At most companies, the supply chain is shrouded in mystery, despite its importance to every group within the organization. Buyers charged with ordering parts have imperfect information, approaches, and tools, often resulting in shortages, excess inventory, and late customer deliveries. For industrials, these problems are especially severe. While no forecast will ever be entirely accurate, companies can improve their predictions and achieve greater flexibility by following the segment, stock, and plan (SSP) approach to part segmentation, stocking, and planning. Importantly, we know, with diversity comes opportunity. Different types of suppliers bring different things to the table: the more diverse your supplier base, the more diverse the range of ideas and solutions you’ll get. In recent years, the term ‘supplier diversity’ has become industry-speak for inclusive procurement as ‘a proactive activity undertaken by contracting authorities to ensure that all relevant potential suppliers have the fair and equal opportunity to compete for business within their supply chains’. With supply-chain challenges becoming more intense each year, and with the demand for configured-to-order products increasing, high-mix, low-volume industrials should lead the way in implementation. Excerpts from Lokesh Sharma, President- Commercial Operations at Optimus Pharma’s recent interaction with Upamanyu Borah.
Current market position
Optimus was founded as a custom synthesis laboratory in 2004. In 2006, we established our intermediate facility and started commercial production of advanced Intermediates for various APIs. In 2014, we Acquired Optrix Laboratories and expanded capacities of manufacturing Intermediates and APIs. By 2016, we obtained regulatory approvals such as USFDA, EUGMP, WHO (GENEVA), Mexico’s COFEPRIS, KFDA, PMDA, etc. Post that, we expanded operations into finished dosages and began supplying formulations to large pharmaceutical companies.
From the year 2020, Optimus started marketing its own formulations across various categories and was the second company to get approval for marketing Favipiravir (Brand: Favicovid) to domestic and overseas market.
COVID-19 and the supply chain
COVID-19 posed as a challenge for us not only in terms of procurement and sourcing of raw materials but also dispatches for domestic and overseas exports. However, belonging to the essential services category, backed by an efficient SCM model allowed us to mitigate the challenges faced by parties in the value chain.
To ensure better preparedness, we maintain safety stock to meet any eventuality not only at our warehouse but also with other partners. We’ve built a flexible supply chain where our supplier base is diversified and alternative routes are researched on. We also utilise technology that uses ML for demand planning, supply planning, as well as cash flow modelling.
Strategic initiatives for better supply of products
To help us gain better control over the supply process, we entered into SLAs with our vendors and logistic partners to utilise their digital capabilities like live tracking, big data analytics, etc. This helped us in deploying transparency in sourcing, inventory status, demand projection, and also build and maintain strong buyer-supplier relationship.
ERP systems such as SAP are utilised for live monitoring of complete supply chain management which is an end-to-end process starting from planning to dispatch, where we monitor various stages that include inventory, stock statements at our various warehouses, raising timely requisition and purchase orders to vendors of raw materials. These include suppliers of excipients, packaging material, and capital equipment.
ERP is also used to fetch financial reports related to sourcing and supply of products, logistic partners tracking on logistic SLA v/s actual.
So we are creating and monitoring a complete vendor scoring process by utilising Advanced Information Technology Services (AITS) to strength our supply chain management processes.
Approaches to establishing coordination
SLAs with suppliers and transporters allow us to define readiness of products at vendor’s end, lead time, etc. SLAs also become an excellent way to collect data that can be a feedback loop into decision making processes.
Overall, risk management during pandemic=smooth coordination=SLA.
In case of any crisis, this will alarm us well in advance for any implication which can be corrected timely before its goes out of hand.
SLA and vendor scoring for both our suppliers and service providers (logistic partners) is important so as to share the regular feedback with them, through meetings, on where we stand in terms of the SLA and how we are further going to improve to avoid any implication in the entire line of the supply chain.
Logistics—Essential to Strategy
Logistics is the heart of our operations. We consider it critical as it helps us maintain the complex network relationship between our different business units and trading partners and timely delivery of products to retailers, etc. Regular meetings are conducted with our logistics partners to understand ways to optimise route of transportation and find its alternatives (railways, sea, air, etc.) and minimise lead times. At the same time, we enter into agreement considering specific SLA with logistic partners and keep on sharing data with them about scoring against SLA v/s actual for continuous improvement.
Outsourcing of logistics
We have a set of dedicated and reputed logistic partners for domestic and overseas supply. These partners include GATI, SafeXpress, TCI-SCS, DHL, Maersk, etc.
We choose our logistic partners basis their expertise in handling and transportation and technology to manage backend operations, depending on the size of their fleet comparing our production capacity, strong network of domestic routes and overseas, 24×7 support, RIFD live tracking abilities, ability to figure out alternatives in case of any breakdown, so on and so forth.
Agreements with logistics service providers (LSPs) are renewed based on regular performance review.
Selection through an integrated multicriteria approach
Our main modes of transport include roadways and railways. Alternative modes include sea route, air cargo, and express courier services. To understand and utilise alternative routes, our team discusses the criteria with LSPs and agents, and the same are in compliance with the SLAs.
We have a policy in place considering which mode or route we need to select for our shipment, based on the urgency or the lead time requirement of the manufacturing plant. The supply chain team will accordingly take the call and opt for the desired service from the logistics partner. Also, every shipment is accompanied with proper documentation for timely supply of product.
We have a full proof warehouse strategy in place in line with cGMP and regulatory requirements. Each product we source is being stored in the warehouse in line with the storage requirement of the product. Some products can be stored in ambient temperature while some are cold chain products and accordingly storage condition is miniated in warehouse. This also applies for the finished products as well as with our logistic partners during transport.
As already mentioned, we have an ERP in system in place that directs us on which column and which rack a product is stored along with the complete details of the batch number, manufacturing and expiry. As such, we have an end-to-end control which gives us all the visibility in terms of inventory and shelf life of the product, along with full control of what FIFO system should follow while issuing material to plant.
Guiding backend performance
Entering into SLAs with expert logistics partners have allowed us to evaluate and find less expensive transportation modes, avoid logistic disruptions, monitor and minimise lead times, reduce safety stock, and optimise inventory levels. Our logistics partners have always ensured 24×7 backend support, helping us to live-track movement of each and every general to critical products.
Trends that are reshaping the future
Advent of digital capabilities like AI, ML, big data and advanced analytics, RFID and GPS tracking, benefit supply chain and logistics managers immensely by allowing greater control on the process, costs associated and scenario planning, thereby helping mitigate supply chain disruptions and enabling the flow of robust SCM practices.