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Demystifying Information Asymmetry: Aurobindo Pharma’s Journey Sandeep Chatterjee

Demystifying Information Asymmetry: Aurobindo Pharma’s Journey Sandeep Chatterjee Principal Consultant, Oracle India. 3 rd International Conference on Transforming Healthcare with IT 31 st Aug.-1 st Sep. 2012 Hyderabad, India. Agenda.

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Demystifying Information Asymmetry: Aurobindo Pharma’s Journey Sandeep Chatterjee

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  1. Demystifying Information Asymmetry: Aurobindo Pharma’s Journey Sandeep Chatterjee Principal Consultant, Oracle India 3rd International Conference on Transforming Healthcare with IT 31st Aug.-1st Sep. 2012 Hyderabad, India

  2. Agenda • Aurobindo Pharma: An Overview • What is Information Asymmetry • The Business Challenges • Solution Options • Aurobindo Pharma’s Journey 3rd International Conference on Transforming Healthcare with IT 31st Aug.-1st Sep. 2012 Hyderabad, India

  3. Agenda • Aurobindo Pharma: An Overview • What is Information Asymmetry • The Business Challenges • Solution Options • Aurobindo Pharma’s Journey 3rd International Conference on Transforming Healthcare with IT 31st Aug.-1st Sep. 2012 Hyderabad, India

  4. Aurobindo Pharma: An Overview • Founded in 1986 by Mr. P.V. Ramaprasad Reddy, Mr. K. Nityananda Reddy and a small group of highly committed professionals • Commenced operations in 1988-89 with a single unit manufacturing Semi-Synthetic Penicillin (SSP) at Pondicherry • Became a public company in 1992 and listed its shares in the Indian stock exchanges in 1995 3rd International Conference on Transforming Healthcare with IT 31st Aug.-1st Sep. 2012 Hyderabad, India

  5. Aurobindo Pharma: An Overview • Market leader in Semi-Synthetic Penicillins • Presence in key therapeutic segments such as neurosciences, cardiovascular, anti-retro virals, anti-diabetics, gastroenterology and cephalosporins • Well integrated Pharma company and features among the top 10 companies in India in terms of consolidated revenues 3rd International Conference on Transforming Healthcare with IT 31st Aug.-1st Sep. 2012 Hyderabad, India

  6. Aurobindo Pharma: An Overview • Exports to over 125 countries across the globe with more than 70% of its revenues derived out of international operations • Nine units for APIs / intermediates and seven units for formulations 3rd International Conference on Transforming Healthcare with IT 31st Aug.-1st Sep. 2012 Hyderabad, India

  7. Agenda • Aurobindo Pharma: An Overview • What is Information Asymmetry • The Business Challenges • Solution Options • Aurobindo Pharma’s Journey 3rd International Conference on Transforming Healthcare with IT 31st Aug.-1st Sep. 2012 Hyderabad, India

  8. What is Information Asymmetry? • In economics and contract theory, information asymmetry deals with the study of decisions in transactions where one party has more or better information than the other • Creates an imbalance of power in transactions which can sometimes cause the transactions to go awry 3rd International Conference on Transforming Healthcare with IT 31st Aug.-1st Sep. 2012 Hyderabad, India

  9. What is Information Asymmetry? • Can lead to two main problems • Adverse Selection • Moral Hazard 3rd International Conference on Transforming Healthcare with IT 31st Aug.-1st Sep. 2012 Hyderabad, India

  10. Agenda • Aurobindo Pharma: An Overview • What is Information Asymmetry • The Business Challenges • Solution Options • Aurobindo Pharma’s Journey 3rd International Conference on Transforming Healthcare with IT 31st Aug.-1st Sep. 2012 Hyderabad, India

  11. The Business Challenges • Faulty Demand Forecasting • Adhoc Supply Planning • Silos across departments • No real time information flow • Huge Pile up of inventory • Poor Cost management • Bureaucratic business processes • Paper and signature intensive 3rd International Conference on Transforming Healthcare with IT 31st Aug.-1st Sep. 2012 Hyderabad, India

