DMO will be computed in the receive column. The total receive amount will be added with the opening stock. Through the working day any kind of issue of a particular product that may be issued for sales to the distribution assistances or may be free issue as samples to the MPO or FM will be calculated in the issue column. The total amount of the issue will be deducted from present stock. After adding the total receives and deducting the total issue with available stock, the rest amount is the closing stock of that product and the closing stock of a product is the opening stock of that product in the next working day. •
Putting Seals on Every Product’s Packet: The store maintaining authority has to seal on every product’s packet. That seal may be three types that are DMO’s seal, month’s seal and the seal of MPO’s ID. On every product package DMO’s seal (like DHK for Dhaka DMO) and the month name’s seal (like FEB for February) must be used. But the seal of the MPO’s ID is used only on several products.
•
Balancing the Chalan Value and Invoices Value: Before stock out the products for distribution, it is the duty of store in charge to check the top sheet (chalan) and invoices by comparing every invoice’s quantity with top sheet quantity.
•
Stock out the Products for Retailing: To stock out the products for retailing to the DAs according to the invoice and chalan, is another important work of store in charge. Based on the every day’s sales order, invoices are made for retailing the products to the customers. Particular DA abides by to supply the products to a particular region’s customers. The SI gives them products according to their chalan.
•
Receiving the Return Products from the DAs: To receive the sales return products from the DAs is a mentionable task of SI. According to the return from retailing, a particular DA is bound to return the unsold products to the SI. And SI takes the unsold products as return and also maintains its accounting activities.
•
Giving the Sample Products to MPOs:
To distribute the sample products to Medical Promotion Officers (MPO) is another work of store in charge. He does this work according to the given statement by the Product Management Department (PMD). He stocks out that particular amount of product and gives those to the MPOs on the basis of their grade (A or B). •
Stock out Free Issue Products: The store in charge also has to stock out free issue products for distribution to the identified person that may be to the MPO or to the FM or to the PDM authority.
•
Preparing Monthly Stock Statement: To make a monthly statement of stock incoming and outgoing depending on the ledger book is also under the SI’s duties. Based on his daily accounts, he makes a monthly statement.
•
Receiving Things from Resigned MPO: If any MPO resigns from his/her job, then he/she has to return his bag and other materials and the store in charge has to take those things and keep them in the store room.
5.8 Duties of the Accountant Step 01: 1. Receiving Petty Cash From Corporate Office The accounts department has to receive a cash amount from corporate office at the beginning of a month to bear the office expenses through the whole month. For the regular activities of a DMO, it requires money and the head office gives a prepaid amount of money to the accountant of a DMO to keep the regular activities running. 2. Giving Advance To The Distribution Assistances And Van Drivers For the delivery of the products it requires money for the transport cost and other costs and for this DAs and van drivers have to be paid some money. By analyzing the market and observing the invoices the account department has to pay that money. Thus, the delivery assistances are paid a prepaid amount of money for their distribution expenses and which is given by the account section based on their market area. 3. Receiving Net Cash (with VAT) From DAs Distribution assistances (DA) supply the products according to the orders of the chemists and also collect money from the chemists and after coming
back to office the DAs submit their collected value to the account department and it is one of the main duties of the accountant to receive the value from DAs according to their net sales. 4. Keeping Accounts For The Collected ValueThe account section has to keep accounts for the collected money. After receiving the money from DAs the accountant has to write down the amount in an account book and also in the computer. In the computer there is a software system for keeping the accounts for sales value and the accountant just puts the value in the preset up software. 5. Deposit The Collected Money To Bank It is also the duty of account section to deposit the collected sales money from the DAs which is also collected from customers by DAs to the specified bank which is HSBC Bank. Step 02: 1. Check The Received Bill From DAs and VDs Every distribution assistance and van driver (VD) has to submit a bill of expenses (prepared in the company’s specific form) to the account section describing all of his expenses at time of distribution or delivery. And after receiving that bill the accountant has to check the bill and if he thinks that any modification is needed then he does so. 2. Preparing Vouchers For Bills And Other Expenses The accountant also has to prepare vouchers for every type of expenses. After receiving any kind of bill of expense that may be on distribution expenses or on any official expenses, he has to prepare a voucher for that bill. 3. Posting Voucher Amount To The Ledger And Cash Book Once preparing the vouchers, the accountant has to write down every voucher amount in the ledger and cash book. By this way he maintains the accounts book for all of the official expenses. Step 03: 1. Monitoring Accounts Receivable (Market Credit) It is also the duty of accountant to monitor the accounts for market credit. Now the company has decided to buy its products on the basis of cash payment. Yet the company allows some credit sale which is not more than five thousand. And the accountant monitors these credit accounts. The particular credit sale is made under the liability of which medical promotion
officer (MPO), what is the amount, or any credit collection or anything related with credit are kept in accounts by the accountant. And any credit collection is also handled like the cash collection. 2. Send ‘Cumulative Sales Report’ To The Corporate Office The accountant has to prepare reports daily on the basis of that day’s cash sales, credit collection, daily return, comparing credit collection with the previous date etc. and he also sends those reports to the corporate office daily. Step 04: 1. Reporting Monthly Statement To The Higher Management The accountant prepares a monthly Bank Deposit Statement on the basis of daily sales and accounts receivable (daily cash collection and credit collection) and he has to send that report to the Manager (F&A) of corporate office and Manager (Accounts) of head office. 2. Reporting Petty Cash Statement With Cost Estimation For bearing the office expenses throughout the whole month, the account department requires money and so they submit a petty cash statement to get the money from the corporate office. They also submit their cost estimation for the whole month expenses with the petty cash statement so that the higher management can easily understand the amount of money which is needed. They also check or verify the estimation and after that they sanction an amount to bear the operation costs of the whole month.
