1.

INTRODUCTION

1.1 Origin of the report:

This report has been prepared to fulfill the partial requirement for the course
Financial Information System and IT in Business (F-406), for Muhammad
Bakhtear Uddin Talukdar, Lecturer, Department of Finance, Faculty of
Business Studies, University of Dhaka.

1.2 Objectives:
Management Information Systems (MIS), is an essential discipline that covers
the application of people, technologies, and procedures to solving business
problems. The main objective of this report is to make use of the various MIS
concepts of analysis that has been taught in the Management Information
Systems Course to evaluate a real life situation or problem and then to
present the analysis in an organized manner .
Our objective for this term paper is to analyze various methods of MIS that
can be applied to determine a cost effective Supply Chain Management for
Apex Pharma, a sister concern of Apex group. The contemporary
performance of the company will be measured and then will be compared the
proposed changes in their Distribution System.
An outline of the objectives:
• Identify the existing practices of Supply Chain Management for
Pharmaceuticals and understand how Management Information System
is incorporated in the current practice.
• Identify the loopholes in the existing process
• Identify the role and reporting alternatives of management
information systems
• Identify the existing proportion of Time, Cost, and Quality dedicated in
every step of the process and Compare the change in these
parameters with the envisioned system.

1.3 Scope:

1
This report is based on the findings of only one of 16 depots of Apex Pharma.
The selected depot is situated at the Tejgaon industrial area. In total the
aforementioned firm has 16 depots in the country.
The report deals with incorporation of new practices of Information system to
bring down the Supply Chain Management.

1.4 Methodology:
The information required to plan the report can be classified into
Primary data
Secondary Data
 Primary data was collected through interview with Mr. Mohammad Ripon,
respected personnel of Apex Pharma
 Secondary Data constitutes the various on-line articles and newspaper
excerpts that were consulted during the preparation of this report.

1.5 Limitation:
There were some limiting factors that hindered the progress of the report.
The report was written within a relatively short time span, research on how
factors change with various seasonal diseases could not be conducted and
certain time schedules may be erroneous.

1.6 Industry Background:

The pharmaceutical industry is one of the most important industries of a
nation since medicine is directly related to human life. This industry plays a
major role in the development of the country by improving health care
standards, providing employment for thousands of people and earning
foreign exchange through export.
The pharmaceutical industry has evolved in the last twenty-five years. In
1981, there were 166 licensed pharmaceutical manufacturers in the country,
but local production was dominated by eight multinational companies which
manufactured about 75% of the products. After the introduction of the Drug
(Control) Ordinance of 1982, local companies improved the range and quality
of their products and began to emerge as key players in the industry.

2
As a LDC Bangladesh is exempt from meeting WTO patent regulations till
2015 and therefore the pharmaceutical industry has the potential to achieve
strong growth and establish itself firmly in both domestic and foreign
markets.
In 2005 Bangladesh pharmaceutical market was worth US$ 504Mn. And it is
growing at a steady average rate of 17.18%. The Pharmaceutical Sector is
the second highest contributor to the National Ex-Chequer and the largest
Labor intensive employment sector of the country. With an annual domestic
turnover of above US$ 500Mn among the 49 LDCs Bangladesh is the only
country that is near self sufficient in pharmaceuticals. A number of 21 local
pharmaceuticals companies are now locally producing products. Today,
Bangladesh Pharmaceutical Industry is successfully exporting its quality
products to about 69 countries.
Physical distribution of pharmaceuticals in Bangladesh has evolved in a
unique way. Unlike other countries Bangladesh pharmaceutical industry is
more retail oriented and bulk of distribution is done by the companies
themselves. Pharmaceutical companies distribute their products from their
own warehouses located in different parts of the country, as no professional
distribution house is available. Wholesalers play a limited role in this regard
since companies supply goods to both retailers and wholesalers. Recently, a
number of industries equipped with modern infrastructure facilities are
maintaining international standard. Packaging of the produced
pharmaceutical items is also developing simultaneously.

1.7 Company Overview:

Apex Pharma began its journey in Bangladesh in the year 1981. It is the sister
concern of Apex Group, established in 1972 Apex Group has a very diverse
business portfolio ranging from garments and medicine to footwear
machineries. Some of the sister concerns of Apex Group, Gallery Apex, Apex
Tannery and Quantum.
At present Apex, manufactures and markets its `branded generics' for almost
all diseases, both in national and international borders. Every year it launches
a handful number of new product in the market to capture a wider range of
the population.

