UNDER THE ESTEEMED GUIDANCE OF

A. Santosh kumari

INTERNATIONAL AND DOMESTIC
PROCUREMENT PROCESSES OF API
IN FLEMING LABORATORIES
INTRODUCTION
Procurement represents more than 50% of total costs in the
pharmaceuticals industry and plays a key role in driving
innovation, achieving marketing success, controlling costs and
risk and managing volatile raw-material supply markets.
Compared to other industries, Pharma procurement
organizations are facing significant challenges in supplier
relationship management, technology harmonization and
workforce management, since their main focus is on ensuring
regulatory compliance and creating global supply chain
transparency
The primary objectives of this project is to understand the
methods of Sourcing and Procurement of Active Pharma
Ingredients (API).To study the various factors impacting
Sourcing and Procurement activities at Fleming Laboratories
Limited.
OBJECTIVES OF THE STUDY
To study and understand the methods and processes involved in
procurement of API at Fleming Laboratories Limited.
To study the various factors impacting Logistics during
procurement of API at Fleming Laboratories Limited.
To Analyze the performance and quality requirement for
sourcing
To Assess and select new suppliers and improve supplier
performance based on the feedback provided by the suppliers.
HYPOTHESES OF THE STUDY
H
01
: There is no significant association between the product
quality and the type of the supplier
H
02
: There is no significant association between cost reduction
and the type of the supplier
H
03
: There is no significant association between on time delivery
and the type of the supplier.
H
04
: There is no significant association between Logistics
Management and the type of the supplier.
H
05
: There is no significant association between Bulk Purchases
and Cost Reduction by International suppliers.
H
06
: There is no significant association between on time delivery
and logistics management by international suppliers.
H
o7
: There is no significant association between on time delivery
and logistics management by domestic suppliers.


H
08
: There is no significant association between product quality and
meeting clients requirements by international suppliers.
H
09
: There is no significant association between Cost Reduction and
product quality of local suppliers
H
10
: There is no significant association between Geographical Location
of International supplier and the on time delivery performance metric
measurement of supplier.
H
11
: There is no significant association between employee experience
and their opinions on the importance of E-Procurement tool.
H
12
: There is no significant association between employee experience
and their opinions on the importance of supplier collaboration tool.
H
13
: There is no significant association between employee experience
and their opinions on the importance of Spend Analysis tool.
H
14
: There is no significant association between employee experience
and their opinions on current P2P (Procure to pay) drawbacks.
DATA SOURCES
3.3.1 Primary data:
A survey on Sourcing and Procurement was conducted by
means of questionnaire to derive the Sourcing and
Procurement activities at Fleming Laboratories Limited.
Efforts were directed in obtaining the view of
employees/executives who got experience in the area of
Sourcing and Procurement.
3.3.2 Secondary data:
Secondary data collection included studying the website of
the company. Information pertaining to Sourcing and
Procurement activities was obtained by referring to
journals, books; internet and other published materials for
collection of necessary data on sources of Inventory
procurement.
3.4 SAMPLE SIZE
The sample size taken for the study includes 50
employees from Procurement & Logistics in Fleming
Laboratories Limited Headquartered in Hyderabad, India.
Out of the 50 employees 34 were male and 16 were
female.

SCOPE OF THE STUDY
This study covers International and Domestic Procurement
Processes of Active Pharma Ingredients in Fleming Laboratories.
It will serves as a tool to examine the Procurement Processes
levels which helps in tracing if the suppliers are connected to the
organization and is delighted to work with the organization.
The Procurement Processes is the challenging factor which helps
the organization to get best quality Pharma ingredients and also
reduces wastage and time factor. The corporate sector is a growing
one and such burgeoning segment need researches and reports to
understand the challenges, issues and to gather information. A
more detailed research could be carried out in the next 4-5 years to
study the significance and also to keep track of changing trends.
PERIOD OF THE STUDY
This study covers the International and Domestic sources for
Procurement of API at Fleming Laboratories Limited
Headquartered in Hyderabad, India. The data has been collected
during 10.08.2013 to 09.010.2013.
LIMITATIONS
Since the population was not homogenous, some biases might
have crept up.
Non-response by some of the respondents
Sample size collected was small.
As the research time is not adequate i.e. only two months the
data has been constrained to only procurement process.
Financial factor is also another major constraint for the project.
BRIEF PROFILE ABOUT FLEMING LABORATORIES
The Name FLEMING In honor of Noble laureate Dr. Alexander
Fleming, whose invention of Penicillin marked a new era in the
treatment of life threatening bacterial infections. The FLEMING
LABORATORIES LIMITED is established in 1994 by B.RAVI
SHANKAR who is Chairman and Managing Director of the
company
Fleming laboratories limited is 90% export oriented high quality
bulk drug manufacturing company located at gummadidala,
medak district near by Hyderabad. Fleming is a major
manufacturer of cinnarzine, flunarine hcl, and cyproheptadine hcl
loperamide hcl. Well-experienced and skilled personnel are
continuously working round the clock in various departments in
Fleming.
85% of production is exported .About 60 countries in all
geographic locations.
Cross tabulation
14.b Product quality of local supplier Total
Neutral Satisfied Greatly Satisfied
13.a Product quality of
International supplier
Satisfied
Count 0 11 0 11
% within 13.a Product qlty
of Int supp
0.0% 100.0% 0.0% 100.0%
Greatly Satisfied
Count 1 34 4 39
% within 13.a Product qlty
of Int supp
2.6% 87.2% 10.3% 100.0%
Total
Count 1 45 4 50
% within 13.a Product qlty
of Int supp
2.0% 90.0% 8.0% 100.0%
Chi-square test: H
01
: There is no significant association
between the product quality and the type of the supplier


TABLE 2.1 Chi-Square Tests
Value df Asymp. Sig. (2-sided)
Pearson Chi-Square 1.567
a
2 .457
Likelihood Ratio 2.637 2 .267
Linear-by-Linear Association .516 1 .473
N of Valid Cases 50
a. 4 cells (66.7%) have expected count less than 5. The minimum expected count is .22.