  12. Agenda • Aurobindo Pharma: An Overview • What is Information Asymmetry • The Business Challenges • Solution Options • Aurobindo Pharma’s Journey 3rd International Conference on Transforming Healthcare with IT 31st Aug.-1st Sep. 2012 Hyderabad, India

  13. Solution Options • Custom Solution • Pros • Fit for your specific needs • Lower Upfront Cost • Immediate fixes, enhancements • Cons • Scalability • Difficulty in supporting new technology platforms 3rd International Conference on Transforming Healthcare with IT 31st Aug.-1st Sep. 2012 Hyderabad, India

  14. Solution Options • Commercial, Off the Shelf • Pros • Scalable • Incorporates best practices • Cons • Higher Upfront Cost • Industry specific 3rd International Conference on Transforming Healthcare with IT 31st Aug.-1st Sep. 2012 Hyderabad, India

  15. ERP System • Integrates all business management functions, including planning, inventory/materials management, engineering, order processing, manufacturing, purchasing, accounting and finance, human resources, and more • Streamlines processes and workflows with a single integrated system 3rd International Conference on Transforming Healthcare with IT 31st Aug.-1st Sep. 2012 Hyderabad, India

  16. ERP System • Reduces redundant data entry and processes and information is shared across departments • Consolidated view 3rd International Conference on Transforming Healthcare with IT 31st Aug.-1st Sep. 2012 Hyderabad, India

  17. Agenda • Aurobindo Pharma: An Overview • What is Information Asymmetry • The Business Challenges • Solution Options • Aurobindo Pharma’s Journey 3rd International Conference on Transforming Healthcare with IT 31st Aug.-1st Sep. 2012 Hyderabad, India

  18. Aurobindo Pharma’s Journey • Successfully deployed Oracle E-Business Suite 11i across all its locations in 2004 • Solution was deployed across all key functions right from finance, distribution to addressing manufacturing needs of the company • The solution not only provides up-to-date transaction information, but also ensures smooth information flow between the plants and locations of the company 3rd International Conference on Transforming Healthcare with IT 31st Aug.-1st Sep. 2012 Hyderabad, India

  19. Aurobindo Pharma’s Journey • The implementation was carried out in a phased manner with the finance, purchasing, sales and related quality and stores activities being carried out in the first phase and process manufacturing, quality control, plant maintenance and projects in the second phase 3rd International Conference on Transforming Healthcare with IT 31st Aug.-1st Sep. 2012 Hyderabad, India

  20. Scope of the Implementation • Oracle Financials (General Ledger, Accounts Payables, Accounts Receivables, Fixed Assets, Cash Management) • Oracle Purchasing • Oracle Inventory • Oracle Order Management • Oracle Process Manufacturing (Product Development, Process Planning, Process Execution, Cost Management, Quality Management, Manufacturing Execution System) • Oracle Human Resources 3rd International Conference on Transforming Healthcare with IT 31st Aug.-1st Sep. 2012 Hyderabad, India

  21. Business Benefits • Reduction in Inventory • Better Cost Control • Higher Productivity • Smooth information flow across departments • Reporting needs • Consolidated view 3rd International Conference on Transforming Healthcare with IT 31st Aug.-1st Sep. 2012 Hyderabad, India

  22. Stage 2 • Transition from existing Oracle system (11i) to an enhanced version of Release 12 application in 2010 • Consideration was a futuristic and ‘best practices’ embedded process model environment facilitated by package enabled re-engineering • Developed a robust solution for Actual Costing through deployment of OPM Costing 3rd International Conference on Transforming Healthcare with IT 31st Aug.-1st Sep. 2012 Hyderabad, India