5.9 Delivery Section This section plays the duties of distribution to the customer of the company. Their activities are very important in the distribution system. Actually, they do the physical distribution which is directly related with the customer of the company. The employees who are performing the activities of physical distribution are the Distribution Assistances that means their job title is Distribution Assistance (DA). There are twenty DAs in the Dhaka DMO.
5.10 Duties of Distribution Assistances (DAs) •
Order Receive from MPOs: Medical Promotion Officers (MPO) know or inform about the orders of the chemists to the DMO office so that the products can be supplied. And it is the duty of the DAs to receive the orders from the MPOs through telephone or mobile. MPOs give the orders with the help of telephone or
mobile and the DAs receive these orders in an order form which is formatted by the office. •
Orders Distribution among DAs: Once receiving the orders from the MPOs of different territories, the DAs distribute those orders among them on the basis of their market area for the distribution of the products. One particular DA supplies the ordered products in particular area (such as Mrpur-1 for one DA). Only for the Dhaka City this area separation is applicable and for this task the Distribution Officer (DMO in Charge) also helps them.
•
Submit the Orders to Computer Section: Once distribution of the orders among them, one DA gets the duty of a particular area and then the DA submits his area’s chemist wise orders to the computer section for preparing the chemist wise invoices and a chalan (top sheet) which is the summary of all invoices.
•
Matching the Invoices with Orders: After getting his invoices according to the orders the particular DA has to check all invoices comparing with the orders. He has to check the ordered products, ordered value and the quantity of both invoices and orders.
•
Receive the Goods from Store In charge: Every DA has to receive products from the store in charge for the supply of those products to the chemists. According to the invoices the particular DA has to collect products from stock for the distribution of those products to a particular area’s chemists according to their orders.
•
Packaging of the Received Products: Once receiving of the products from the store in charge for distribution, the products need to be packaged because of the protection of the products in the time of distribution and also because of handling and bearing the products at the time of supply the products.
•
Receive Money for Delivery Expenses: For the delivery of the products it requires money for the transport cost and other costs and for this DAs have to collect money from the account section and which they get as prepaid system. By analyzing the market and observing the invoices the DAs want that money. And the accountant also analyses the market area and then justifies DAs’ demand and pays the money.
•
Delivery According to the Invoices:
Actually this is the main task of the DAs. When a particular DA gets the duty of delivering the products to a particular market area, he is bound to deliver those products to the particular chemists who have given the orders for the products to the MPOs. In the Dhaka city they go for Man Delivery that means they go manually without any van or other vehicle to deliver the products. They go to deliver in a particular area’s customers’ shop according to the invoices such as; one DA may go to old Dhaka for delivery to twenty chemists according to their ordered quantity. •
Invoice Value Collection from Chemists: Now the company has decided to sale their products on the basis of cash payment. So, the DAs have to collect the money or value from the chemists according to their buying at the time of delivering. The chemists receive the ordered products from the DAs and then they pay to the DAs and if they buy partial from their order they pay for that quantity. So, the DAs collect only the value of the sold amount.
•
Write Down Details about Return: The products may be returned for various reasons. A particular chemist may return the products for cash short, for the over writing in the order form by MPO or his unwillingness to buy the products or any other reasons. The particular shop may stay close at the time of delivery. Why the products are being returned has to be noted by the DA who faces the above situations and that has to be written on invoices.