3
Apex Pharma is acclaimed both domestically and internationally for its
outstanding product quality, world class manufacturing facilities, product
development capabilities and outstanding service.
As a company committed to provide a continuously improving level of
service to its customers, the team of trained human resource comes in the
scene. The management is in the hands of experienced professionals with
their efficient handling of business and company policies. The management
of Apex Pharma also believes that it is the man behind the machines who are
the key to success.

4
2. EXISTING SYSTEM

2.1 Functional Capability

The concerned functional capability of the pharmaceutical company is the

Supply Chain Management ranging from receiving orders from the
pharmacies to delivering the products to the hands of the customer.
2.2 Process Model

The Medical Promotion Officer (MPO) visits various doctors at different

chambers and clinics to promote the products of Apex Pharma. Next, he visits
different pharmacies and takes orders in an Order Sheet. The Order Sheet is
a form containing a list of all the available products where the goods ordered
along with quantities are marked. It has three carbon copies, each of which
are kept with the customer (pharmacy), the MPO and the depot. The MPO
delivers this information along with a copy of the Order Sheet to the depot in
person or through telephone if the customer wants the goods immediately.
However, if he is out of his station, he may mail the Order Sheet through a
courier service.

Invoice and MPO carries

Summary sent Central
order to depot
IT
Information
against SCR
sent

Returns MPO takes

DA SCR order
delivers (Invoice)
products

5
Each depot has a Depot-In-Charge (DIC), an IT Officer and a Store Manager/
Store Assistant. Upon receiving the order, the DIC sends the Order Sheet to
the IT Officer. The IT Officer inputs the information into the company software
which has been custom-designed for the company by Big Bang.
The IT department issues the invoices for each customer and creates a
summary for each Delivery Assistant (DA) or Sales Representative. The
summary contains a list of deliveries the DA is to make to specific customers
along a designated route. The summary is sent to the Store Manager who
issues the products from the stock of inventory in the store. Next, the DIC
physically cross checks the summary with the products to ensure accuracy
and issues these to the DA for delivery.
The DA goes to respective customers to deliver the products. The company
has two delivery vans, but the DAs often use rickshaws of buses for short
distances when the usage of company vans would prove to be uneconomical.
The DA delivers the products and collects the payment and returns to the
depot. He hands over the money to the DIC along with a Sales Collection
Receipt (SCR). The SCR contains the name of the customer, the date, the
invoice number, the amount and if the sales have been made for cash or on
credit. The DIC submits this money in a company bank account and gives the
SCR to the IT Officer who inputs the information into the software and
updates the customer database.

6
 Scope for improvement

The detailed steps flowchart is given below:

MPO receives order from customer

Purpose
MPO submits Order Sheet to DIC at the
Order Order Sheet depot
Step 1
Input Output Purpose Order Sheet at depot

Performance Step 2
Output
Input
Performance
Time: MPO receives order from
pharmacies and records them in an Time: MPOs takes order from the pharmacy and
Order Sheet. It takes on an average 10- returns to the depot, where he submits one copy of
15 minutes to write down the orders in the Order Sheet. He visits the depot twice a day
the Order Sheet. to hand over the Order Sheets to the DIC. It takes
Quality: Satisfactory a minimum of 5 hours and a maximum of 8 hours
Cost: Some cost in terms of salary of for an MPO to take order and return to the depot.
MPO is involved, along with pen, If the MPO is very far from depot and it is
Order Sheet, conveyance. impossible to come within the day, then MPO
couriers it to the DIC which takes 1 to 1.5 days
(not applicable in this specific case). If the
pharmacies require the goods immediately, the
MPOs phone in the orders. It takes an average of 5
min over the phone (rare). Here we consider only
the return journey of MPO from customer which
varies from 40 mins to 80 mins.
Quality: Satisfactory, although error may occur
when the MPO gives order over phone and DIC
copies the order.
Cost: Some cost in terms of salary of MPO, DIC,
IT Officer inputs information and makes summary transportation courier and mobile bills.

