INDUSTRIAL
MANAGEMENT
Presented by
MOHANASANKAR V,
M.Pharmacy I Sem
Department of Pharmaceutics,
College of Pharmacy, Madras Medical College, Chennai
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CONTENTS
▪INTRODUCTION
▪PRODUCTION MANAGEMENT
▪PRODUCTION CONTROL
▪PLANNING CONTROL
▪MATERIAL MANAGEMENT
▪INVENTORY MANAGEMENT
▪SALES FORECASTING
▪BUDGET & COST CONTROL
▪INDUSTRIAL AND PERSONAL RELATIONSHIP
▪CONCEPT OF TOTAL QUALITY MANAGEMENT
▪CONCLUSION
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INTRODUCTION
Industrial Management
The term industrial management is composed of
▪ Industry
▪Management
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▪What is Management?
▪Industrial Management is Effective and Efficient
running of Industry using Human and Non-human
resources in order to achieve its goal and Objectives
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Traditional Meaning of Management
“Management is the art of getting things done through people”
– Mary Parker Follett
“Management consists of getting things done through others..
A manager is one who accomplishes organizational objectives
by directing the efforts of others”
-C.S George
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PRODUCTION
MANAGEMENT
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PRODUCTION MANAGEMENT
▪WHAT DO YOU MEAN BY PRODUCTION?
▪Production in pharmaceutical
industry means that, creation &
maintenance of a clearly and
defined organization and make it
effective.
▪It coordinates use of land,
personnel, building, & equipment,
including management of
inventory assets.
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▪Production management is a process of planning, organizing,
directing and controlling the activities of the production
function.
▪ It combines and transform various resources used in the
production subsystem of the organization into value added
product in a controlled manner as per the policies of the
organization.
▪ It is a process in which raw material is converted into
finished good or products.
▪ It deals with decision making regarding the quality, quantity,
cost etc. of production.
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BASIC PRINCIPLE OF PRODUCTION MANAGEMENT
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BASIC CONCEPT OF PRODUCTION MANAGEMENT
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OBJECTIVE OF PRODUCTION MANAGEMENT
▪RIGHT QUALITY
▪RIGHT QUANTITY
▪RIGHT TIME
▪RIGHT COST or PRE-ESTABLISHED COST
OTHER OBJECTIVES
▪MACHINERY AND EQIUPMENT
▪MATERIALS
▪MAN POWER
▪ SUPPORTING SERVICES
It improve the efficiency of product.
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▪RIGHT QUALITY
The quality of product is established based upon the
customer’s needs.
The right quality is not necessarily best quality. It is
determined by the cost of the product and technical characteristics as
suited to the specific requirements.
▪RIGHT QUANTITY
The manufacturing organization should produce the
product in right number.
If they are produced in excess of demand the capital will
block up in the form of inventory and if the quantity is produced in
short of demand, leads to shortage of products.
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▪RIGHT TIME
Timeliness of delivery is one of the important parameter to
judge the effectiveness of production management.
so, the production department has to make the optimal
utilization of input resources to achieve its objective.
▪RIGHT COST
Manufacturing costs are established before the product is
actually manufactured. Hence all attempts should be made to
produce the products at pre established cost.
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Importance of PM
▪PM plays a very important role to the industry management.
▪ It help the industry to satisfy the customer’s needs and
achieve its objectives.
▪ Its also help to maintain reputation, goodwill and image.
▪ It help to introduce new product.
▪ It help to face competition in the market by making product of right
quality, quantity and at time.
▪ It helps the industry to expand and grow as production management
tries to improve quality and reduce cost.
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FUNCTIONS OF PRODUCTION MANAGEMENT
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GOOD MANUFACTURING PRACTICES
▪ WHO defines GMP as “that part of quality assurance”
▪ It ensures that product are essentially produced and controlled to the quality standards
appropriate to their intended use and as required by the market authorization.
▪ GMP covers all aspects of the manufacturing process.
▪ It covers
• GENERAL REQUIREMENTS
• WAREHOUSING AREA
• PRODUCTON AREA
• ANCILLARY AREA
• QUALITY CONTROL AREA
• PERSONNEL
• MANUFACTURING OPERATIONS AND CONTROLS
• PAW MATERIALS
• EQUIPMENTS
• QUALITY ASSURANCE
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GENERAL REQUIREMENTS
▪ Location and surroundings- The factory building(s) for manufacture of drugs shall be so
situated to avoid risk of contamination from external environmental including open
sewage, drain, public lavatory or any factory which product disagreeable or bad odor,
fumes, dust, smoke, chemical or biological emissions.
▪ Building and premises-The building(s) used for the factory shall be designed,
constructed, adapted and maintained to suit the manufacturing operations so as to permit
production of drugs under hygienic conditions. The premises used for manufacturing,
processing, warehousing, packaging labeling and testing purposes shall be
(i) compatible with other drug manufacturing operations that may be carried out in the
same or adjacent area / section.
(ii) adequately provided with working space to allow orderly and logical placement of
equipment, materials and movement of personnel so as to:
• (a) avoid the risk of mix-up between different categories of drugs or with raw materials, intermediates
and in-process material.
• (b) avoid the possibilities of contamination and cross- contamination
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▪Water System – There shall be validated system for Treatment of water
drawn from own or any other source to render it potable in accordance with
standards specified by the Bureau of Indian Standards or Local Municipality,
so as to produce Purified Water conforming to Pharmacopoeia specification.
▪Disposal of waste –
(i) The disposal of sewage and effluents (solid, liquid and gas) from the
manufactory shall be in conformity(compliance) with the requirements of
Environment Pollution Control Board.
(ii) All bio-medical waste shall be destroyed as per the provisions of the Bio-
Medical Waste (Management and Handling) Rules, 1996.
