Ajith Kumar R
Head-Procurement, Natural RemediesMukund Pattapu
VP-API Global Sourcing, Lupin LimitedPurchasing is the backbone of resilient supply
chain. We send an RFI (request for information) to
the vendor asking for detailed company information,
then we send a RFQ (request for quotation) for the
serried material, further we select a few vendors
based on quality, reliability and other parameters.
We then ask for samples from vendors along with
the tech pack. Vendors are thoroughly evaluated by
analytical and regulatory departments. Vendor sites
are audited by QA. Developmental quantities are
purchased. There are query responses, analytical
query resolutions for the material.
The batches made using this material are then
kept to do stability studies. Once the vendor is
approved and launched, then commercial purchase
of the material starts. Generally during launch,
there is negotiation on commercial terms and supply
agreements after which purchase orders are shared
and regular supply begins.
In the last five years, the role has seen a lot of
changes. We don’t call it purchasing now, we call
it sourcing and procurement. Earlier purchasing
was a simple term for buying material. But now
sourcing includes identifying the correct vendors,and procurement is buying the material. There are a
lot of strategies adopted like for API purchase there
is different strategy, for packing material there is
different strategy and so on. Now, procurement and
sourcing professional has to be technically sound in
all aspects of the material that is sourced. Earlier it
was more of give the order and get material.
There are different set of rules and regulations for
different geographies. For US, the biggest market,
USFDA regulations are followed. To qualify a supplier
in Indian market, it takes about six months. For US, it
may take up to two years.
Procurement metrics may vary company wise. But
one of the important metric is OTIF-on time in full. It
means, if you commit some date, you have to deliver
on the date. In Lupin, we keep minus eight days for
material delivery.
Market analysis is done by floating enquiries
through ARIBA, getting quotations and comparing
them. Then there is TCO-total cost ownership. Here
we do the costing for intermediates and all, to find
out if the material is correctly priced. Websites like
Newport Thompson Reuters, Row 2 technologies etc
are also seen to identify active vendors in market.Explain the purchasing process
Purchase is an area where we spend money,
whereas sales is an area where we earn money. Focus is
paramount when you spend money. If earning has no
limit, spending has. It is the criticality of procurement
process. Sales plan for the year is broke down to
monthly requirement. We use funnel concept in
material planning, where one month firm requirement
and next two months’ tentative requirements are
arrived at. In natural remedies, we have four broad
categories for procurement — herbs, chemical solvent,
imports and capex. Procurement process is centralised
through ERP system.
We have a set of approved vendors. Vendor
approval process is quite an elaborate process at NRPL.
We check financial ability, process ability, and how
good the supplier is in sustaining the service level. We
have a customer-centric approach. In the last two years,
we have started a process called ‘’4 Gate Concept’’. The
process is to get customer 100% defect-free material.
The concept works on the fact that no process can give
a 100% error-free product.
There are four gates through which any material
needs to pass through before it hits the market. Gate no1: Vendor’s manufacturing
point, Gate no 2: vendors’
quality, Gate no 3 is NRPL
inward quality screening and
Gate 4 is NRPL process line. We
applied “4 Gate Concept” in 2015-16 and 2016-17 and
resulted in 65 per cent reduction in customer quality
complaints.
Crucial criteria for choosing suppliers
Apart from service level, quality and cost, we do
market survey and get market intelligence report
Your role over the last 5 years?
It happened in many fronts. Initially, supply
chain means procurement to many. But SCM is much
broader and procurement is a very critical and
important part of it. Sales is doing selling, product is
using manufacturing, R&D is doing research, so what
supply chain is doing is nothing but co-ordination. It is
co-ordination from the procurement, to the end
customer. Role has changed in phenomenal manner by
way of visualising this concept. Procurement person is
a crucial link in any organisation on its profitability and
customer service. The realisation is the biggest change
happened in recent years.(^30) COVERStory BioSpectrum | May 2017 | http://www.biospectrumindia.com