Order Sheet at Purpose

depot SCR and Summary Store Manager issues products
Step 3
7
 Input Output Purpose

Performance Step 4 Inventory

Input Output

Time: The IT manager of the depot Performance

inputs the details of the Order Sheet on
to the computer which takes on average Time: The store manager receives the
10-12 min. The custom designed summary sheet from the IT manager.
software designed by Big Bang then The summary sheet is a compilation of
prepares the invoice and a summary for the orders according to the zone divided
each DA and gives it to the store for each DA (Delivery Assistant). It
manager. It takes 20-30 minutes to takes on average 20- 30 minutes to load
prepare each summary. These data are the products according to one DA’s
mailed to the Central IT at CDC every summary. For each order, it takes an
night through cyber cafés for average of 1.5 min to load the products.
adjustments. Quality: Unsatisfactory. Since this
Quality: Manual input by the IT process is manual, wrong products may
manager makes it error prone and may be loaded.
result in wrong invoice or summary Cost: Some costs in terms of salary of
sheet. Store Manager are involved (4000).
Cost: Some costs in terms of salary of
IT Officer (BDT 5000).
DIC cross-checks products with summary

Purpose Inventory issued to DA

Verified
Inventory Purpose
Inventory Step 5
Output Products
Input Step 6
Input Output
Performance

Performance
Time: DIC physically cross checks the
summary of each DA with the products
unloaded by the Store Manager. It takes Time: It takes on average 15-20
on average 15-20 minutes to check each minutes to explain and issue products
summary with products. For each order, according to summary to one DA. For
it takes an average of 1.5 min. each order, it takes an average of 1.5
Quality: Satisfactory. min.
Cost: Some costs in terms of salary of Quality: Satisfactory.
DIC are involved. Cost: Some costs in terms of salary of
DIC and DA are involved.

DA delivers products and collects money

Time: The DA goes to respective
customers to deliverPurpose
the products. The DA submits SCR and money to DIC
distance traveled by each DA is broken
Products SCRand
and money Purpose
Step 7Ex Station
down to Headquarter,
InputOutstation. Headquarter is within 15 Verified SCR
km radius of the depot, and takes a Step 8
minimum of 10 minutes to go to the Output
closest pharmacy, Performance
within 1 km and
come back to the depot. Outstation is
Time: After delivery of the goods, the
out of the city and at a maximum Performance
DA returns to the depot and submits the
distance of 100 km, taking up to 8
SCR (Sales Collection Receipt) and
hours to deliver and return.
money to the DIC. If it has been a
Quality: Unsatisfactory. It would be
credit sale, he submits only the SCR
faster if more company owned vehicles
with details of the credit sale. It takes
were used
15- 20 mins for the DA to explain and
Cost: Some costs in terms of salary of
hand over the money and SCR to the
DA, driver’s salary, fuel, etc. (BDT.
DIC. For each order, it takes an average
4300 per DA a month.)
of 1.5 min. 8
Quality: Satisfactory.
Cost: Some costs in terms of salary of
DIC and DA.
 DIC submits SCR to IT officer who inputs information

Purpose

Updated
Verified SCR information
Step 9
Output
Input

Performance

Time: DIC upon receiving the SCR

gives it to the IT manager who inputs
all the information into the computer.
The customer database is updated. It
takes on an average 10 minutes for the
DIC to explain to the IT Officer and 2
minutes for the latter to input one SCR.
On average 220 to 880 invoices are
received. The IT officer would then go
to a cyber café and mail the
information. This takes an average of
15 min.
Quality: Unsatisfactory. Wrong data
input may cause erroneous invoice.
Cost: Some costs in terms of salary of
DIC and IT Officer are involved.

2.3 Performance Parameters

Step 1 Step 2 Step 3 Step 4

Min Avg. Max Min Avg. Max Min Avg. Max Min Avg. Max
min min min min min min min min min min min min
10 12.5 15 40 60 80 10 11 12 1 1.5s 2
20 25 30

9
 Step 5 Step 6 Step 7 Step 8
Min Avg. Max Min Avg. Max Min Avg. Max Min Avg. Max
min min min min min min min min min min min min
1 1.5 2 1 1.5 2 5 7.5 10 1 1.5 2

Step 9
Min Avg. Max
mi min min
n
1.5 2 2.5
12 15 18

10
2.4 Role of System Components

2.4.1 People

In each of the 16 depots, there is a Depot-in-Charge (DIC), an IT Officer,

a Store Manager in addition to the Medical Promotion Officers (MPO)
and Delivery Assistants (DA).
i. Depot-in-Charge (DIC):
The DIC maintains all functional activity of the depot. He is entirely
responsible for ensuring timely execution of orders and supply at the point of
sales as per commitment of the sales force by:
 Receiving orders from the MPO

 Giving the order details to the IT department for invoicing and

summary

 Cross checking goods with summary and issuing them to the DA

 Collecting money and SCR (Sales Collection Receipt) from DA

Moreover, he maintains all vehicles (deliver vans), keeping track of fuel,

driver’s cost, etc. He reports directly to the Central Distribution Office.

