CHAPTER THREE THEORETICAL CONSTRUCTION 3.

1 INTRODUCTION
Manufacturing is a vast area involving supplier to the customer service. It is a process of converting raw materials into finished goods. Manufacturing involves making products from raw materials by means of various processes, machinery and operations, through a well-organized plan for each activity required. The word product means something that is produced. There are many types of disturbances hamper the production processes, among them in our thesis we only discuss about raw material shortage problem. Raw material is the key and vital input in any manufacturing process.

3.2 CAUSE AND EFFECT DIAGRAM

Cause and effect diagrams were developed by Kaoru Ishikawa in 1943. It is also known as fishbone diagrams because of their appearance. Cause and effect diagrams are used to identify and systematically list the different causes that can be attributed to a problem. These diagrams thus help to determine which of several causes has the greatest effect. The possible reasons behind the raw materials shortage which we obtain from our investigation and expert opinions are shown below in Fig. by cause and effect diagram:

Cause-effect diagram
Supplier related problem Communication problem Transportation related problem

leadtime problem supplier capacity supplier production problem

incorrect information incomplete information delay s of information

Transport delay M isscheduling political instability

information to w rong person

expiration w rong quantity of stock lev el Wrong material inappropriate inspection defectiv e material material spoilages label shortage

Raw material shortage

w rong method of inv entory control

printing problem

Inventory control problem

Quality problem

Problem in pack ing

Fig.: Possible cause and effect diagram for disturbances.

3.3 DISTURBANCES OF PHARMACEUTICAL INDUSTRY

We keep encountering shortage phenomena not only as consumers but also as manufacturers. Disturbances are not rare in the supply of raw materials, semi-finished products, and finished products. Shortage of raw materials becoming a norm for various industries especially manufacturing. Raw material shortage increasingly retards the expansion of production. As pharmaceutical companies are growing faster and they face this problem frequently. So, nowadays the management of pharmaceutical companies has given attention to find the causes for the disturbances. From our observation we got 8 disturbances that mainly occurs in pharmaceutical industries. These disturbances and their relative causes are discussed below: 3.3.1 Transportation related problem There are 3 main types of disturbances to consider when transporting a shipment at raw material stages in the supply chain network: Transport delay: Some manufacturing companies do practice just in time (JIT) that involves lot of movement of logistics or transports. Transport companies engage by the suppliers fails to deliver on time due to transportation problem causing materials shortage. Miss scheduling: Sudden change in planning of production schedule which involve various models with different types of raw materials with specific lead time causes materials shortage. Political instability: Political instability of any country creates unwanted situation which hampers the production. Delayed supply of raw materials occurs due to the political strike. Sometimes organization fails to transport finished product at due time because of transportation problem. 3.3.2 Problem in Packing Sometimes manufacturer do realize that the materials receive might have shortfalls such as short packing which could be trace during production or physical stock count. But when reaches at the hand of production personnel, it is too late that eventually might see material shortages which might delay the output. Short packing is the phenomena of discrepancy exist on actual quantity supplied versus the labeled quantity in a carton or packaging means that quantity insufficient in a standard packing. Printing problem Label shortage

3.3.3 Communication problem Proper information flow among different departments is necessary to acquire the production target. When information is not passed smoothly it creates problem which we call communication problem. Production schedule hamper for communication problem. The reasons of communication problem are Incorrect information Incomplete information Delays of information Information to wrong person

3.3.4 Quality problem Since the pharmaceutical products directly affect the health of the customer it is extremely necessary to produce products of the highest quality. This can only be achieved by strict quality protocols at each stage of the supply chain. Proper quality inspections have to be done. Quality problem may occur when the quality of supplied raw material from supplier is exceeded the acceptance limit. There are many reasons behind the suppliers supplied raw material quality problem. Material spoilages: When production runs the process from input to output might encounter materials spoilage. Spoilt materials cannot be rework or repair at all. This could have happen during handling of materials by human or machines at production area or store warehouse. Once again insufficient materials to support production in other word causing materials shortage. Defective material: Defective is meant for incoming poor quality of raw materials produce by suppliers. For the case of pharmaceutical exact quantity will be delivered by supplier but any unforeseen incoming poor quality materials naturally leads insufficient good quality materials which cause materials shortage. Inappropriate inspection: An inspection is, most generally, an organized examination or formal evaluation exercise. It involves the measurements, tests applied to certain characteristics in regard to an object or activity. The results are usually compared to specified requirements and standards for determining whether the item or activity is in process with these targets. Inspections are usually non-destructive. If inappropriate inspection occurs, during manufacturing it causes materials shortage. Wrong material: Suppliers do deliver wrong materials means that the materials delivered totally out of specification or not fit for manufacturing process. Manufacturer detects the wrong materials during production process or receiving of materials at store warehouse. But for the case wrong materials receive at store and while waiting for immediate replacement, it is also too late and this cause materials shortage. Expiration: Store warehouse do practice first in and first out (FIFO) to avoid any expiry taken place on raw materials. But sometime cannot be avoidable when certain demand for product been delay upon requisition according to demand, this actually sees that some raw materials will be hold in the store warehouse for some time, without realizing