•
Submit the Return Invoices to Computer Section: After returning the ordered products from delivery, the return invoices also have to be submitted to the computer section to prepare the return invoices and return top sheet. If all the products which are sent to distribute are not sold in the market, then the particular DA has to return the invoices of return products to the IT department for preparing the return invoices and return top sheet.
•
Return the Products to the Store In charge: If all the products which are sent to delivery are not delivered or sold in the market, then the particular DA has to return the return products to the store in charge according to the return top sheet.
•
Submit the Collected Money to the Accounts: At the time of delivery the DAs also collects the invoices value from the chemists and coming back to the office they have to submit the collected
money to the account section according to the invoices and this money also include the VAT. This is a very important duty of the DAs. •
Submit the Bill of Expenses to the Accounts: Every DA has to submit a bill of expenses (prepared in the company’s specific form) to the account section describing all of his expenses at time of distribution or delivery. Coming back to the office the DAs have to write down all of their delivery expenses in the co.’s specified form and submit to accounts for checking.
Chapter-6
MARKETING & CHANNEL DISTRIBUTION PRACTICE OF JALALABAD 6.1 4P’S OF JALALABAD: Product: JALALABAD produce different type of products for different reasons. They have 14 district marketing office and through these offices they provide their product to the customers & Provide desired therapeutic efficacy .Having unquestionable quality competitive presentation & price. Price: JALALABAD generally follows the mark up pricing policy according to the requirement of the country. The most elementary pricing method is to add a standard mark up to the product cost. Manufacturing companies submit job bids by estimating the total project cost and adding the standard mark up for profit. The manufactures mark up price is given in below: Markup price= unit cost/ (1-desired return on sales) Place: JALALABAD provide their product through the whole country. They have 14 DMO in 14 major place of the country for distributing the product. They have many delivery vans which goes place to place to fulfill the customers need. Promotion: JALALABAD provide different thing as increasing promotion of the product. They provide doctors pad, pen, sample product and different gift items as the promotional activities. They have also internal promotional activities as they provide incentives on sale to the sales related person. 6.2 DISTRIBUTION PRACTICE OF DHAKA MARKETING OFFICE •
JALALABAD provide their product through the whole country. They have 14 DMO in 14 major place of the country for distributing the product. They have many delivery vans which goes place to place to fulfill the customers need.
Territory schedule
The distribution is done here on the basis of a fixed day. They make the schedule in three segments. It means the days of a week are scheduled for a particular territory. The Saturday and Tuesday are for a territory, the Sunday and Wednesday are for 2nd territory and Monday and Thursday for another territory. Personnel of distribution Personnel are definitely a fact for any distribution office. JALALABAD has own skilled people
6.3 STRUCTURE OF THE SUPPLY CHAIN DIVISION
Head of Supply Chain
Secretary
Manager Planning
Executives
Manager Procurement
Head of Distribution
Executives
Depot managers
Figure 01: Structure of supply chain division.
6.4 SWOT ANALYSIS OF JALALABAD’S DISTRIBUTION: Strength---•
Brand image.
•
Skilled people.
•
Sufficient people.
•
Sufficient storing capacity.
•
Availability of product.
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Surplus product.
Weakness---•
No utilization of vans.
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Lacking of vehicle.
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Bad condition of vehicle.
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Distribution is less frequent than others.
Opportunity---•
Customer’s confidence on brand.
•
Large market opportunity.
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Utilization of vaccine and Lyophilized products.
Threat---•
Aggressive movement of others.
•
Large competitor.
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Less priced product of others.
•
Rising condition of local company day by bay
6.5 PLANNING & PROCUREMENT UNITS Activities of planning and procurement are very critical to achieve the overall objectives of the organization. Two different managers have been assigned to perform all diversified but related activities of this division. They report to the head of supply chain division. A group of dynamic and well educated executives constantly assists these two Managers in maintaining network with internal as well as external customers. In case of planning they closely work with marketing department peoples to get timely forecasting of all products. Accordingly they forecast related raw materials for production so that matching between demand and supply is confirmed. They also convey these vital information to the factory people, where they develop the production scheduling- the actual production of medicines. All these joint activities reveal the collaborative nature of forecasting of Jalalabad Limited. Manager for Procurement is responsible for purchasing related all necessary activities. In purchasing raw materials, finished products, promo-materials, machineries for plant, automobiles for distribution, supply chain division strictly follows the corporate rules and procedures of the Jalalabad. As Jalalabad is a research based pharmaceuticals company, they have to import direct components – active ingredients and recipients, from abroad. Other indirect components like Bottles, packaging materials are purchased from local sources. Various administrative activities related to import like L/C opening, Invoice, Bill of Entry etc are prepared by executives of procurement and checked by managers. They also deal with indenting firms. In this important phase they also closely work with finance department especially in case of fund transfer. Regarding local purchase all activities like, tender floating, quotation
collection, Purchase Order formatting are done by executives, procurement also. Finance and marketing department also help them in this phase.