Therefore, the DIC’s job is a composite function of sales administration,

employee management, sales management, expense management,
communication and customer service (both internal and external).

ii. Store Manager:

He is solely responsible for the store and stocks. His main job is the
arrangement of physical delivery of goods to the DA as per the summary
issued by the IT officer. He is also responsible for the safety and security
of the store/warehouse and stock. He plays the following role:

 Receives the invoices and summary from the IT department

 Unloads the products accordingly

 Gives the goods to the respective DA

11
iii. Deliver Assistant:
There is DA who has an assigned route to deliver products according to a
summary. He reports directly to the DIC. His jobs are
 Delivery of products to pharmacies
 Collect cash payment or record credit payment
 Submit the money and SCR (Sales Collection Receipt) to the DIC.

iv. Medical Promotion Officer:

The MPO also reports directly to the DIC. His jobs are:
 Collects information from Pharmacies, i.e. what goods are available and
what are running short
 Visits clinics and doctors and promotes products
 Collects orders from pharmacies
 Records all orders in the order sheet
 Delivers the Order Sheet to the DIC either in person or courier if
customer needs immediate delivery
v. IT Officer:
IT Officers reports directly to the DIC. The list of his jobs is as follows:
 Maintains database of doctors to be visited MPOs
 Maintains database of customers and their previous sales records
 Inputs orders from Order Sheets and creates invoice.
 Makes summary for each DA containing the list of products they owe to
deliver customers.
 Inputs information from CSR.

2.4.2 Machines/Tools
i. Software
The software used by Apex Pharma was designed by Big Bang.
 Invoicing: They have a customer database which has IP/ code name
for each customer. The IP officer inputs info from the order sheet and
prepares the invoice
 Summary: the software is also used to create a summary for each DA

12
  Input SCR (Sales collection receipt): The software is also used to
input info from the SCR. By using the invoice number and clicking on
each chemist’s ID number the it officer can record his payment

ii. Hardware

 Computers in each depot, equipped with printers and scanners.

 Database Server Computer in the CDC

iii. Database

They have a database that consists of the following lists:

 Doctor’s list
 Customer’s list
 List of previous transactions/ account’s balance. E.g.
 Previous month’s dues Collection
 Previous month’s dues
 Deposit up to last month

iv. Communication Network

 LAN at CDO (Central Distribution Office)
 Courier services
 Email from cyber cafes
 Communication through phone

13
14
2.5 Relationships of Component roles to Performance Parameters (only time has been considered):

People Software Hardware Database Network

Role PP Role PP Role PP Role PP Role PP
MPO receives 12.5
order mins

Transports 60 mins
order via
van, bus,
rickshaws/
courier
service/
phone
IT Officer 11 mins Software 11 mins Types & 11 mins Stores & 0.5
inputs to input, prepares to input, displays to updates min
information 24 mins summar 24 mins informa input, Customer
and makes to make y to make tion 24 mins &
summary summar summar to make inventory
y y summar Database
y
Store 1.5 mins
Manager
issues
products

15
manually
DIC cross- 1.5 mins
checks
products with
summary
Summary 1.5 mins
and
Inventory
issued to DA
DA delivers 7.5 mins
products and
collects
money
DA submits 1.5 mins
SCR and
money to DIC
IT officer 2 mins Software 2 mins Types & 2 mins Stores & 0.5 Sends data 15 min
types in each stores displays Updates min from a cyber
order at data informa Customer cafe
depot against tion database
each
invoice
Total Time: Time: Time: Time Time:
123 37 min 37 min : 15
min 1 min