(iii) Additional precautions shall be taken for the storage and disposal of
rejected drugs. Records shall be maintained for all disposal of waste.
(iv) Hazardous, toxic substances and flammable materials shall be stored in
suitably designed and enclosed areas in conformity with Central and State
Legislations
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WAREHOUSING AREA
▪ It is a large building where the raw materials or manufactured, goods
may be stored
▪Adequate areas shall be designed to allow sufficient and orderly
warehousing of various categories of materials and products like starting
and packaging materials, intermediates, bulk and finished products,
products in quarantine, released, rejected, returned or recalled, machine
and equipment spare parts and change items.
▪Warehousing areas shall be designed and adapted to ensure good
storage condition.
▪They shall be clean, dry and maintained with acceptable temperature
limits, where special storage conditions are required (e.g. temperature,
humidity), these shall be provided, monitored and recorded. Proper
racks, bins and platforms shall be provided for the storage of materials
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PRODUCTION AREA
▪The production area shall be designed to allow the production
preferably in unit flow and with sequence of operations.
▪ In order to avoid the risk of cross-contamination, separate
dedicated and self-contained facilities shall be made available for
the production of sensitive pharmaceutical products like penicillin
or biological preparations with live microorganisms.
▪Pipe-work, electrical fittings, ventilation openings and similar
services lines shall be designed, fixed and constructed to avoid
creation of recesses spaces. Services lines shall preferably be
identified by colors and the nature of the supply and direction of
the flow shall be marked/indicated.
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ANCILLARY AREA
▪Rest and refreshment rooms shall be separate from other areas. These
areas shall not lead directly to the manufacturing and storage areas.
▪Facilities for changing, storing clothes and for washing and toilet
purposes shall be easily accessible and adequate for the number of users.
▪Maintenance workshops shall be separate and away from production
areas. Whenever spares, changed parts and tools are stored in the
production area, these shall be kept in dedicated rooms or lockers.
▪ ANIMAL HOUSING AREAS shall be isolated from other areas. The
other requirements regarding animal houses shall be those as prescribed
in Rule 150-C(3) of the Drugs and Cosmetics Rules, 1945 which shall
be adopted for production purposes.
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QUALITY CONTROL AREA
▪ Quality Control Laboratories shall be independent of the production areas. Separate areas
shall be provided each for physio-chemical, biological, microbiological or radio-isotope
analysis. Separate instrument room with adequate area shall be provided for sensitive and
sophisticated instruments employed for analysis.
▪ Quality Control Laboratories shall be designed appropriately for the operations to be
carried out in them. Adequate space shall be provided to avoid mix-ups and cross-
contamination. Sufficient and suitable storage space shall be provided for test samples,
retained samples, reference standards, reagents and records.
▪ The design of the laboratory shall take into account the suitability of construction materials
and ventilation.
▪ Quality Control Laboratory shall be divided into separate sections i.e. for chemical,
microbiological and wherever required, biological testing. These shall have adequate area
for basis installation and for ancillary purposes.
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PERSONNEL
▪ The manufacture shall be conducted under the direct supervision of
competent technical staff with prescribed qualifications and practical
experience in the relevant dosage and / or active pharmaceutical products.
▪ The head of the Quality Control Laboratory shall be independent of the
manufacturing unit. The testing shall be conducted under the direct
supervision of competent technical staff who shall be whole time employees
of the licensee.
▪Number of personnel employed shall be adequate and in direct proportion
to the workload.
▪ The licensee shall ensure in accordance with a written instruction that all
personnel in production area or into Quality Control Laboratories shall
receive training appropriate to the duties and responsibility assigned to them.
▪ They shall be provided with regular in-service training.
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HEALTH , CLOTHINGS AND SANITATION OF
WORKERS
▪All persons prior to and during employment shall be trained in practices
which ensure personnel hygiene.
▪All employees shall be instructed to report about their illness or
abnormal health condition to their immediate supervisor so that
appropriate action can be taken.
▪Direct contact shall be avoided between the unprotected hands of
personnel and raw materials, intermediate or finished, unpacked
products.
▪All personnel shall wear clean body coverings appropriate to their
duties.
▪ smoking, eating, drinking, chewing or keeping plants, food, drink and
personal medicines shall not be permitted in production, laboratory,
storage and other areas where they might adversely influence the
product quality.
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MANUFACTURING OPERATIONS AND
CONTROLS
▪All manufacturing operations shall be carried out under the supervision
of technical staff approved by the Licensing Authority. Each critical
step in the process relating to the selection, weighing and measuring of
raw material addition during various stages shall be performed by
trained personnel under the direct personal supervision of approved
technical staff.
▪The contents of all vessels and containers used in manufacture and
storage during the various manufacturing stages shall be attractively
labeled with the name of the product, batch number, batch size and stage
of manufacture. Each label should be dated by the authorized technical
staff.
▪Products not prepared under aseptic conditions are required to be free
from pathogens.
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RAW MATERIALS
▪The licensee shall keep an inventory (complete list of items) of all raw
materials to be used at any stage of manufacture of drugs and maintain
records as per Schedule U.
▪All incoming materials shall be purchased from approved sources under
valid purchase vouchers. Wherever possible, raw materials should be
purchased directly from the producers.
▪Authorized staff appointed by the licensee in this behalf, which may
include personnel from the Quality Control Department, shall examine
each consignment on receipt and shall check each container for integrity
of package and seal. Damaged containers shall be identified, recorded
and segregated(kept a part).
▪ If a single delivery of material is made up of different batches, each
batch shall be considered as a separate batch for sampling, testing and
release.
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▪Raw materials in the storage area shall be appropriately labeled.
