UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ DINH XUAN THONG IMPROVING THE ACCURACY OF SALES FORECAST: A CASE STUDY OF OPV PHARMACEUTICAL COMPANY IN VIETNAM MASTER OF BUSINESS ADMINISTRATION Ho Chi Minh City – Year 2020 1 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ DINH XUAN THONG IMPROVING THE ACCURACY OF SALES FORECAST: A CASE STUDY OF OPV PHARMACEUTICAL COMPANY IN VIETNAM MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: PHAN THI MINH THU Ho Chi Minh City – Year 2020 2 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com EXECUTIVE SUMMARY OPV is leading pharmaceutical compnay in Vietnam which have one factory with WHO-GMP certificate in Dong Nai province and large distribution network in nationwide. Consequently, OPV always commits to provide products with the highest international standards to customers. Firstly, we introduce the history and the organization chart of OPV pharmaceutical. About overview, OPV has the largest portfolio of the registered pharmaceutical products in Vietnam, including OTC and the prescription formulations across important therapeutic classes.
In this thesis, we only focus in analyzing responsible and activities of Planning team for understanding problems of OPV pharmaceutical company. In the next chapter, all operation activities in the dealer’s channel will be analyzed to find the potential problems through all symptoms manifesting outside which we can observation and perception. According real data of OPV combining with literature and theory, we demonstrated and pointed out the central problem of dealer’s channel that are raw material shortage and this problem also leads to low performance and don’t achievement target 2018 of dealer’s channel. This thesis were used the theory informed to identify the potential causes, which made the raw material shortage in dealer’s channel and inferred root cause is inaccurate demand forecasting which based on impacted range and important level.
Finally, we have the cause-and-effect diagram of raw material shortage that pointed out relationship of all factors from symptoms to root cause in issue of dealer’s channel. We have also given some ideals for the solution design by comparing efficient and accuracy between two demand forecasting model that are simple moving average method and linear regression method. In this experiment, we used sales data 2017 for history data and applied two demand forecasting model for predict sales forecast 2018. After that, we would compare the results with the sales actual sales data in 2018 for find the better solution.
At the last, next one provides some ideals for the design of change process in demand forecast of dealer channel, to be used for the realization of the solution. To be continued with the suggested plan for deploying linear regression method in demand forecasting that were expressed and explained clearly on this chapter. We detail all steps from the data preparation to train all departments about the new demand forecast procedure and execute the linear regression model. At the last, evaluation and adjustment will be do end of year to ensure the model always improvement and efficiency.
1 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com In the conclusion, based on a quantitative and a qualitative analysis of sales result 2018 in dealer’s channel, we can be concluded that the main problem in dealer’s channel of OPV is shortage of raw material and the root cause of main problem is inaccurate forecasting. The research aimd to identify the effective forecasting methods for dealer’s channel by using linear regression model and the results indicated that this model is improvement in more accurate and more efficient than other model. The next part were showed the details of two types of data used in this thesis that are secondary data was collected from quantitative data such as financial reports, sales reports, policies,. and primary data was collected from qualitative research and used the in-depth interview as the main method.
Additionally, we also attached results of experiment in making demand forecasting by using linear regression model and simple moving average model. Finally, this is the list of all the articles and all the journals that were used in this thesis. Those information used for verifying and demonstrating the pointed out problems and causes that are urgent and importance in the dealer’s channel of OPV as well as suggested solution is suitable and reasonable for solving the main problem. 2 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Table of Contents 1.
CHAPTER 2: PROBLEM IDENTIFICATION. Identifying and Diagnosing Tentative Problems. Shortage of product. The prolonged completion time of sales orders.
The high rate of overdue sales orders. High competitive price. Verifying Tentative Problems. Identify the central problem.
High competitive price problem. The tardy work progress in production planning task. The central problem is raw material shortage. CHAPTER 3: CAUSE VALIDATION.
Potential cause 1: Ingredient is out of date. Potential cause 2: Delivery delay. Potential cause 3: Material is used for another product. Potential cause 4: Short notice from planning.
Root cause validation: Inaccurate forecasting cause. CHAPTER 4: ALTERNATIVE SOLUTIONS. The first alternative solution: the forecasting method based on the simple moving average (SMA) technique. The second alternative solution: the forecasting method based on the linear regression technique.
Comparison two methods. CHAPTER 5: ACTION PLAN. 57 3 LUAN VAN CHAT LUONG download : add luanvanchat@agmail. Company Background For over 65 years, OPV has been a leader in the Pharmaceutical sector in Vietnam.
OPV produces and markets OPV brands, develops products for third party distributors, and provides contract-manufacturing services for multinational companies. The OPV factory is WHO-GMP certified and operates to highest international quality standards. Additional, OPV factory has capability to produce many different types of products (drugs, liquid, solid, cream and ointment). The production equipment and facilities are invested to meet the requirements in high quality standards which expected from OPV multinational partners.