16
min

17
3. OPTIMUM ROLES FOR SYSTEM COMPONENTS

Roles Peo Soft Hard Dat Net Comment

ple war ware aba wor
e se k
Existing (a)/ a b a b a b a b A b
Envisioned
(b)
Receiving √ √ × × × × × × × × The current system of receiving
orders orders is optimized for people.
Submitting √ √ × √ √ √ × √ × √ The current system is not
order to DIC optimized. Here SMS system
at depot needs to be introduced in order to
save time required by MPO to
communicate with depot.
Information √ × √ √ √ √ √ √ × √ The current system is not
input and optimized as manual input of data
summary is required. This role would be
played by the software which will
optimize through time saving and
accuracy.
Issuing √ √ √ √ √ √ √ √ × × The current system is optimized.
product The current system uses a
combination of software, hardware
and manual functions that is
effective.
Cross √ √ × × × × × × × × The current system is optimized.
checking Here people’s intervention is
product required.
Issuing √ √ × × × × × × × × The current system is optimized
inventory for people.
Delivering √ √ × × × × × × × × The current system is optimized
products and for people.
collecting
money
Submitting √ √ × × × × × × × × The current system is optimized
money and for people.
SCR
Inputting √ √ √ √ √ √ √ √ × √ The current system is not

18
SCR optimized. The introduction of
information company’s internet service would
enhance the performance.

19
4. THE ENVISIONED SYSTEM

In our proposed model, we introduce an instant order placement system through

cell phones which will allow various automations in the whole process.

4.1 Functional Capability

4.1.1 SMS order placement

Medical promotion officers, instead of collecting the orders and submitting them
at the end of the day or at least after a certain period of time, will place their
orders through SMS. The SMS will use codes to specify the order. The syntax will
be as follows:

Customer Code_ Product Code(1)_ Product

Quantity_ Product Code(2)_ Product Quantity_
Priority Level
The four letter shop code will include information
on area and name of customer, such as: KB ABC T9

(kalabagan), BH (Bhuiyan Pharmacy). KBBH_AT5

The three letter product code will follow, such as
_02_AT2_02
_CG0_02_5
AT5 (Aptoridin 500 mg), including the name and
specification of the medicine.
Finally, there would be the information on quantity
of the product needed, such as, 02 for 2 boxes of
the tablet. This will require two more characters.
In total, detail of one product will require 7
characters, including two spaces, and one sms will
accommodate orders of up to 22 different
medicines (including 4 characters for the shop
code). The remaining digit can be used to mention the priority of the order, on a
scale of 5, 5 being the most urgently needed.

20
This SMS order placement will not replace the order sheet. The order sheet will
be filled up as per the customer’s request. After the order is finalized, the MPO
will send the SMS order, and keep the order sheet to himself for reference. This
reference, if need be, can be cross checked with summary of SMS sent from
each MPO.
4.1.2 Benefits
In the current system, MPOs collect the orders and brings them after a certain
number of pharmacies have been covered and sometimes even end of the day.
This means the orders placed in the morning are delayed by the whole day. The
instant SMS order placement will benefit the organization in multiple ways. First,
the depot will be ahead of time to prepare the items for delivery. As soon as a
certain number of orders have been placed from a certain area, the deliver
assistant can be sent with the items. This would drastically reduce the delivery
time. Also, the Central Distribution Center will be informed real time on which
depot is using up which inventory and needs replenishing, so that it can arrange
for a delivery to the depot as soon as possible. This would especially help at
times of increased demand of particular product. Another advantage is that the
depot will no longer require preparing a requisition order for the CDC. There will
not be a need for an IT personnel.
Further implications of this method involve the ease of use of the technology.
Every MPO has a mobile and has knowledge of how to send an SMS. There will
be a list of customer codes and product codes to each MPO.
Below the process is explained through Cost, Quality and Time.

Cost: Other than at the receiving end, there is no setup cost involved. This is a
highly efficient solution for the cheapest possible cost.

Time: As mentioned early, this drastically reduces the delivery time. MPOs will
not have to return in person to the depot to submit the orders, saving both time
and transportation cost. Instant orders will allow more time for the store
manager to arrange the products for the DA to deliver. No time is wasted to
prepare requisition order for CDC. CDC is has continuous update on depot

21
inventory status against the placed orders, and can send supplies as soon as
needed.

Quality: Since no one is inputting these order sheets manually, there is no

chance of errors (How the error on sent SMSs can be minimized is discussed on
the software part). More time allowed means better inspections and cross-
checks to minimize human error. Reduced travel time and cost of MPOs mean
more concentration on order generation. Managers can visually see the
activities of the company, performance of depots, individual MPOs, DAs etc.

4.1.3 Software
The software at the central IT will collect the SMSs and input the data into the
database. As soon as a substantial amount of order has been accumulated, the
software will automatically generate a summary sheet for delivery and send it to
the relevant depot. Also, sales credit report on each customer will also be sent
to the depot. The depot will take print-outs and assign a DA to deliver them. The
DA, according to the summary, will deliver the products, and return the SCRs
with either cash or in credit. The depot will input the code of SCR and the
payment status into the software and update it.