Labels shall be clearly marked with the following information:
• (a) designated name of the product and the internal code reference,
where applicable, and analytical reference number;
• (b) manufacturers name, address and batch number;
• (c) the status of the contents (e.g. quarantine, under test, released,
approved, rejected); and
• (d) the manufacturing date, expiry date and re-test date.
▪Only raw materials which have been released by the Quality
Control Department and which are within their shelf-life shall be
used
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EQUIPMENTS
▪ Equipment shall be located, designed, constructed, adapted and
maintained to suit the operations to be carried out. Each equipment
shall be provided with a logbook, wherever necessary.
▪To avoid accidental contamination, wherever possible, non-
toxic/edible grade lubricants shall be used and the equipment shall
be maintained in a way that lubricants do not contaminate the
products being produced.
▪Defective equipment shall be removed from production and Quality
Control areas.
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QUALITY ASSURANCE
▪The system of quality assurance proper to the manufacture of
pharmaceutical products shall ensure that: –
• (a) the pharmaceutical products are designed and developed in such a
way that it meets the requirement of Good Manufacturing Practices
and other associated codes such as those of Good Laboratory
Practices and Good Clinical Practices.
• (b) adequate arrangements are made for manufacture, supply and use
of the correct starting and packaging materials.
• (c) the finished product is correctly processed and checked in
accordance with established procedures.
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PRODUCTION & PLANING CONTROL(PPC)
▪The principle of PPC lies in the statement
“FIRST PLAN YOUR WORK & THE WORK ON YOUR
PLAN”
▪ Its also powerful tool available to the management to achieve the
stated objective.
▪Production planning starts with the analysis of data like demand &
delivery schedule etc. and basis of information available and
resources like machine, material, & men
▪So PPC process of directing & coordinating of firms resources
towards attaining prefixed goal.
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OBJECTIVE OF PPC
▪Planning is required to produce economical products with in time
▪To avoid difficulties in production and marketing of products
▪Planning is needed for meeting and changing economic social
conditions seasonal demands and marketing fluctuations
▪ In case of series of operations are involved in the production of a
product then planning will improves the efficiency and
effectiveness.
▪To increase productivity too.
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PPC – PROCESS
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ROUTING Route is refers the path and optimum sequence of
operations to be performed on the job
LOADING Load indicates the assignment of work to men,
machines or department in advance without
specifying when the work is to be done
SCHEDULING Scheduling may be defined as a process of decision
taking to start the work for production
DISPATCHING Key link between production and sales
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Function of production control
Receives Compare Removes Modifies the
Maintains
work them with causes of scheduled
quality of
progress the scheduled delay in plant
products
reports plans production capacities
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MATERIAL
MANAGEMENT
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MATERIAL MANAGEMENT (MM)
▪ Introduction
▪Aim of MM
▪Purpose of MM
▪Objective of MM
▪Basic Principle
▪Elements of MM
▪Conclusion
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INTRODUCTION
▪Material is one of the major inputs in the manufacturing of the
pharmaceutical production along with the other inputs like
• people
• Facilities
• Equipment
▪ It involve the planning, programming, organizing, directing,
controlling and co coordinating the various activities concern the
materials.
▪ It is the grouping of management function supporting the
complete cycle of material flow, from the purchase and internal
control of production material to the planning and control of
work in process to the warehousing, shipping and distribution of
the product.
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▪For this reason, the management of material from the GMP
point of view involves dealing with following aspects..
1. Raw materials(active and inactive)
2. Packaging material(primary, secondary, others)
3. Dispensing of RM / PM
4. Intermediate and bulk material.
5. Finished product.
6. Rejected and recovered material.
7. Reagents & culture media.
8. Reference and working standards.
9. Waste materials.
10.Miscellaneous materials.
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AIM OF MATERIAL MANAGEMENT
▪To get
1. The right quality
2. Right quantity of supplies
3. At the right time
4. At the right place
5. For the right cost
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PURPOSE OF MATERIAL MANAGEMENT
▪To gain economy in purchasing
▪To satisfy the demand during period of replenishment,.
▪To carry reserve stock to avoid stock out.
▪To stabilize fluctuations in consumptions.
▪To provide reasonable level of client services.
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OBJECTIVE OF MATERIAL MANAGEMENT
▪ Primary objectives:
▪ Secondary Objective:
1. Efficient materials planning 1. Efficient production scheduling
Buying or Purchasing
2. To take make or buy decisions
2. Procuring and receiving
3. Prepare specifications and
3. Storing and inventory control Standardization of materials
4. Supply and distribution of 4. To assist in product design and
materials Quality assurance development
5. Good supplier and customer 5. Forecasting demand and quantity of
relationship materials requirements.
6. Improved departmental 6. Quality control of materials purchased
efficiency
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PRINCIPLE OF MATERIAL MANAGEMENT
▪ Effective management and supervision. It depends on managerial
function of
▪ Planning
▪ Organizing
▪ Staffing
▪ Directing
▪ Controlling
▪ Reporting
▪ Budgeting
▪ Skillful & hard poised negotiation.
▪ Sound purchasing method
▪ Effective purchase system
▪ Simple Inventory control programme
▪ Must not be increase other cost.
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FUNCTION OF MATERIAL MANAGEMENT
▪Materials planning and programming
▪Raw material purchase
▪Receiving, store keeping & warehousing
▪ Issuing of material
▪ Inventory control
▪Transportation of materials
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PURCHASING
▪All materials should be purchased against an approved and
adequate specification which defines not only the grade and quality
of the materials, but also the nature of the packaging and container
to be used.
▪Materials should be purchased and sourced only from approved
suppliers and manufacturers.
▪Raw materials and Packaging materials should only be purchased
by buyers who are trained and who possess sufficient technical
knowledge.
