Back Score on supply
Raja Simhan T.E.
| Technology has helped a Chennai-based distributor for pharmaceutical companies to move drugs faster and smarter. Here's the story. |
THREE years ago, when eWorld asked a couple of entrepreneurs of small and medium size enterprises (SMEs) how they planned to use technology, they said, "We want to convert manual work into computerised tasks."
With a personal computer and a data entry operator, they did not look beyond this.
Since then, however, things have changed dramatically.
Today, SMEs are using the power of technology to improve overall efficiency in the company, and outsmart competitors by having direct links with various players in their chain of operations, including suppliers and customers.
One such SME is the Chennai-based Palepu & Co that is into sales and distribution of pharmaceutical products, and has benefited from using Forum, a supply chain management solution of Sify Ltd, the Chennai-based Internet and e-commerce firm.
Palepu is distributor for large pharmaceutical companies, including Cipla, GlaxoSmithKline and Dr Reddy's.
P.S. Gopal, Palepu's owner, believes that there are only two ways of retaining a customer: either by providing markedly more reliable and timely delivery of stocks against chemists' orders, or by offering goods at a significant discount to their retailer price (not a good business practice).
Therefore, the choice is clear: It is the first way - timely delivery of stocks - through the use of technology.
Operating from Moore Street, a narrow and congested lane in Parry's Corner, one of Chennai's busiest business locations, Palepu implemented Sify's Forum in June 2003 to manage its sales and distribution operations across three branches.
And, the benefits started flowing gradually.For instance, the process time — from taking an order to delivering drugs to the end customer — has come down, from seven-eight hours earlier to three-four hours.
Similarly, customers are given the right drugs at the right price (the price given to the retailer, which could vary from time to time) and with the right batch number. The company can now track the expiry date of drugs and prevent drugs past the expiry date from entering the market.
The software is linked with the finance department. This helps Palepu to create credit limits for each retailer.
An alert is generated when the limit is exceeded, and delivery of stock to the retailer is stopped, says Gopal.
Typically, the day's work at Palepu starts at 7 a.m., with an army of 32 salesmen making contact with individual chemists across Chennai, taking down orders and ensuring delivery of stocks.
These salesmen communicate the order to data entry operators at Palepu's office through mobile phones.
The operators enter the requirement in the system, giving details of the retailer's code, the drugs (with code) sought for, and the quantity.
The information is sent to the godown, through a local area network, and stocks are despatched accordingly. In his computer, Gopal has a virtual godown to track the inventory level, and places orders with drug manufacturers accordingly.
The whole thing was a nightmare before the introduction of Forum, says Gopal. After collecting orders from retails shops, the salesmen used to communicate them to the office using a public telephone.
There would be frequent problems in the telephone lines, and the four telephone lines would always be engaged.
It used to take eight-nine hours to despatch the drugs to customers, he says. Palepu has been distributing pharmaceutical products in Chennai for the last 40 years.
Started with an invoice value of Rs 101, the company today churns out around 700 invoices a day, does around Rs 3.5 crore worth of billing a month, and supplies drugs to around 4,000 retail shops in Chennai, he says.
Easy does it
Forum has made things easy for Palepu, says Debjyoti Paul, Business Manager, Sify Ltd.
For example, when goods are transferred between branches, the stock transfer notes are electronically transmitted through the Internet (in a process similar to electronic data interchange, implemented on the Internet).
Even within each office (Palepu has two branches at Tambaram and Ambattur), the benefits are evident. Transactions are executed on their LAN (local area network) much quicker due to superior database handling.
The time taken to print large numbers of invoices has been reduced significantly, and the time taken to generate the necessary reports at month-end has also come down.
The entire business process is now reliable and it is simple to control operations across branches, by using a dial-up Internet connection for synchronising transactions across locations.
Palepu had a cumbersome process in place before introducing Forum.
The first step in the exercise was to have the branch office estimate what stocks, and how much of them, was needed.
This was a manual process in which the details were compiled and communicated to head office on phone.
The head office would have the manager or accountant or Gopal himself scrutinise this vis-a-vis expected stock levels at the branch.
After due validation/modification, the despatch details were prepared. Stocks were despatched along with a file copied on to two floppy disks (one for backup) containing the details of the stock transfer.
The file would be uploaded from the floppy at the recipient branch to update stocks in the branch software.
With Forum, the process was dramatically streamlined. The head office can pre-configure the `Stock Norm' at the branch office based on current sales to ensure that Stock Requests are automatically generated when the branch office needs stocks.
The branch office connects to the Internet through a dial-up Internet connection and at the click of a button, the details are received at the head office. (These details are pre-validated since the request is automatically generated based on rules set by the head office. Therefore, even a cursory review will do).
At the head office, the authorised person just needs to click on another button to generate the Stock Transfer Note.
Stocks are accordingly shipped to the branch and a copy of the Stock Transfer Note is automatically sent back through the Internet to the branch office.
Based on this, the branch office can update its inventory records immediately at the click of a button.
Palepu had faced constraints in handling large volumes of business data with its earlier software, which was in the DOS version.
Typically, handling more than one month's data was not feasible and therefore, any MIS (management information system) report that had to be generated for prior months required a laborious and elaborate process.
However, Forum operates on a superior and more scalable database and relevant reports are just a button-click away.
It is also possible to consolidate MIS reports from branch offices through the Internet at the click of a button, which is a significant benefit for Palepu, says Paul.
Forum is available in two flavours: one, a fully integrated supply chain solution (commonly called the Full Version) and the other, a standalone micro-ERP (enterprise resource planning).
The full version is available on a `pay-as-you-go' pricing model, in which the customer pays a monthly fee that would be less than the cost of employing a low-end unskilled staff.
The standalone Micro-ERP again is available at a price of Rs 11,000, says Paul.
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