1.
PRODUCT MANAGEMENT:
PRODUCTION ORGANIZATION MATERIAL
MANAGEMENT, INVENTORY MANAGEMENT AND
CONTROL
SUBMITTED BY: PRACHI PANDEY, RAHUL PAL
SUBMITTED TO: DR. HIMMAT SINGH CHAWRA
M. PHARM (PHARMACEUTICS)
NIMS INSTITUTE OF PHARMACY, NIMS UNIVERSITY, JAIPUR

2.
CGMP (CURRENT GOOD MANUFACTURING
PRACTICE
 CGMP refers to Current Good Manufacturing Practice (CGMP) regulations enforced by US FDA.
 Current Good Manufacturing Practices are the methods to be used in, the facilities or controls to be
used for, the manufacturing, processing. packaging or holding of a drug to assure that such drug meets
the requirements of the act, and has the identity and strength and meets the quality and purity
characteristics that is represented to possess.

3.
OBJECTIVES OF CGMP
 Ensure that products are consistently manufactured and controlled to the specified quality.
 Concerned with all aspects of production and quality control.
 In the manufacture of cosmetic products, overall control and monitoring
 Ensure that the consumer receives products of specified quality.
 The quality of a product depends on the starting materials, production and quality control processes,
building, equipment and personnel involved.
 CGMP regulations assures the identity, strength, quality and purity of drug products

4.
PRODUCT MANAGEMENT: MATERIAL
MANAGEMENT
Definition: “It is an organizational concept which has the authority & responsibility of all actives
principally concerned with the flow of materials for the organization”.
 Material management works continuously with production, marketing, sales & quality control.
 It has the responsibility of determining the amount of inventory & its accountability.
 It is concerned with planning, directing & controlling the kind, amount, location, movement of the
various flows of materials used in & produced by a business enterprise.

5.
FUNCTION OF MATERIAL MANAGEMENT
 Material planning & programming.
 Simplification, standardization & value analysis.
 Inventory control & management.
 Purchasing of materials in desired quantities without delays.
 Receiving of incoming materials.
 Storage, preservation & administration of materials.
 Production planning & scheduling.
 Disposing of rejects & obsolete materials, Improving operation efficiency through training.

6.
MATERIALS - QUALITY & QUANTITY
 Four factors are considered to be essential...
 Quality
 Quantity
 Price
 Delivery date

7.
INVENTORY MANAGEMENT
DEFINITION: “The 'inventory' can be defined as stock of items (includes raw materials, in process
goods, finished goods, packaging, & other spares) in order to meet an unexpected demand/ distribution in
the future.”
(OR)
“Inventory is defined as an itemized list of goods with their estimated worth, specifically, annual account
of stock taken in any business.”

8.
CLASSIFICATION OF INVENTARY
 PRODUCTION INVENTORY : Special items manufactured to company specification.
 MRO INVENTORY: Maintenance, repair & operating supplies which is consumed in production process.
Do not become part of the product.
 IN-PROCESS INVENTORY: Semi finished products found at various stages in the production operation.
 FINISHED GOODS INVENTORY: Complete product ready for shipment.
PRODUCTI
ON
MRO
IN-
PROCESS
FINISHED
GOOD

9.
OBJECTIVES
 To reduce dependence of one another
 To enable each organization schedule its operation
independently of another.
 To reduce material handling costs.
 To obtain a reasonable utilization of people & equipment.
 Maximize customer service, Longer production runs
 Flexibility in production scheduling.
 To avoid stock out and shortage.

10.
BENEFITS
 Inventory control ensures an adequate supply of material & stores, minimizes stock out & shortage &
avoid costly interruption.
 It keeps down the investment in inventory.
 Eliminate duplication in ordering / replenishing stocks.
 better utilization of available stocks by facilitating inter-dept transfer within a company
 Serves as means for the location and disposition of inactive & obsolete item of services.
 provide a consistent and reliable basis for preparing financial statement

11.
INVENTORY COSTS
 Cost factors must be considered while taking any decision regarding inventories.
 Includes ordering costs, carrying cost, out of stock/shortage cost and set up cost.
ORDERING COST:
 Costs of placing an order with a vendor of material such as preparing a purchase order (receiving and
ordering calls), processing payments (typing costs), transportation, receiving & inspecting the material.
 This cost does not depend on or vary on the number ordered.