▪DOCUMENT REQUIRED: 1. SOP
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RAW MATERIALS
▪All raw materials and other related materials should be checked for
following things, after receiving:
1. Name of the manufacturer/supplier.
2. Name of the product.
3. Batch numbers.
4. Date of manufacturer and date of expiry.
5. Quantity received and number of containers.
6. Condition of containers and materials
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▪ All received materials must be properly identified with their status
(e.g. received, sampled, approved, rejected, to be returned back,
etc.) labels and materials identification like, product name, batch
number, code number, sterility status, etc.
▪Materials in the storage area should be appropriately labelled.
Labels should bear at least the following information:
• 1. The name and internal code number of the product.
• 2. The batch number.
• 3. Status of the material.
• 4. Retest and expiry date of the product.
• 5. Appropriate special storage conditions.
▪Containers from which samples have been taken out should be
identified.
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▪ Each dispensed material and its weight or volume should be
independently checked and the check recorded.
▪DOCUMENT REQUIRED:
1. List of approved suppliers/sellers with materials.
2. List of materials classified according to storage conditions.
3. SOP on sampling, storage and dispensing of materials.
4. Register of sampling and dispensing activities.
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PACKAGING MATERIALS
▪Packaging materials are divided into following categories:
▪1.Primary Packaging Materials: Materials which come in direct
contact with the medicinal product. E.g. bottles, ampoules, vials,
foils, etc.
▪2.Secondary Packaging Materials: Materials which come in
contact with the primary packaging materials, e.g. labels, carton etc.
▪3.Printed Packaging Materials: All packaging materials which
have any thing printed on it; even error medical literature sent along
with finished product is also put in this category. Such materials
include labels, cartons, foils, etc.
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▪Tertiary and other Packaging Materials: All other packaging
materials other than those covered in the above three categories.
▪While handling all these materials following points should be kept
in mind.
1. The purchase, handling and control of primary and printed
packaging materials shall be as for raw materials.
2. Access to all storage areas should be limited to authorized
personnel only.
3. A separate sampling room should be provided for sampling of
primary packaging materials, which should be a fairly clean area.
DOCUMENT REQUIRED: 1. A list of approved vendors along
with names of materials.
2. Sampling and dispensing register in chronological order.
3. A list of materials based on their storage conditions
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INTERMEDIATE AND BULK PRODUCTS
▪ Intermediate and bulk product storage is the responsibility of the
production department.
▪ Intermediate or bulk product may be defined as the material, which
has started processing but not yet got converted into the finished
saleable product e.g.
• 1. Granulated materials ready for compression.
• 2. Compressed tablets for coating or packaging.
• 3. Filtered or unfiltered liquids for oral or injectable etc.
▪These products should be kept under appropriate storage conditions
of temp, relative humidity, class of air etc.
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▪ Intermediate or bulk products purchased as such should be handled
on receipt as though they were raw materials.
▪DOCUMENT REQUIRED:
• 1. List of categories of intermediate and bulk products along with
their storage conditions.
• 2. Other requirements if any e.g. how much time such materials
can be stored for further processing etc.
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REJECTED AND RECOVERED MATERIALS
▪Rejected materials may be defined as materials at any stage, which
have been tested against a set of predefined specifications and
found not meeting the specification fully.
▪We can deal with such materials mainly in two ways:
• 1. Reprocess and retest the materials to see whether it meets our
specific requirements.
• 2. Destroy or send it to the supplier.
▪Rejected materials and products should clearly marked as such and
stored separately in restricted areas.
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▪Such areas in industry are normally painted RED in colour to make
it distinguishable easily.
▪Such materials should either be returned to the suppliers or
reprocessed or destroyed.
▪Rejected production batches should be reprocessed in exceptional
situations.
▪Reprocessed batches should be given a new number by means of
which, such batches can be identified as reprocessed batches.
DOCUMENT REQUIRED:
• 1. SOP on handling of rejected materials.
• 2. Record of disposal of rejected materials.
• 3. SOP on handling of recovered materials.
• 4. Record of disposal of recovered materials.
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RECALLED PRODUCTS
▪Products, which are already distributed or sold, may be required at
times to be recalled from market for various reasons e.g.
substandard quality detected after the product was distributed,
damage of goods during transit.
▪Such recalled products should be clearly identified and stored
separately in a secure area until a decision is taken on their fate.
DOCUMENT REQUIRED:
• 1. SOP on handling of recalled products.
• 2. Records of recalled products and action taken on such recalled
products.
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E.g, for Recalled products
Sunscreen
recall 2021
Johnson &
Johnson
To know more click below
https://www.fda.gov/drugs/drug-safety-and-availability/drug-recalls
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RETURNED GOODS
▪Pharmaceutical products can be returned from the market for various
reasons. E.g. quality problems, accidental damage of goods etc.
▪Such products when returned from the market should have the following
action immediately taken on it.
• 1. Physically examine the condition of the goods returned. Also check all
the relevant documents.
• 2. Ask Q.C department to evaluate the quality of the goods received, and
take a decision on whether these products can be reprocessed and
recovered or needs to be destroyed
• 3.If it is possible to reprocess and recover, then such products after
reprocessing and retesting may be considered for relabeling, repacking
and resealing the same.
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REAGENTS AND CULTURE MEDIA
▪ All reagents and culture media should be recorded upon receipt or preparation.
▪ Reagents made up in the laboratories should be prepared according to written procedures
and appropriately labelled. Such labels should indicate following information viz.
• a) Name of the reagent.
• b) Nominal concentration (e.g. 1 N, 0.1 N etc.).
• c) Standardization factor (1N=0.996 N etc.).
• d) Shelf life ( or use before date).
• e) Date when re-standardization is required.
• f) The storage conditions.
▪ A register be maintained giving details of the reagents made, standardized, standardized
and used and destroyed if any.
▪ Both positive and negative controls should be applied to verify suitability of the culture
media.
