Pharmaceutical Company

C: Since the revenues have fallen, has the volume decreased or the price?

I: The price has remained uniform; the volume of sales has decreased.

C: I would like to look at the issue from both demand and supply side. In supply side, have we been able to produce enough for the demand, or has there been any trouble in our supply chain? 

I: There has been no change in the demand

C: Ok. So, from a supply perspective, I want to know if there has there been a fall in production levels? Are we able to produce as per the demand?

I: Yes, the production has fallen and we are not able to cater to the demand

C: I’ll look at the supply chain to analyze the reason of fall in production. Based on my understanding, the raw material is procured, which is stored then processed, packaged and eventually distributed. Can you confirm if these are the right steps of the supply chain process, before I go ahead with delving deeper into each stage?

I: Yes, please go ahead.

C: Has there been a change in the raw material procurement process, with respect to the vendors involved, the quantity procured and the quality and cost of raw material and time taken for delivery?

I: No, there hasn’t been any change in the raw material procurement process.

C: Okay. Has any change occurred in storage and warehousing facilities ?

I: No

C: To analyze any changes in the processing, I would like to write production as a function of following :

Capacity * Utilization rate * Efficacy (yield)

I: That is correct. Among these factors, the yield has fallen.

C: So, yield would be driven by the interplay between labor and machinery. I would be looking at both these factors to find the reason for fall in yield.

I: Sure, go ahead.

C: Does the plant employ in-house labor or outsources them? Also, has there been a decline in the labor employed lately?

I: Our labor is in-house. Further, there have been no changes in labor employed.

C: Has there been a change in wages ?

I: No, it has been the same

C: So I believe there has been no changes in labor and I would look at the machines now. Has there been a change in the number of machines recently?

I: No, the number of machines have been constant

C: Has there been any upgrade or decline in term of technology used in machines ?

I: Yes, the technology has been upgraded. Our machines have been digitalized with new technology.

C: Since the labor has remained the same, is it right to infer that the existing labor does not have the skill to operate the new technology, due to which the yield has fallen.

I: Yes, you are right. Can you give some suggestions for this?

C: In the short run, the client can look at outsourcing labor which is skilled to operate the machines. At the same time, the client can conduct skill training workshops for the existing labor so they can operate these machines in the long run.

I: Yeah, sounds good. We can close the case here.