12.
 CARRYING COSTS/HOLDING COST
 Costs connected directly with material such as deterioration, pilferage, storage facilities, obsolescence.
 Financial costs includes taxes, insurance , handling charges & interest
 OUT OF STOCK/SHORTAGE COST
Back ordering
1. Lost sales
2. Customers goodwill
 COST OF ITEM: Direct cost of item
 SET UP COST:
 It include production charge- equipment change over , report preparation etc.

13.
ROLE OF PHARMACIST IN DRUG
PROCUREMENT
 The hospital pharmacist should be in collaboration with the purchase officer, assuming the following
duties:
 Maintaining a list of names, addresses, and telephone numbers of drug manufacturers, wholesalers and
local representatives.
 Preparing detailed specifications for drugs, chemicals, and biologicals.
 Preparing request for purchase form.
 Preparing receipt memo, if the drugs are received directly by the pharmacy.
 Preparing return goods memo whenever applicable.

14.
TECHNIQUES IN INVENTORY
MANAGEMENTABC
 ABC Analysis
 VED Analysis
 EOQ Analysis
 Perpetual Inventory System
 Lead time
 Buffer Stock

15.
ABC (ALWAYS BETTER CONTROL)
 “Always Better Control”
 It is an inventory categorization method
used for the analysis of range of items that have
different levels of significance and should be controlled
 As per the analysis, the inventories is grouped into 3 categories based on cost of the material and
money value of consumptions

16.
VED ANALYSIS
 This system is based on utility of the material.
 The different brands of the drug formulation is classified as:
V=VITAL ITEMS
E-ESSENTIAL ITEMS
D-DESIRABLE ITEMS
 Vital Items:
 They are very useful and important in daily patient care.
 Maximum levels of such drugs should be maintained always in order to have a continuous supply
VITAL ITEMS
ESSENTIAL
ITEMS
DESIRABLE
ITEMS

17.
 Essential items:
 These are such items which can affect the pharmacy services to some extent. They require a lesser
stock level when compared to vital drugs.
 Essential items are those items whose stock-out cost is very high for the company.
 Desirable items:
 These are required by the pharmacy but they do not effect the quality of service to the patient.
 Desirable items are those items whose stock-out or shortage causes only a minor disruption for a short
duration in the production schedule.

18.
EOQ ANALYSIS
 EOQ is the quantity of materials to be ordered at one time, which minimizes the cost.
 The correct quantity to buy is the quantity at which the ordering cost and inventory cost is minimum.
EOQ = √2AB/C
Where, A- Annual requirement
B- Ordering cost
C- Carrying cos

19.
PERPETUAL INVENTORY SYSTEM
The method of recording the store balance after every receipt and issue to facilitate regular checking and to
prevent closing down for stock taking.
 It comprises of:
1.BIN CARD
2.STORE LEDGER
3.CONTINUOUS STOCK TAKING
 BIN CARD:
 Is a document maintained by the store keeper in his store, It serves the purpose of ready reference.

20.
 STORE LEDGER:
 It is kept in the accounting department.
 Generally maintained in form of loose leaf cards, so that they can be easily removed and inserted.
 CONTINUOUS STOCK TAKING:
 Only a limited no. of items are verified on a day.
 Selection of the item should be such that each item gets checked at least a certain no. of times in a year.
and checking is evenly distributed during the period.

21.
BUFFER STOCK
 Is used in emergency to meet the unseen demands ,i.e, the minimum quantity of particular item which
must be kept in the stock at all the time.
 Buffer stock needs the following factors to be taken into consideration like:
lead time
nature of items, rate of consumption
availability of substance
re-order level
stock out cost