Invoice and
Summary sent Central
IT Order sent
Information from mobile
against SCR
sent
ABC

T9
KBBH_
AT5_02
_AT2_0
2_CG0_
02_5

Returns
DA SCR
delivers (Invoice)
products

22
4.1.4 Error Detection
The software at the central IT will detect any faulty input in SMS. The spaces
between the values in the SMS will define the variables. Each variable must be
correct according to the list provided. For example, for the name of the product,
say paracetamol 500mg, if the code PC5 is entered wrongly as PA5, this error
can be detected in several steps. First, there might not be even a code as PA.
Second, even if in the remotest chance, there is one product with the code PA,
there is a high chance that the product does not even have an mg value similar
to that product.

4.2 New Process Model

23
Details of the new process model are given below:

MPO receives & submits order to Central

depot, IT office & regional depots via SMS
Purpose
Ordering Information Software generates summary and SCR
Order Purpose
Step 1 Summary &
Input Output SCR
Step 2
Output
Performance Input

Performance
Time: MPO receives order from
pharmacies in an Order Sheet. It takes on an Time: There is no need for any data
average 10-15 min. He then sends an SMS input. Data sent by MPO automatically
to the central IT instead of the depot with gets integrated into the server of the
detailed product and price information. It company. It takes around 5 min to
takes approximately 5 min to fill in the make a summary and SCR by the IT
order form through SMS officer at central IT. the accountant at
Quality: Very good each depot receives the summary sheet
Cost: Some cost in terms of salary of MPO, and the SCR from the central IT and
and SMS charge of mobile phones are prints it and gives it to the store
involved. A software to integrate the system manager. It takes on average 5-10 mins
is required in the central IT. issues products to print it and give it to the store
Store Manager manager. For each order, it takes an
Purpose average of 1.5 min.
Quality: Very good
Cost: Some costs in terms of salary of
IT officer in the central IT, setup cost
of software, and SMS charge is
involved. No incremental cost of
mobile phones as an MPO already has a
mobile phone with access to SMS.
Accountant at the depot prints the summary
sheet and SCR
Purpose Store manager packs products according
to summary sheet
Inventory
SCR & Summary Purpose
Step 3
Input Output
Verified Inventory
Step 4
Performance Input Output

Performance
Time: The store manager receives the
summary sheet from the accountant.
The summary sheet is a compilation of Time: DIC physically cross checks the
the orders according to the zone divided summary of each DA with the products
for each DA (delivery assistant) It takes unloaded by the Store Manager. It takes
on average 20- 30 mins to load the on average 15-20 minutes to check each
products according to one DA’s summary with products. For each order,
summary. For each order, it takes an it takes an average of 1.5 min.
average of 1.5 min to load the products. Quality: Satisfactory.
Quality: Unsatisfactory. Since this Cost: Some costs in terms of salary of
process is manual, wrong products may DIC are involved.
be loaded.
Cost: Some costs in terms of salary of
BDT 4000 Store Manager are involved.

24
 Summary and Inventory issued to DA

Purpose
DA delivers products and collects money
Checked inventory Products
Step 5 Purpose
Input Output SCR & Money
Step 6
Input Output
Performance

Performance
Time: The DA goes to respective
customers to deliver the products. DAs
often use rickshaws or buses for short Time: The DA goes to respective
distances apart from using company customers to deliver the products. The
owned vans, when the usage of distance traveled by each DA is broken
company vans would prove to be down to Headquarter, Ex Station and
uneconomical. The DA delivers the Outstation. Headquarter is within 15
products and collects the payment and km radius of the depot, and takes a
returns to the depot Distance varies minimum of 10 minutes to go to the
from 1 km- 100 km, 4 hours. For each closest pharmacy, within 1 km and
order, it takes an average of 1.5 min. come back to the depot. Outstation is
Quality: Unsatisfactory. It would be out of the city and at a maximum
faster if more company owned vehicles distance of 100 km, taking up to 8
were used. hours to deliver and return. For each
Cost: Some costs in terms of salary of order, it takes an average of 1.5 min.
DA, driver’s salary, fuel, etc. (Tk. 4300 Quality: Unsatisfactory. It would be
per DA a month) faster if more company owned vehicles
were used.
Cost: Some costs in terms of salary of
DA, driver’s salary, fuel, etc. (Tk. 4300
per DA a month).
Purpose
DIC submits SCR to accountant who inputs information
Input
SCR&
CSR &
Money
Money SCR and SCR
Verified money
Step 7 Purpose
Input Output SCR
Step 8
Input Output
Performance

