Glenmark Pharmaceuticals, the Rs250 crore pharma company is among the top 30
companies in the industry. Glenmark acquired companies and brands to fill in
important niches, set up drug discovery centers, ramped up new product launches,
set up global alliances and launched new business divisions. The company grew at
a blistering 33.4% against an industry average of 8.1%. However archaic systems
and processes had started limiting its ambitions. Coupled with the pressure on
the planning and distribution network was the imperative to monitor and control
costs. The volume of business had grown multi-fold and a wide range of products
was being sold across the country through a complex supply network. The solution
lay in integrating the business processes in order to control key business
parameters and extract value.
After evaluating various vendors, SAP was selected. Early last year, Mahindra
Consulting implemented the solution for Glenmark across 13 offices, two
factories, and an R&D center. It deployed the SAP R/3 system by selecting
modules and integrating them with the existing legacy distribution system.
First, the distribution network was integrated with the planning and production
processes. The company envisaged a system where there would be timely
availability of products across the distribution network. Materials planning was
also integrated with the production process, which in turn had to be controlled
by monitoring product configurations, formulation batches and shelf life.
Various promotion incentives had to be monitored.
With an eight-member team, Glenn Saldanha, joint managing director, Glenmark,
launched the project. But lack of exposure to integrated systems and low IT
awareness at Glenmark were challenges to achieve quality and meet targets in
time. The user team had to be trained on integrated business processes.
The legacy distribution application, which had to be integrated with SAP,
posed challenges to the Mahindra Consulting team. For one, the distribution
system had been installed recently and was not operational in all locations.
Processes were made uniform across all points on the distribution network right
away and data was consolidated. After redesigning certain business processes,
integration of the distribution system with the SAP was successfully carried out
However, SAP was not yet an easy roll out at Glenmark. The pharma business
has specific product configurations and process control requirements, governed
by agencies like FDA. The domain knowledge of the consultant organization
becomes very important in such cases. Says Saldanha, ” The consultants had
a very good understanding of the pharma processes and it was easy to ensure a
match between processes and business functionality”.
Apart from manufacturing, the pharma industry presented another specific
issue in the design of the solution. The fluctuating levels of product movement
in the distribution network greatly influence business planning in the pharma
industry. At the same time, the distribution network cannot be starved of
products because have to be available in all outlets. Such planning is usually
achieved using SCM tools like i2 or Manugistics. The challenge was to achieve
reasonable performance without such a tool. This was achieved using the
functionality available in R/3, linking distribution to production and materials
The entire SAP implementation was completed in six months. With an investment
of Rs 4 crore, Glenmark is confident that the technology will drive business
growth and bring return on investment. Says Saldanha, “The system is pretty
stable and we are now seeing the benefits of integration”. The greatest
benefit accrued is in terms of streamlining business processes which helps the
company accommodate changes in business dynamics like adding or removing
suppliers/ partners, integrating products from an acquired company, handling
changes in the distribution pattern itself, adding new locations, and the
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