S.NO

NULL HYPOTHESES

SIGNIFICANT
VALUE

RESULT
1
H
01
: There is no significant association between the product
quality and the type of the supplier
0. 457 Accepted
2
H
02
There is no significant association between cost reduction
and the type of the supplier.
0. 318 Accepted
3
H
03
: There is no significant association between on time
delivery and the type of the supplier.
0.453 Accepted
4
H
04
: There is no significant association between Logistics
Management and the type of the supplier.
0.009 Rejected
5
H
05
: There is no significant association between Bulk Purchases
and Cost Reduction by International suppliers.
0.781 Accepted
6
H
06
: There is no significant association between on time delivery
and logistics management by international suppliers.
0.000 Rejected
7
H
07
: There is no significant association between on time delivery
and logistics management by domestic suppliers.
0.002 Rejected
8 H
08
: There is no significant association product quality and
meeting clients requirements by international suppliers.
0.849 Accepted
9 H
09
: There is no significant association Cost Reduction and
product quality of local suppliers.
0.742 Accepted
10 H
10
: There is no significant association between Geographical
Location of International supplier and the on time delivery
performance metric measurement of supplier.
0.294 Accepted
11 H
11
: There is no significant association between employee
experience and their opinions on the importance of E-
Procurement tool.
0.540 Accepted
12 H
12
: There is no significant association between employee
experience and their opinions on the importance of supplier
collaboration tool.
0.849 Accepted
13 H
13
: There is no significant association between employee
experience and their opinions on the importance of Spend
Analysis tool.
0.921 Accepted
14 H
14
: There is no significant association between employee
experience and their opinions on current P2P (Procure to pay)
drawbacks.
0.342 Accepted
Findings
It is observed that 22% of the employees are satisfied and 78%
are greatly satisfied with the product quality of International
suppliers whereas 90% are satisfied, 8% are greatly satisfied and
2% are neutral with the product quality of domestic suppliers.
It is observed that 54% of employees are satisfied and 46% are
greatly satisfied with the cost reduction by International sourcing
where as 68% of the employees are satisfied and 32% are greatly
satisfied with reduced cost by souring from domestic suppliers.
58% of the employees are satisfied and 34% are greatly satisfied
with on time delivery by International suppliers while 86% are
satisfied and 14% are greatly satisfied with on time delivery by
local suppliers.
It is observed that 2% of the employees are unsatisfied, 8% are
neutral whereas 74% are satisfied and 16% are greatly satisfied
with the logistics management by international suppliers.2% of
them reported neutral,96% are satisfied and 2% are greatly
satisfied with the logistics management by domestic suppliers,
28% of the employees are satisfied and 72% are greatly satisfied
by bulk purchases from international suppliers. 54% of
employees are satisfied and 46% are greatly satisfied with cost
reduction by international suppliers. Hence cost reduction by
international suppliers does not depend on the quantities
purchased.

SUGGESTIONS
Pharmaceutical industry is more driven to gain competitive
advantage through innovative technology. Therefore employing
some of the well known technologies like Enterprise Resource
Planning (ERP), Electronic Data Interchange (EDI), Supply
Chain Management (SCM) etc., can derive value in terms of
compelling business process, tapping technological mega-
developments, reducing delays and complexities that are being
faced by Fleming laboratories ltd. with their current
procurement tools.
Only Primary reference materials are being used as
Pharmaceutical Reference Standard at Fleming laboratories ltd,
Using Secondary reference materials can eliminate time and
effort involved with preparing and validating ones own working
standards and it is also price advantage relative to primary
reference standards when larger quantities are purchased.

Adopting some more risk management strategies through the
consistent use of the tools/methods and periodic review will
reduce the number of threats or minimize their impact on
sourcing and procurement activities of Fleming laboratories ltd.
Expanding the use of E-Sourcing Tools for project management,
reporting, e-request for X (eRFxs) and online reverse auctions,
process integration will add value to the business.
Adopting alternate purchase methods like P Card , Purchase
Order (PO) process, Evaluated Receipt Settlement (ERS ) within
P2P will reduce delays and complexities that are being faced by
Fleming laboratories ltd. with their current P2P (Procure-to-Pay)
process.

CONCLUSION
The study at Fleming Laboratories Ltd. shows that the product
quality, cost reduction and on time delivery of raw material does
not depend on the type (International or domestic) of the
supplier. It is also noticed that cost reduction by international
suppliers does not depend on the quantities that are purchased.
Similarly cost reduction by domestic suppliers does not depend
on the quality of the product they supply.
The supplier selection processes are very important to
organizations nowadays since choosing the one that fits best the
companys needs, can bring significant savings. This research
signifies that the supplier performance measurement criteria most
commonly used by pharmaceutical industries are quality,
delivery and service. Our study is concerned with mitigating
supplier failure risk hence risk transfer is the key supply risk
strategy implemented by Fleming . Ultimately, applying risk
management to pharmaceutical industry should reduce the
number of threats or minimize their impact through the
consistent use of the tools/methods and periodic review.