Performance
Time: After delivery of the goods, the
DA returns to the depot and submits the
SCR (Sales Collection Receipt) and Time: DIC upon receiving the SCR gives it
money to the DIC. If it has been a to the IT manager who then inputs all the
credit sale, he submits only the SCR information on the invoice on to the
with details of the credit sale. It takes computer. It takes on average 10 minutes for
15- 20 mins for the DA to explain and the DIC to explain to the IT Officer and 2
hand over the money and SCR to the minutes for the latter to input one SCR.on
DIC. For each order, it takes an average average 220 to 880 invoices are received.
of 1.5 min. Finally it would take 1 min to send the
Quality: Satisfactory. information to the server at CDU for update.
Cost: Some costs in terms of salary of Quality: Unsatisfactory. Wrong data input
DIC and DA. may cause erroneous invoice .
Cost: Some costs in terms of salary of DIC

4.3 New Performance Parameters:

25
 Step 1 Step 2 Step 3 Step 4
Min Avg. Max Min Avg. Max Min Avg. Max Min Avg. Max
min min min min min min min min min min min min
10 12.5 15 3 5 7 1 1.5 2 1 1.5 2
3 5 7 1 1.5 2

Step 5 Step 6 Step 7 Step 8

Min Avg. Max Min Avg. Max Min Avg. Max Min Avg. Max
min min min min min min min min min min min min
1 1.5 2 5 7.5 10 1 1.5 2 1.5 2 2.5
0.5 1 1.5

4.4 New Role of System Components

4.4.1 Software
The enhanced role of the system component can be integrated in the existing
software. The software needs the following adjustments:
- Integration of SMS data

- Generation of summary report, SCR based on certain parameters

(area, number of orders)

- Interfaces for each depot, allowing input of SCR data and report
generation

4.4.2 People
In the new system, the role of the IT personnel in each depot will become
obsolete. Because both the summary sheet and the SCR are processed centrally
within the software, the copies are sent to depots where the store manager will
take the print-out, distribute it to the DAs and along with the products. Once the
DAs return, the accountant will input the SCRs into the software, which will
update the information against the order placed.

26
4.4.3 Communication Network
For the instant exchange of data and communication with the server, a
dedicated internet connection will be required.
The computer hardware requirement will remain the same, the new software
can easily run on the existing system.

4.4.4 Training requirement

The software in depot will not require sophisticated use, hence a one-day
workshop would enable them to understand the software interface, and input
the basic data. The personnel at the central IT, however, will require further
training.

27
4.5 Relationships of components roles to Performance Parameters

People Software Hardware Database Network

Role PP Role PP Role PP Role PP Role PP
MPO receives 12.5 Use mobile 5
order mins phone to mins
send SMS
Software 2 Print out of 1 min Stores 0.5 Links the 0.5
processes min summary and mins software mins
incoming data and SCR updates with
from mobiles, informatio database &
stores data in n mobile
database, and network
generates
summary and
SCR
Store 1.5
Manager mins
issues
products
manually

DIC cross- 1.5

checks mins
products with

28
summary
Summary and 1.5
Inventory mins
issued to DA
DA delivers 7.5
products and mins
collects
money
DA submits 1.5
SCR and mins
money to DIC
Accountant 2 mins Software 2 Type and 2 min Stores 0.5 Links the 1 min
types in the
processes & min display data and min software
SCR to make
necessary make updates with
adjustments
necessary informatio database
and then
sends it to adjustments n.
central server
against each
through
internet invoice
Total Time: Tim Time Tim Time:
28 e: : e: 1.5
min 2.25 8 1 min
min min min

29
5. COST SAVINGS AND EXTRA ORDER GENERATION:

Before implementing a new system, the effect of the new system on the
financial health of the company should be taken under consideration. The
benefits of investing in new system should be measured against the cost of
the investment. In order to measure accurately the value added by
investment, the setup cost and relevant periodic expenditures together with
the salaries of the personnel involved are considered.