6.6 DISTRIBUTION UNIT Another important unit is distribution. It is one of the biggest wings of Jalalabad. From site selection of depot to the final delivery every components of this department is well organized and consistent with the company’s corporate and supply chain strategy. It plays a very crucial role in storage and transportation facilities. As they have their own distribution department Jalalabad highly invested in developing distribution department to gain the competitive advantages. These depot sites were selected based on geographical and business importance. These depots also cover the distribution of their surrounding areas to ensure the complete distribution coverage of Bangladesh. Depot heads take care of their respective areas. Depot head is assisted by a group of dynamic officers, clerks, and drivers. Invoice receiving, Order entry, Invoice formatting, revenue collection all these important activities are actually done by them. Each depot has two types of facilities: (1) Space for Medicines require normal temperature, and (2) Space for Medicines requires Refrigeration- vaccines, insulin, etc. They also use two types of vehicles for transportation activities(1)
Microbus without air-condition and,
(2)
Big size truck with complete air-condition built in system.
6.7 ORDER BOOKING Order booking is usually done by the medical representatives from the chemists of respective territories. After order submission all shipment are done the very next day. In case of emergency the same day delivery is also done recognizing the high business value. In some cases order booking over telephone is also done to ensure the honor of physician’s prescriptions and chemist requests.
6.8 USE OF TECHNOLOGY Jalalabad use internet, intranet and customized computer program for their effective and efficient delivery system. All depot activities are monitored from Dhaka offices. Even other departments like, marketing, finance etc can take sales
and stocks report of any depot sitting in front of their computers. This technology based activities significantly reduce their inventory level and helps in achieving the actual matching of demand and supply.
6.9 CREDIT POLICY Credit policy of Jalalabad is developed by a collaborative effort of finance, marketing, supply chain and managing director. Credit customers are not allowed for cash business. Drug license and other necessary documents are thoroughly checked up before credit approval. Any kind of special credit facilities should be done with the prior approval of the managing director of Jalalabad.
6.10 DELIVERY SCHEDULE FOR TERRITORY The final delivery to the surrounding areas from a specific depot is usually once or twice in a week based on location and business potential. This schedule is also known as “Van Schedule”. This van schedule is important particularly to the medical representatives. According to “van schedule” each medical representative designs their own field visit planning which include doctor and chemist shops visit. Thus traveling of sales people is guided by “van schedule” to a great extent .
6.11 TRAINING & DEVELOPMENT Supply chain division arranges various training and development program for their employees. In arranging these programs Human research division plays the role of the coordinator and ensures the desired level of performance to be achieved. On regular basis depot manager gets training on depot management, credit policy and territory management. Computer operators get training on upgraded software whenever necessary. Besides these, all drivers get special training on safety driving. All these training and development programs help the members of supply chain division to become more skillful. This greatly assists the organization to gain the competitive advantages.
6.12 MONTHLY MONITORING
• These key performance indicators are integrated and mentored each month, by the respective supply chain managers and compared with predefined standard targets. • All these key performance indicators are monitored and published monthly for consultation on the intranet by the supply chain Direction. Chapter-7
DATA ANALYSIS & RESULTS •
From the calculation it is seen that 20% of the respondents think that comparing with others the quality of products of the company is very good, and 40% think that it is good and the rest 40% think that it is average.
•
From the calculation it is seen that 30% of the respondents told that the demand of the products of the company is high, 45% think that the demand is average, 25% told the response is low.
•
From the calculation it is seen that 30% of the respondents give orders more than 8 times, 10% more than 4 times but less than 8, 30% give 4 times and the rest 30% give less than 4 times.
•
50% respondents think that the distribution system of the company is very good and the rest 50% think that that is good. They are satisfied with the distribution. And they do not want any modification in the distribution.
•
Most of them prefer cash payment and a few wants credit system.
•
30% of them think that their facilities are same as other companies, 50% think that their facilities are more than other companies, 20% think that their facilities are less than other companies.
•
Their expectations from and suggestions to the company are more prescription, gifts, discount, sample, product quality and flat rate.