▪ The size of the inoculum used in positive controls should be appropriate to the sensitivity
required. DOCUMENT REQUIRED: 1. Register of reagents and culture media.
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WASTE MATERIALS
▪The waste materials can be classified mainly in two categories:
• 1. Trash : which do not have any resale value and may be disposed off by
proper method depending upon the nature of the trash.
• 2. Scrap : which do have a resale value and may be sold to scrap dealers,
after proper segregation.
▪Toxic substances and flammable materials should be stored in suitably
enclosed cupboard, as required by national legislation.
▪Waste materials should not be allowed to accumulate.
▪Before disposal of these materials, they can be segregated in different
categories:
▪1) Paper 2) Aluminium foils 3) Plastic 4) Glass 5) Metallic containers etc.
DOCUMENT REQUIRED: 1. SOP and Records of handling waste work
materials.
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REFERENCE STANDARDS
▪Reference standards may be available in the form of official reference
standards.
▪Reference standards prepared by the producer should be tested, released
and then stored in the same way as official standards.
▪ They should be kept under the responsibility of a designated person in a
secure area.
▪Official reference standards should be used only for the purpose
described in the appropriate monograph.
▪All such reference standards should be stored and used in a manner that
will not adversely affect their quality.
DOCUMENT REQUIRED:
1. SOP and Records on handling of reference and working standards.
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MISCELLANEOUS MATERIALS
▪All those materials, which do not specifically fall under the
category of raw materials and packaging materials, intermediates,
bulk and finished pharmaceuticals may be considered under this
category of miscellaneous materials.
▪Such materials like, rodenticides, insecticides, fumigating agents
and sanitizing materials fall under this category, these materials
should not be permitted to contaminate equipment, raw materials,
packaging materials, in-process materials or finished products.
▪ DOCUMENT REQUIRED:
▪1. List of miscellaneous materials handled in pharmaceutical plants.
2. SOP on handling of miscellaneous materials.
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INVENTORY
MANAGEMENT
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INVENTORY MANAGEMENT
▪ Introduction
▪ Inventory Control
▪Aims Of Inventory Control
▪Objective Of Inventory Control
▪Advantages Of Inventory Control
▪Types of Inventories
▪ Inventory Management
▪Cost Of Inventory Control
▪Techniques of Inventory Control
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Inventory Means…..
▪ It means all materials, supplies, tools, in-process product & finished
product recorded in a book by an organization and keep in the
stock, warehouse or plant for some period of time.
▪ Inventory may also be defined as “ a detail list of those movable
items which are necessary to manufacture a product & to maintain
the equipment and machinery in a good working order. The quantity
along with value of ever items is also maintain in the list.
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INVENTORY CONTROL
▪“It means control over materials lying in the store.”
▪“It refer to the regulation of the stock and the flow of materials and
components in an efficient, effective and economical manner to
meet the need of manufacturing department”
AIMS OF INVENTORY CONTROL:
1. Never run out of stock of any material.
2. Never buildup very large inventory.
3. Never send out too many small orders for more as such small
order turn out to be very costly.
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OBJECTIVE OF INVENTORY CONTROL
▪To ensure smooth flow of stock.
▪To provide for required quality of material.
▪To control the investment in stock.
▪Protection against fluctuating demand.
▪Protection against fluctuations in outputs.
▪Minimization of risk and uncertainty.
▪Risk of obsolescence.
▪Minimization of material cost.
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ADVANTAGES OF INVENTORY CONTROL
▪To ensure the continuous production by supplying materials.
▪To helps the concerned to secure many economy through bulk
purchase such as higher discount , lower price, better use of
available resources etc..
▪ It helps the management in the maintaining efficient accounting
particularly material aspect of cost accounting.
▪ It ensures timely and continuous supply of goods to customers by
maintaining sufficient stock of finished goods.
▪ It eliminates over stocking of inventories and maintain minimum
investments.
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TYPES OF INVENTORIES
▪Production Inventories
• Eg. Components such as active ingredients
▪MRO(Maintenance Repair and Operating) Inventories
• Eg. Cleaning products & Repair tools
▪Work in-process Inventories
• Eg. Granules waiting for compression, Tablets waiting for coating
▪Finished Products Inventories
• Dosage forms
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INVENTORY MANAGEMENT
▪ It is defined as scientific method of finding out how much stock
should be maintain in order to meet the production demand and able
to provide right type of material at the right time, in right quantity
and at competitive prices
COST OF INVENTORY
▪Ordering cost
▪Carrying cost
▪Out of stock or shortage cost
▪Capacity cost
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1.ORDERING COST
▪Cost of placing an order with a vendor of a material
1. preparing a purchase order.
2. processing payment
3. receiving and inspecting the material.
▪Ordering from the plant:
1.machine setup
2.startup scrap generated from getting a production run started.
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2.CARRYING COSTS
▪COST CONNECTED DIRECTLY ▪CAPITAL COST
WITH MATERIALS 1. Interest on money invested in
1. Obsolescence inventory
2.Deterioration 2. Interest on money in land &
3.Pilferage building.
▪FINANCIAL COSTS ▪STORAGE SPACE COSTS
1. Taxes 1. Building rent
2. Insurance 2. Depreciation
3. Storage
3. Cost of maintenance
4. Interest
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3.OUT OF STOCK COSTS
▪ lost sales , transportations
4.CAPACITY COSTS
▪Overtime when capacity is low.
▪Ideal time when capacity is large.
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STEPS IN INVENTORY CONTROL
▪Deciding the maximum- minimum limits of inventory
▪Determination of Reorder point
▪Determination of reorder quantity
▪DANGER LEVEL
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MAXIMUM STOCK LEVEL
▪Quantity of inventory above which should not be allowed to be kept.
This quantity is fixed keeping in view the disadvantages of
overstocking;
Factors to be considered:
▪Amount of capital available.