reaching towards expiration date. When the concern product on schedule, the raw materials are actually expired leads to materials shortage that required immediate purchase for new materials. 3.3.5 Supplier related problem Organization wants to make the production system smooth by maintaining a tight schedule. But when the suppliers fail to supply raw materials at due date, a disturbance is developed which we call Supplier related problem. Production rate is decreased as well as production cost is also increased for this disturbance.For this reason, organizations are failed to deliver finished product at due time which will lead to the loss of goodwill of the company. There are some causes which is responsible for Supplier related problem. These are discussed below Lead-time problem: Supplier intention to fulfill their obligation towards their manufacturing clients demand which very much dependent on the perfect information flow from both parties. The information provided by supplier such as their lead time to produce and deliver to the door step of manufacturer should not be ignored. Any ignorance might cause hiccups to suppliers to deliver on time. Any change in manufacturing planning, then supplier might face difficulty to commit delivery for shorter lead time eventually causes materials shortage. Supplier capacity: Purchasing division in a manufacturing plant involves sourcing and procurement process of supplier. During sourcing for potential supplier, one of the criteria to be met is the capacity to produce raw materials. Over ambitious of giving more orders to suppliers without examining their actual capacity will lead to abnormal situation. The word of trust in supply chain partnership between manufacturer and suppliers make us blind for a moment. While suppliers might confront with their capacity problem to produce the exact quantity demanded by manufacturer eventually leading or causing materials shortage. Supplier production problem: This is the reason that occurs when the suppliers fail to produce the proper amount of raw material at the right time to supply the production plant. This type of problem is not simple because manufacturing plant depends on the suppliers. If there is any problem in the suppliers production system and cannot supply sufficient amount of raw at right time to the production plant, then the bad effect also come towards the manufacturing plant.

3.3.6 Inventory control problem Inventory is an idle stock of physical goods that contain economic value, and are held in various forms by an organization in its custody awaiting packing, processing, transformation, use or sale in a future point of time. There are four kind of inventory, raw materials inventory is one of them. It must be maintained properly to reduce materials shortage. Wrong method of inventory control: Communication and transportation efficiencies throughout the supply chain have allowed inventory reductions at all levels. Most manufacturers, distribution centers, and systems use just-in-time inventory management to reduce the cost of inventory on hand and optimize cash flow. This

strategy is recognized as sound business management for all stakeholders, but an unexpected shortage at any point in the supply chain can significantly affect the end user and patient. Some manufacturers and distributors use inventory management strategies that minimize end of- quarter or end-of-year product inventories or limit shipments based on yearly quotas. But improper inventory control method causes materials shortage. Wrong quantity of stock level: Poor ordering practices, stockpiling before price increases, hoarding caused by rumors of an impending shortage, and unexpected delivery delays may affect inventory levels in Pharmaceutical systems.

3.3.7 Design Change Product and materials design by engineering division. The product family consists of components such as work in process (WIP) and raw materials. The drawing and specifications of materials will be channeled out to purchasing, production and quality assurance division. Production depends on materials supplied by store which actually involve small process lot by lot. Time to time, engineering division might change the design or specification of the raw materials to suite the current process or fit the current performance of the product. But, then this process of design change has greater impact to supply chain process in the upstream level due to insufficient lead time and in available of expertise to produce new part. Sudden design change might happen especially for new models or new products which production might require immediately. For this case creates shorter lead time order to supplier which apparently supplier fail to deliver on the stipulated lead time and date which directly cause materials shortage. 3.3.8 Demand for critical material Many pharmaceutical materials in the world do face critical materials shortage. Critical materials are those materials which are in the obsolete stage, for this kind of materials firms are facing materials shortage. But some of this kind of materials has high demand in the market.

3.4 CONCLUSION
Pharmaceutical sector is affected by raw materials shortage problem that reduce the total earnings. For this disturbances, organizations can not achieve their production target. So, the aim of this research is to identify the common disturbances occurred in the pharmaceutical sectors of Bangladesh, the causes behind the disturbances and consequences of these disturbances. To achieve the outcomes related to objectives set for the study is discussed in the next chapter.