As a result, OPV has become the partner of choice of world leading pharmaceutical companies including MSD, GSK, Johnson & Johnson and Otsuka. Furthermore, the business is managed by a talented professional team who bring deep industry expertise and high ethical standards to everything we do. Our staff are amongst the best in Vietnam and we value them as critical to OPV’s success so that OPV has the largest portfolio of registered pharmaceutical products in Vietnam, including OTC and prescription formulations across important therapeutic classes. OPV has dedicated itself to continuously improving its operations to meet current international quality standards and to provide reliable professional services to its customers, both local and multinational.
Finally, OPV will commit to improve access to affordable medicines and help patients “Stay healthy by combining technologies of the world and the traditions of Vietnam”. Organization Charts Figure 1: OPV Organization Chart Source: OPV Annual Report 2018 4 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com OPV company have the six primary divisions which presents for the important aspects in the pharmaceutical company that are - Regulatory Affairs Division is accountable for licensing and maintaining pharmaceutical products of OPV. They responsible for compliance with the policies of Drug Associate Vietnam - DAV in all OPV activities and OPV product portfolio. - Commercial Division is accountable for sales performance of OPV and engage core customers in company activity as well as maintain good relation with the customers to improve the company image in field and in front of the customers.
- Supply Chain Division is accountable for all supply chain activities such as supply planning, demand planning, inventory management, import planning & forecasting, warehousing, expiry management, distribution, invoicing, etc. with the objective of creating net value, building a competitive infrastructure, leveraging logistics, synchronizing supply with demand resulting the optimum customer satisfaction by minimizing the stock levels/CID, reduced lead time and expiries, and measuring performance against pre-agreed KPIs. - Quality Division is accountable for all production activities are delivered to the OPV standard of quality and drives compliance in accordance with the applicable regulatory requirements, the OPV Quality Management System, Policies and written procedures and industry best practices. - Production Division focuses on ensuring that all OPV products are produced to the highest standards of quality, safety and efficacy and are available when needed.
Production Division is accountable in maintaining and handling advanced pharmaceutical manufacturing equipment, and software that controls manufacturing equipment following GMP documentation and other formalized, rigorous procedures. - Support & Operation Division is the central core management function of OPV which involves managing people, equipment, technology, information, and all the other resources needed in the production of goods and services. OPV are committed to operating at the highest standards of corporate governance. Most of systems and processes are well-defined to ensure minimum wastage of time and money.
We believe our governance structure underpins our ability to deliver the company strategy to create long-term value and benefit for our shareholders and stakeholders. ‘Efficiency’ was added as a part of ‘OPV Core Value’. 5 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com The Planning Department In this thesis scope, we will go deeply to the structure of the Planning Department which hold accountable in organizing production according to demand and quality standards as well as committing materials and equipment are available when the Production needed and ensuring everything runs smoothly. Figure 2: Planning Department Organization Chart.
Source: OPV Organization Chart The total headcount of Planning department is four employees that include one manager and three staffs with the specification and responsibility below: - Planning Manager are in charge of developing the strategies to increase production efficiency and output in which is responsible for creating a better workflow that uses company resources more effectively and oversee all aspects all production process and recommend changes as needed. Additionally, production planning managers share information about the future production changes with other managers and work closely with other managers of other departments to ensure a cohesive shipping process. - Planning Staff is responsible for the accuracy and timeliness of the production process by maintaining an accurate inventory of items produced, as well as ensure all company and industry standards and regulations are followed. Duties include a specific focus on the materials and goods required in the production phase, ensuring the working requirements is properly maintained in order to have optimal performance.
The planning department plays a central role in the manufacturing and the production for OPV organizations, this process can be responsible for OPV success or failure in these core areas of responsibility. Therefore, Planning department should be the one to commit that OPV goods are produced on time for distribution in a profitable manner. This lead to the goal of Planning department is to ensure the smooth and cost-efficient flow of OPV production operations. In summary, the role of Planning department is to ensure that materials and equipment are available when needed and that everything runs smoothly so that Planning department involves what to produce, when to produce it, how much to produce, and more.
6 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Dealers channel and Tydol product The OPV business in Vietnam with approximately 300 employees, focusses on bringing the prescription medicines and healthcare products to Vietnamese patients and consumers through three distribution channel as below - Retail Channel: OPV sales teams direct sell and distribute the products under OPV brands to pharmcy stores (for OTC products) and to hospitals (for ETC products). - Dealers Channel: OPV factory produces the products under OPV brands according to sales orders of the dealers and the dealers will self to make sale policy based on their business and their resource. - Contract Manufacturing: The partners such as MSD, GSK, J&J will provide material for OPV factory produces the products under partner brands based on contract terms between OPV and partners.