▪Possibility of loss.
▪Cost of maintaining stores
▪Likely fluctuation in prices
▪Seasonal nature of supply of material
▪Restriction imposed by Govt.
▪Possibility of change in fashion and habit.
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MINIMUM STOCK LEVEL
▪The minimum stock level is a the projected stock should not fall
below the minimum stock level.
▪The level is fixed for all items of stores and the following factors
are taken into account:
1.Lead time
2. Rate of consumption of the material during the lead time.
FORMULA:
▪Min level= re order level-(normal consumption x normal re order
period)
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DANGER LEVEL:
▪This means a level at which normal issues of material are stopped
and issues are made only under specific instruction. The purchase
officer will make special efforts to get the material
▪FORMULA:.
▪DL= avg. consumption x maximum re order period for emergency
purchases.
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RE-ORDERING LEVEL
▪ It is the point at which if stock of the material in store approaches,
the store keeper should initiate the purchase requisition for fresh
supply of material.
▪This level is fixed some where between maximum and minimum
level.
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TECHNIQUES IN INVENTORY CONTROL
▪EOQ
▪ABC analysis
▪VED analysis
▪HML analysis
▪FSN analysis
▪SDE analysis
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ECONOMIC ORDER QUANTITY
▪ It is also known as standard order quantity , optimum quantity or
economic lot size.
▪By definition economic order quantity that size of order for which
the total cost is minimum.
▪The widely used formula is
EO=2CO/I
Where ,
• C = ANNUAL CONSUPTION
• O =Cost of placing an Order.
• I = cost of CARRYING PER unit for one year.
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ABC ANALYSIS
▪ (Always Better Control analysis)
▪ It is efficient control of stores requires greater in case of costlier items.
▪ It is a very effective and useful tool for classifying, monitoring &
control inventory.
▪The firm should not keep same degree of control on all the items of
inventory.
▪ It is based on pareto’s of law.
▪The firm should put maximum control on those items whose value is the
highest , with comparison of the other two items.
▪The higher value items are classified ‘ A items’ & would be under tight
control.
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VED ANALYSIS
• Based on critical value &
shortage cost of an item V E D ITEM COST
Items are classified into:
A AV AE AD CATEGORY 1 10 70%
▪ Vital:
•Shortage cannot be tolerated. B BV BE BD CATEGORY 2 20 20%
▪ Essential:
C CV CE CD CATEGORY 3 70 10%
•Shortage can be tolerated for a
short period.
▪ Desirable:
CATEGORY 1 – NEEDS CLOSE MONITORING &
▪ Shortage will not adversely CONTROL
affect, but may be using more CATEGORY 2 – MODERATE CONTROL.
resources. CATEGORY 3 – NO NEED FOR CONTROL
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FSN ANALYSIS
▪Fast moving,slow moving, non moving
• N-No issues
• S- Upto limit 10-15 issues
• F- Exceeds the limit
▪ADVANTAGES:
• Helps to avoid in investment of non moving or slow items.
• Its is useful in facilitating timely control.( The issue of items in past
two or three years are considered.)
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LEAD TIME
▪Avg. No.of days between placing an indent and receiving materials.
▪Composed of 2 elements
• Administrative / buyer’s lead time.
• Delivery/ supplier’s lead time.
HML ANALYSIS
Classification based on unit value
H – High cost
M – Medium cost
L – low cost
This type of analysis helps in excercising control at the use point.proper
authorisationshould be there for replacing a higher value item
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SDE ANALYSIS
▪This analysis is based on spares availability of an item –
▪S – refers to Scarce Items, especially imported and those which are
very much in short supply.
▪D – are Difficult items which are procurable in market but not easily
available. For example, items which have to come from far off
cities or where there is not much competition in market or where
good quality supplies are difficult to get or to be procured.
▪E – refers to Easy items – Items are those which are easily available;
mostly local items.
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HOW INVENTORY SOFTWARES WORKS ?
▪SKU numbers (stock keeping unit)
▪Barcode scanning
▪RFID (radio frequency identification) tags
▪QR (quick response) codes
▪NFC (near field communication) tags
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SALES FORECAST
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SALES FORECASTING
➢FORECASTING
✓Primary function is to predict the future using data we have in
hand
➢SALES FORECASTING
✓Art or science of predicting future demand by anticipating what
consumers are like to do in a given set of circumstances
✓Sales forecasting made by the marketing staff
✓Poor forecasting causes serious ill effects on production operation
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FACTORS AFFECTING SALES FORECASTING
EXTERNAL FACTORS INTERNAL FACTORS
▪Relative state of the economy ▪Labour problems
▪Direct and indirect competition ▪ Inventory shortages
▪Styles or fashions ▪Working capital shortage
▪Consumer earnings ▪Price changes
▪Population changes ▪Change in distribution method
▪Production capability shortage
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SALES FORECASTING METHODS
Qualitative (historical data)
1. Executive opinion method.
2. Delpi method
3. Sales force method
4. Survey of buyer’s intentions
Quantitative
1. Time Series Analysis
2. Market Test Method
3. Regression Analysis
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QUALITATIVE METHODS
Executive Opinion Method
▪ Most widely used
▪ Method of combining and averaging views of several executives
regarding a specific decision or forecast.
▪ Leads to a quicker (and often more reliable) result without use of
elaborate data manipulation and statistical techniques.
Delphi Method
▪ Process includes a coordinator getting forecasts separately from
experts, summarizing the forecasts giving the summary report to
experts who are asked to make another prediction; the process is
repeated till some consensus is reached
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Sales Force Composite Method
▪Also known as “Grassroots Approach”
▪ Individual salespersons forecast sales for their territories
▪ Individual forecasts are combined & modified by the sales manager
to form the company sales forecast.
