Abstract
The rise of demand and supply chain management is of particular relevance to outsourced contracting companies as they are but one cog in a complex chain and have no end products of their own. They rely upon a range of customers and suppliers (the two sometimes being the same entity), who are in turn dependent upon the contract packer. This leads to a complex supply chain where profit margins are generally small and where internal process efficiency and excellent customer service are critical for survival. In this chapter, three projects that introduced new technologies to improve processes or services are reviewed. They all aimed to increase revenues and drive down costs but achieved mixed outcomes.
TopCompany Profile
In 2003, Brecon Pharmaceuticals Ltd (BPL) was an independent company based in the Wye Valley Business Park, near Hay-on-Wye in Hereford, UK. The company provided “outsourced” services to the pharmaceuticals and healthcare industries, principally the packaging of manufactured drugs and of new drugs undergoing clinical trials. BPL’s reputation was founded upon a high quality, flexible service. The company’s corporate vision was to achieve “growth through excellence” where “excellence” is defined as “the customers’ confidence in the company’s ability to deliver according to their requirements” (Momenta, 2005, p.2). The market for outsourcing in the UK pharmaceuticals industry was circa £50m per annum and was expanding by at least 5% per year. BPL had a 10% share - its main competitors being the other UK outsourced packaging providers, including Unipack (£20m turnover) and Penn Pharmaceuticals Ltd (£14m turnover). BPL’s business plan was to grow turnover from £4m in financial year 2001 to £22m in 2007, increasing pre-tax profits from £0.5m to £4.4m over this period. By 2005/6, however, the company had increased its turnover to £11m, and with substantial investment in new packaging facilities and successful contracts agreed with international drug companies (e.g. Eli Lilly), was well placed to pursue its growth ambitions. Today, in 2018, after a number of sales and mergers, the company is now part of Packaging Coordinators Inc (PCI), a global packaging business owned by private equity company Frazier Healthcare.
Project Rationale
The ability to respond rapidly to customer requirements is a key factor in obtaining business and BPL held some spare capacity, in terms of machinery and facilities, which could be “switched on” at short notice. Typically, the firm order book was only two to three months long, but it took approximately six months to recruit and train staff to the required standard or, where necessary, to order and install new equipment. In order to maintain its competitive advantage, BPL had to optimise the management of its resources, making efficient use of existing facilities and timing the introduction of new equipment and qualified staff to best effect.
As the company grew, it became clear that its information systems needed to be robust and scalable to support the planned increases in business volumes. In line with this growth, the number of employees increased from 162 in 2003 to over 300 in 2006, bringing associated challenges in managing employee data, and the administrative burden of an increasing range of employee benefits. BPL had to replace the existing mix of manual and non-integrated computerised systems, which were inadequate for an expanding business and could have seriously undermined the planned expansion. It was also accepted that these new systems would need to be accompanied by significant process change, but the company did not have the in-house skills necessary to introduce technology and process change simultaneously on such a scale.
Key Terms in this Chapter
K: Is used to denote thousands, particularly in the context of costs or savings e.g. £150K.
PRISM (Professional Information Systems Management): A systems development and project management methodology originally developed by Hoskyns. A straightforward, logical, and easy-to-follow approach to systems development and software package acquisition and implementation.
PRINCE2 (Projects in Controlled Environments): A mainstream project management methodology used extensively in the UK and internationally by both Government agencies and the private sector. It is strong on quality control and risk management and projects using the methodology are run by a Project Board. ® PRINCE2 is a registered trademark of AXELOS Limited, used under permission of AXELOS Limited.
Good Pharmaceutical Manufacturing Practice (GPMP): Is a system and set of procedures that ensures pharmaceutical products are manufactured to established quality standards.
Laboratory Information Management System (LIMS): A software package that is specifically designed to support laboratory operations. Sometimes these systems interface or integrate with the larger corporate ERP system.
Teaching Company Directorate (TCD): This was the original UK Government agency that ran the Teaching Company Scheme (TCS), the forerunner to the KTP scheme. It was succeeded by Momenta in 2003, then by the Technology Strategy Board in 2007 and Innovate UK in 2014.
Enterprise Resource Planning (ERP): An integrated software system that supports all business functions in a company. Originally used mainly by large companies, they are now being deployed by small to medium sized enterprises as well. Examples include SAP, Oracle, EFACS, and Sage.
Knowledge Transfer Partnership (KTP): A UK Government scheme to support the transfer of knowledge and expertise from the university sector to companies and organisations. Projects often concern technology transfer and are typically of 2 years duration.
Material Requirements Planning (MRP): A software system that is used for production planning, scheduling, and inventory control system in the manufacturing process. Such a system can be one module in a larger ERP system.