First, we compared the cost per order of the existing system with that of the
envisioned system based on the salaries of the company’s employees. The
salaries were considered because they form the bulk of the overall expense
per order. The cost per order under the existing system is as follows:
Existing System:
BDT
DIC 20,000.00
BDT
IT 5,500.00
BDT
DA (22) 99,000.00
BDT
Accountant 6,500.00
BDT
MPO (44) 660,000.00
BDT
Driver (2) 12,000.00
BDT
Store Manager 4,000.00
BDT
Total monthly personnel salary 807,000.00
Average no. of orders per day
per MPO 12.5
No. of orders per month 13750
Cost per order using existing BDT
system 58.69

For implementing the envisioned system, the company would require an

initial BDT 5 lac to install the system in 18 depots together with the Central

30
Distribution Centre (CDC) and Central Distribution Office (CDO). This initial
setup cost would be spread among 10 years in order to calculate the annual
depreciation expense. Apart from the initial setup cost, Apex Pharma would
face a monthly internet charge and SMS charge for the sending the
information to the central server. The following is a breakdown of the initial
investment to calculate monthly expenditure of implementing the envisioned
system:

Development and Installation cost of new software (16 BDT

depots+ CDC+CDO) 500,000.00
Development and Installation cost of new software per
depot BDT 27,777.78
BDT
Training expense CDC+ CDO+16 depots 100,000.00
Training expense per depot BDT 5,555.56
Internet setup cost per depot BDT 1,500.00
Total initial outflow (per depot) BDT 34,833.33
Useful life (years) 10
Annual depreciation per depot BDT 3,483.33
Annual internet charge per depot (BDT 1200 per month) BDT 14,400.00
Monthly SMS charge per depot BDT 14,202.60
BDT
Annual SMS charge per depot 170,431.25
BDT
Annual cash outflow (annual internet +annual SMS) 184,831.25
Total annual expense of new software (annual BDT
depreciation + annual cash outflow) 188,314.58
Monthly expense of new software BDT 15,692.88

The implementation of the new system would save time in several steps of
the whole distribution process. However, considering its contribution on
increasing the number of orders, which in turn would decrease the cost per
order, we would consider the time saved in two steps: the time required by
the IT officer to key in the order sheet (11 min on average) and the time
required by the MPO to return to depot to deliver the order sheet from a
customer (60 min on average). A proportion (25%) of the time saved by the
new system can be utilized to generate new orders. The following
calculations show how much additional orders can be generated by the saved
time.

31
 Average time taken to fill in each order
(min) 11
Average return time per MPO (min) 60
Avarage no. of orders per day 12.5
Total working minutes per day 600
Time taken per order (min) 48
Time saved per day (min) 8690
Time saved per month (min) 217250
Proportion of saved time used to generate
extra orders 25%
1131.510
No. of extra orders per month 417
1.028645
No. of extra orders per day per MPO 833
13.52864
No. of orders per day per MPO (new) 583

So far we have observed the contribution of the new system on two factors:
monthly expense of the new system and the number of new orders
generated per day by each MPO. Another important change in our new
system is the elimination of the IT officer. Using this information, the cost per
order using the new system is calculated as follows:
BDT
DIC 20,000.00
BDT
DA (22) 99,000.00
BDT
Accountant 6,500.00
Monthly expense of new BDT
software 16,371.79
BDT
MPO (44) 660,000.00
BDT
Driver (2) 12,000.00
BDT
Store Manager 4,000.00
BDT
Total monthly personnel salary 817,871.79
No. of orders per day per MPO
(new) 13.52864583

32
 No. of orders per month 14881.51042
Cost per order using BDT
envisioned system 54.96

The cost per order for existing system was found to be BDT 58.69 and now
we have found the cost per order using the envisioned system. The savings
contributed by the new system is calculated as follows:

Cost per order using existing BDT

system 58.69
Cost per order using BDT
envisioned system 54.96
BDT
Savings per order 3.73
BDT
Savings per month per depot 55,537.59
BDT
Annual savings per depot 666,451.04

The envisioned system would result in a net annual savings of BDT 6,66,451
on the depot under consideration. Hence we can infer that the envisioned
system is feasible and would be a very good for the Apex Pharma to reduce
its operating cost.

6. CONCLUSION

Considering the above factors, it becomes obvious that the introduction of

new model will substantially improve the performance and reduce the cost of
the distribution process. For growing companies such as this, adoption of
these processes will allow handling more demands in a better way. As the
company plans to expand its production and operation, using these
sophisticated technologies will prove to be more and more vital.

33