▪Best used when a highly trained & specialized sales force is used.
Survey of Buyer’s intentions
▪Process includes asking customers about their intentions to buy
the company’s product and services
▪Questionnaire may contain other relevant questions
92
QUANTITATIVE METHOD
Time Series Analysis
▪Make forecasts based purely on historical patterns in the data.
▪ The Trend component-Gradual upward or downward movement
over time.
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Market Test Method
▪ Used for developing one time forecasts particularly relating to new
products
▪ A market test provides data about consumers’ actual purchases and
responsiveness to the various elements of the marketing mix.
▪ On the basis of the response received to a sample market test,
product sales forecast is prepared.
94
Regression Analysis
▪ Identifies a statistical relationship between sales(dependent variable)
and one or more influencing factors, which are termed the independent
variables.
▪ When just one independent variable is considered
▪ (Eg: population growth), it is called a linear regression, and the results
can be shown as a line graph predicting future values of sales based on
changes in the independent variable.
▪ When more than one independent variable is considered, it is called a
multiple regression
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Benefits Of Sales Limitations Of Sales
Forecasting Forecasting
▪ Better control of ▪ Part hard fact, part
Inventory guesswork
▪ Staffing ▪ Forecast may be wrong
▪ Customer Information ▪ Times may change
▪ Use for Sales People
▪ Obtaining Financing
96
COST CONTROL &
BUDGETING
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BUDGET AND COST CONTROL
WHAT IS BUDGET?
▪A budget is one of the most basic and probably most useful things you can do
to get in control of your finances.
▪ It is simply a snapshot of your financial situation at a particular point in time,
which can help you keep track of what you’re earning, what you’re spending,
and what happens to the leftovers (if there are any).
WHAT IS BUDGETARY CONTROL?
▪Budgetary control is the use of the comprehensive system of budgeting to aid
management in carrying out its functions like planning, coordination and
control.
▪ This system involves: Division of organization on functional basis into
different sections known as a budget centre.
98
Classification of Budgets
99
Classification-According To Function
SALES BUDGET:
▪ Sales budget is the most important budget based on which all the other
budgets are built-up. This budget is a forecast of quantities and values of sales
to be achieved in a budget period.
PRODUCTION BUDGET:
▪ Production budget involves planning the level of production
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COST OF PRODUCTION BUDGET:
▪ This budget is an estimate of cost of output planned for a budget period and
may be classified into
▪ Material Cost Budget, Labor Cost Budget, Overhead Cost Budget.
PURCHASE BUDGET:
▪ This budget provides information about the materials to be acquired from the
market during the budget period.
PERSONNEL BUDGET:
▪ This budget gives an estimate of the requirements of direct labor essential
to meet the production target. This budget may be classified into
a. Labor requirement budget
b. Labor recruitment budget
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RESEARCH AND DEVELOPMENT BUDGET:
▪ This budget provides an estimate of expenditure to be incurred on R & D
during the budget period.
▪R&D budget is prepared taking into consideration the research projects in hand
and new R & D projects to be taken up.
CAPITAL EXPENDITURE BUDGET:
▪ This is an important budget providing for acquisition of assets necessitated by
the following factors:
a. Replacement of existing assets.
b. Purchase of additional assets to meet increased production
c.Installation of improved type of machinery to reduce costs.
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CASH BUDGET:
▪This budget gives an estimate of the anticipated receipts and payments
of cash during the budget period.
▪Cash budget makes the provision for minimum cash balance to be
maintained at all times
MASTER BUDGET
▪ CIMA defines this budget as “The summary budget incorporating its
component functional budget and which is finally approved, adopted
and employed”.
▪Thus master budget is a summary of all functional budgets in capsule
form available in one report.
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Classification-According To Flexibility
FIXED BUDGET:
▪ This is defined as a budget which is designed to remain unchanged
irrespective of the volume of output or turnover attained. This budget will,
therefore, be useful only when the actual level of activity corresponds to the
budgeted level of activity.
FLEXIBLE BUDGET:
▪CIMA defines this budget as one “ which, by recognizing the difference in
behavior between fixed and variable costs in relation to fluctuations in output,
turnover or other variable factors such as number of employees, is designed
to change appropriately with such fluctuations”
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COST CONTROL
▪The process or activity on controlling costs associated with an
activity, process, or company.
▪Cost control typically includes,
(1) investigative procedures to detect variance of actual cost from budgeted
cost,
(2) diagnostic procedures to ascertain the cause(s) of variance, and
(3) corrective procedures to effect realignment between actual and budgeted
costs.
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INDUSTRIAL
RELATIONS
106
INDUSTRIAL RELATIONS
MEANING & CONCEPT
▪The term ‘Industrial Relations’ comprises of two terms:
‘Industry’ and ‘Relations’
▪“Industry” refers to “any productive activity in which an
individual (or a group of individuals) is (are) engaged”.
▪By “relations” we mean “the relationships that exist within the
industry between the employer and his workmen.”
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DEFINITION
▪The industrial relation also called as labor- management, employee
employers relations.
1. “Employer- employee relationship that are covered specifically
under industrial relation laws”.
2. “concerned with the systems, rules and procedures used by union
& employers to determine the reward for effort & other condition
of employment.
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PARTIES TO INDUSTRIAL RELATION
109
Objectives
1. To safeguard the interest of labor and management by securing the
highest level of mutual understanding.