Chapter-8
FINDINGS
Availability of medicine: Medicines of Beximco, Jalalabad, GSK and Square are available in the market and do not discriminating the brands in terms of doctors’ preference.
Time maintaining in order collection:. Very few Chemists' (Sales personnel in Dispensary) complain about this matter. Therefore, this factor is not discriminating the different brands.
Meeting market demand: The performance of Beximco and Square is much better in this regard. Jalalabad’s condition is also good though its medicines are not equally available everywhere.
Expertise of deliverymen: The performance of deliverymen of each company is good according to Chemists' opinion.
Behavior of deliverymen: Behavior of deliverymen of most of the companies is well.
Faster delivery and quicker service: This factor does not affect the doctors /pharmacists’ preference about different brands or companies. More or less all the companies concern faster and quicker service.
On time delivery: All the companies are vigilant about on time delivery except some sudden and inevitable causes.
Companies’ vehicles cannot move to all places due to unfavorable location.
Distance is another problem.
Not all companies are regular in all places.
Sometimes due to the lack of experience and forecasting capacity of Chemists', overstocking arises as a problem.
Lack of knowledge of Chemists' about the usage of different medicines, for example, they only know about a medicine that is used for a particular disease and do not know about alternative medicines, therefore they used to stock that product.
In my search, I also wanted to know whether MPOs(Medical Promotion Officers) and deliverymen compel Chemists' to place orders and keep the consignment. The findings demonstrated that except some very few cases
they do not force or induce. In very few cases, MPOs try to fulfill their target sales and persuade Chemists' in a positive manner.
It is also found that very few orders are cancelled as the pharmacists place orders according to the demand for medicines. Still a question has been asked assuming that orders might be cancelled due to overstock or low demand. Also not all Chemists' are same in terms of experience and education.
In most of the dispensaries, Beximco and Square provide everyday delivery. In some cases, they provide weekly three to five time delivery. In this regard, both of them provide customized service. In many dispensaries they even supply daily basis i.e., delivery according to orders. Jalalabad follows standardized delivery system in this concern. Its number of weekly delivery is fixed that is it serves a customer weekly two times. This schedule is not obligated for the regular customers. This system is not appreciated by most of Chemists'. Their idea is like that, Jalalabad still holds a good image, its products are of high quality and in certain cases some of its medicines are obvious. Therefore, it should increase the number of delivery in order to make its medicines more available.
Chapter-9
RECOMMENDATIONS AND CONCLUSION 9.1 RECOMMENDATIONS: Analyzing the survey result and other relevant information, the following measures are suggested. These are not decisions rather only suggestions and are given considering the present condition of the pharmaceutical industry in Bangladesh and the Jalalabad’s position in it. Jalalabad should improve its existing distribution system. 1. Delivery schedule should be modified, i.e., the number of weekly delivery should be increased according to the demand and expectations of the Chemists'. 2. More vehicles and work force are needed for high access to the market. 3. More training session should be arranged for MPOs and deliverymen. The training should be more customer need oriented. 4. Jalalabad should be more watchful about the customers’ needs and demands. More surveys can be done in order to identify more deeply the causes of poor performance and other areas of flaws.
5. Physicians and Chemists' should be promoted more comprehensively. 6. More effective and efficient ones should replace existing vehicles. A well and scientific route plan and map should be introduced in order to reach the customers more efficiently. 7. Customers’ database should be maintained using software that is more sophisticated so that existing road map/plan can easily be modified anytime. Modern and versatile software should be used to run the process of keeping records and invoices so that anytime a recheck can be possible. 8. Crosschecking of every records and activities should be practiced. 9. Beside distribution, Jalalabad should concentrate on improving the other areas of operation as well. Vaccine should get more attention because of its temperature sensitiveness. 10. Brand equity in terms of market share should be the main focal now because distribution alone can do nothing if the customers ultimately do not demand the product. 9.2 CONCLUSION : As a poor country, Bangladesh has to depend on import in various sectors of consumption. But, the scenario is exceptional for pharmaceutical sector. Strong small local firms are now competitive and capable enough to fulfill the local demand. This is a positive sign for the country but negative for Jalalabad. Local pharmaceutical products have ample quality and some of these firms are likely to become global concern in coming time. Analyses of the findings of this study indicate that Jalalabad is facing substantial amount of problems and competition especially in distribution system in compare with other pharmaceutical companies. In addition, the recommendations and measures stated in this study have the strong possibilities for future success. Nevertheless improving the present condition depends upon the forecasting capabilities, enthusiasm and ability to face the increasing competition on part of the Jalalabad authority.