  23. Stage 2 • Provided better financial and operational MIS reporting with a provision to comply to IFRS requirements • Developed a Solution footprint and Design Elements to cater to the global rollouts with establishment of a Shared Service Centre 3rd International Conference on Transforming Healthcare with IT 31st Aug.-1st Sep. 2012 Hyderabad, India

  24. Business Benefits • Enhanced Cost Control • Better financial and operational MIS reporting (IFRS) • Opportunity to relook at the business processes • Easy integration with third party software (Chenab for Export Management System) • Enhanced performance • Leverage Service Oriented Architecture • ‘Fusion’ ready 3rd International Conference on Transforming Healthcare with IT 31st Aug.-1st Sep. 2012 Hyderabad, India

  25. Higher degree of uncertainty Get visibility to all demand Manage to uncertainty by postponing inventory Increased global competition Focus on core competency – Increase outsourcing Mass customization Move point of differentiation closer to customers Focus on customer service to ensure brand loyalty Provide reliable and accurate commitments to customers Less money to invest in IT Lower cost of ownership of apps Today: Tough Economic Conditions Business trends forcing you to adapt new strategies Trends Adapt your Business Model 3rd International Conference on Transforming Healthcare with IT 31st Aug.-1st Sep. 2012 Hyderabad, India

  26. Traditional Approach Multi-step planning processes, high latency, limited collaboration Customers Suppliers Tier 2 Tier 1 • Response 1:Maintain Excess Inventory • Response 2: Reserve Production Capacity • Response 3:Expedite Everything! Production Plans Distribution Plans Manufacturing Plans Marketing Forecast Sales Forecast ? Supply Chains Built on INVENTORY Mfg Forecast t = weeks Supply Planning Process Demand Planning Process 3rd International Conference on Transforming Healthcare with IT 31st Aug.-1st Sep. 2012 Hyderabad, India

  27. Move to a More Competitive Model E-Business planning solution: zero latency, real-time collaboration Customers Suppliers Tier 2 • Enable closed loop collaborative planning processes across your value chain • Have complete supply chain visibility • Make better decisions • React immediately to disruptions in supply chain Tier 1 Portal Portal Internet Automated Exceptions Marketing Manufacturing Sales Consensus forecast and prod. plan Single holistic plan Demand Hub & Multi-dimensional analysis Mfg Build a responsive Supply Chain on INFORMATION not inventory S&OP Process Supply Planning Business Intelligence 3rd International Conference on Transforming Healthcare with IT 31st Aug.-1st Sep. 2012 Hyderabad, India

  28. Stage 3 • Deployed Oracle Advanced Supply Chain Planning Solution • Deployed Oracle Crystal Ball which is the leading spreadsheet-based application suite for predictive modeling, forecasting, simulation, and optimization 3rd International Conference on Transforming Healthcare with IT 31st Aug.-1st Sep. 2012 Hyderabad, India

  29. Business Benefits • Global Visibility of Demand and Supply Picture • More accurate forecasting • Reduced Response Time • Improved On Time Delivery • Reduction in Inventory • Optimized Network Design • Improved profitability through a better product mix • Reduction of stock out situations 3rd International Conference on Transforming Healthcare with IT 31st Aug.-1st Sep. 2012 Hyderabad, India

  30. Other Initiatives • Aurobindo Pharma Limited’s fast growth was at risk because it lacked adequate backup and recovery solution • Deployed Data protection solution which bridge multiple platforms at multiple locations to provide the company with a 50 percent faster recovery time, yet enable a 75 percent annual growth in data to be accommodated without an increase in staff 3rd International Conference on Transforming Healthcare with IT 31st Aug.-1st Sep. 2012 Hyderabad, India

  31. Other Initiatives • Brought back IT in house which brought down the total cost of IT helpdesk and facilities management by 15 percent 3rd International Conference on Transforming Healthcare with IT 31st Aug.-1st Sep. 2012 Hyderabad, India

  32. Thank You 3rd International Conference on Transforming Healthcare with IT 31st Aug.-1st Sep. 2012 Hyderabad, India

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