2. To avoid industrial conflict.
3. To improve the economic conditions of workers in the existing
state of industrial managements and political government
4. To Protect management and labor interests.
110
IMPORTANCE
▪Uninterrupted production
▪Reduction in Industrial Disputes
▪High morale
▪Mental Revolution
▪Reduced Wastage
▪Foster Industrial Peace
▪Promote Industrial Democracy
111
ROLE OF THREE ACTORS TO INDUSTRIAL RELATIONS
1.Role of Employee:
▪To secure better terms and conditions for their members
▪To obtain improved status for the worker in his/her work
▪To increase implementation of democratic way of decision making
at various levels
2.Role of Employers:
▪Creating and sustaining employee motivation
▪Ensuring commitment from employees
▪Negotiating terms and conditions of employment with leaders
▪Sharing decision making with employees
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3.Role of States:
▪Labor policies
▪Labor laws
▪ Industrial tribunals
▪Wage boards
▪ Industrial relations policy
113
Causes for poor industrial relation
The main reasons are as follows:
▪ Inadequate fixation of wages or improper wage structure.
▪ Indiscipline ,Unhealthy working conditions at the workplace.
▪Lack of human relations skills on the part of supervisors and
managers.
▪Desire of workers for high bonus, wages or daily allowances.
114
Approaches to industrial relation
115
1. UNITARY APPROACH
▪ Industrial relation is grounded in mutual co-operation, individual
treatment, team work and shared goals.
▪Union co-operate with the mgt. & the mgt.’s right to manage is
accepted because there is no ‘ we they feeling’
▪Assumption: Common interest & promotion of harmony No strikes
are there.
▪ It’s a reactive IR strategy.
▪They seek direct negotiations with employees.
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2. PLURALISTIC APPROACH
▪ It perceives:
• Org. as a coalitions of competing interest.
• Stability in IR as the product of concessions and compromises
between management & unions.
▪Conflict between management and workers is understood
▪Conflict is viewed for innovation and growth.
▪Strong union is necessary.
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3. MARXIST APPROACH
▪Regard conflict as Pluralists…
▪Marxists see conflict as a product of the capitalist society.
▪Conflict arises due to the division in the society between those who
own resources and those who have only labor to offer.
▪For Marxist all strikes are political.
118
TOTAL QUALITY
MANAGEMENT
119
TOTAL QUALITY MANAGEMENT
DEFINITION OF TOTAL QUALITY MANAGEMENT
▪TQM is the art of managing the whole to achieve excellence.
▪”TQM is a management approach for an organization, centered on
quality, based on the participation of all its members and aiming at
long-term success through customer satisfaction, and benefits to all
members of the organization and to society.”
120
EFFECT OF TQM (QUALITY IMPROVEMENT)
▪ Improve Quality (Product/Service)
▪ Increase Productivity (less rejects, faster job)
▪Lower Costs and Higher Profit
▪Business Growth, Competitive, Jobs, Investment
121
TQM Six Basic Concepts
1. Leadership
2. Customer Satisfaction
3. Employee Involvement
4. Continuous Process Improvement
5. Supplier Partnership
6. Performance Measures
(All these present an excellent way to run a
business)
122
1.LEADERSHIP
▪ Top management must realize importance of quality
▪ Quality is responsibility of everybody, but ultimate responsibility is
CEO
▪ Involvement and commitment to CQI
▪ Quality excellence becomes part of business strategy
▪ Lead in the implementation process
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2.CUSTOMER SATISFACTION
▪Customer is always right – in Japan customer is “King”
▪ Customer expectations constantly changing – 10 years ago
acceptable, now not any more!
▪ Delighting customers (Kano Model)
▪ Satisfaction is a function of total experience with organization
▪ Need to continually examine the quality systems and practices to
be responsive to ever – changing needs, requirements and
expectations – Retain and Win new customers
124
3.EMPLOYEE INVOLVEMENT
▪People – most important resource/asset
▪Quality comes from people
▪Deming – 15% operator errors, 85% management system
▪Project teams – Quality Control Circles (QCC), QIT
▪Education and training – life long, continuous both knowledge and
skills
▪Suggestion schemes;
▪Motivational programme, incentive schemes
▪Conducive work culture, right attitude, commitment
125
4.CONTINUOUS PROCESS IMPROVEMENT
▪ View all work as process – production and business
▪ Process – purchasing, design, invoicing, etc.
▪ Inputs – PROCESS – outputs
▪ Process improvement – increased customer satisfaction
▪ Improvement – 5 ways:
✓Reduce resources.
✓Reduce errors.
✓Meet expectations of downstream customers.
✓Make process safer.
✓Make process more satisfying to the person doing.
126
PROBLEM – SOLVING METHOD
1. Identify the opportunity (for improvement)
2. Analyze the current process
3. Develop the optimal solution(s)
4. Implement changes
5. Study the results
6. Standardize the solution
7. Plan for the future
127
5.SUPPLIER PARTNERSHIP
▪40% production. Cost comes from purchased materials, therefore
supplier Quality Management important
▪Substantial portion quality problems from suppliers
▪Need partnership to achieve quality improvement – long-term purchase
contract
▪Supplier Management activities
▪Define product/program requirements
128
6.PERFORMANCE MEASURES
▪Managing by fact rather than gut feelings
▪ Effective management requires measuring
▪ Use a baseline, to identify potential projects, to asses results from
improvement
▪ E.g. Production measures – defects per million, inventory
turns, on-time delivery
129
REFERENCE
▪Lachman/Lieberman’s The Theory and Practice of Industrial Pharmacy
▪Materials Management In Pharmaceutical Industry -A Review, Roy et
al. World Journal of Pharmaceutical Research, Volume 4, Issue 10,
1012-1031.
▪Production planning and control by N.V.satheeshmathav”,”(significant
elements of production management in pharmaceutical industry): a
review by innovate international journal of medical and pharmaceutical
science 2018 3(2).
▪Pharmaceutical regulatory affairs – Total quality management by c. v. s.
Subramanian., j.
▪Significant Elements Of Production Management In Pharmaceutical
Industry: A Review, Innovat International Journal Of Medical &
Pharmaceutical Sciences, 2018; 3(2)
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