analysis on rumack pharmaceuticals

FACULTY OF ENGINEERING & COMPUTING

Case Study , Rumack Pharmaceuticals

User : Davis D Parakal SID : 3357394 Module : Engineering Strategy

Module Leader : Richard Anderson

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Case Study, Rumack Pharmaceuticals

Introduction

This report analyzes the case study on Rumack pharmaceuticals and suggesting

marketing, manufacturing strategies for the future improvement of business.

Marketing Strategy

Marketing is one of the key factors that drive business into success. It delivers the

information of the product and services of the company into public or specifically

customers. “Marketing strategy is defined for our purposes as the total sum of the

integration of segmentation, targeting, differentiation, and positioning strategies

designed to create, communicate, and deliver an offer to a target market”.( Adel I.

El-Ansary,2006)

In the Rumack pharmaceutical case, they mainly used two marketing approaches.

Branding

Product line extension and derivation

Recognizing the level of acceptance of the product, Restolvic as a successful

indigestion reliever, company started strengthening the brand name of that

product. This is the basic principle in which a successful brand name can reach

more heights that a new brand in the market. The customer acceptance level of

branded products always makes industries to seek ways to brand the product or

services as much as they can. “Branding is defined for our purposes as naming the

offer to gain an identity, evolve meaning, and project an image conducive to

building brand equity” ( Adel I. El-Ansary,2006). Rumack pharmaceutical was very

much successful in branding Restolvic and gained the market place.

Keeping the Restolvic brand they stared extending the product line with

derivatives and similar products Restolvic A, Restolvic E etc.. This marketing

strategy gained the market and customer demand increased for the company

products. Keeping same line with the successful product always makes success.

But the disadvantage of this marketing strategy is negative impact on new

product will effect brand image of successful product. So the product

development of new one should give extreme care and planning when they

advertise it will successful brand.

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Manufacturing Implications

Fig 1

The attachment 1 represents the annual quantity distribution (in 000’s bottles or

kilo bottles) for a number of representative products packed on lines 1, 2 and 3

over the last 7 years.

The above table give the exact idea about the production trends and its variety in

Rumack. It is very clear from the data set that production increase steady with in

6 years. The quantity less than 500 kept on increasing for 6 years and it is evident

from this product line increased in such a great way. In the beginning there was

no production more than 1500 on a specific medicine. But it started expanding

from second year and ended with three products with above 2000 numbers in the

end of 6th year. So the demand from the customer kept increasing all these years.

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From the percentage it is clear that less than 500 keep the majority of the

production. The strategy behind this one aims in increasing product line and

successful products. Small test medicines below 500 are introduced every year

and some of they will highly accepted by the customer in the coming years. This

testing and deploying strategy found successful when we see the high production

above 2000 for such products in the last five years of ‘% sample products’ data

set.

Fig 2

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The attachment 2 represents the annual quantity distribution (in 000’s bottles or

kilo bottles) for a number of representative products packed on lines 1, 2 and 3 in

terms of the year of introduction and the 2 years following introduction.

The first row in the table, that explains the 6 year before shows the product

volume increased in that particular time. They introduced 6 different varieties

apart from the successfully running product. But after that initial year of case

study we can’t see a drastic increase in the product variety but they keep a steady

line on introduction like one or two product per year. But the noticeable and

applicable thing was steady increase in production of previously introduced

products. This assure as the success of each product in the market. Keeping an

eye on customer demand this strategy of production was making profit to the

company.

The chart 1 represents the average run size (000’s bottles) on line 1 over the last

6 years.

[0 = Current Year] [-6 = 6 year before] Fig 3

We can see a steady decrease in the average run size of the production. It started

the production before 6 year with an average of 141.9 and drastically reduced to

86 in the following year. Then it started decreasing and ended with 60’s in the last

two year. This problem mainly involved dude to the production line increment in

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those years. Rumack was struggling to manage the production in a proper order

when they increased the production variety.

After analysing the above two tables and chart, it is clear that the marketing

strategy was quiet good enough to make sure the information in properly

reaching the customers. So that the demand on production keep on increased

from the market. Even though Rumack had enough capacity to meet the customer

requirement but the allocation of the production line was complex. The line 1 was

dedicated to Restolvic and Hedanol products and it had an added befit in

production with same bottle size. But in the other end line 4 was much complex

which deals 12 different products with 5 different bottle size. This inequality in

the process arrangement create problem not only on Rumack but in any

manufacturing company that deal with wide range of products. . As production

manager Jim Lawson said, the company does not have any capacity problems. But

problems are with packing this wide range of products. As I mentioned earlier the

marketing approach from the company was not in the right track and the

implication of that approaches didn’t bother much on manufacturing

implications. That relationship must be maintained properly for in industries in

the future when they increase the batch size, product variety and product mix

volume.

Source of problem Facing the Company

These are the key factors that affected Rumack and started making problems with

the business.

Marketing Approaches missed Manufacturing Implications

Packing rather than capacity

Process arrangements

Set-up time vs. product variety

The production figures show us the high demand from the customers and it

implies the success of marketing approaches individually. But for the overall gain,

we need a organise each department in the way it benefit other in the best way.

Rumack was lacking such organization in the strategies from marketing. Even

though it was good at customer demand increase it failed to flow with

manufacturing approaches. The increase the customer demand forced company

to increase the production and this end up in the decision that closed plant at

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California and move to another production Unit. Even this decision increased the

capacity of production it introduced packing problem to the company.

Company identified this problem in packing and did productive measures to

reduce this. They invested more into the packing area and increased the capacity

on that process. This decision was well defined and forecasted the business from

increasing demand from the customer. But the difference in the approaches of

marketing and manufacturing still troubled.

Exhibit 7 shows the set-up and change-over arrangements within the production

process. We can see that product/packaging changes take 4 hours. Bottle size

changes are a bit longer as they can take 5 or 8 hours. This long times lead to high

set-ups which are not good for the productivity.

Fig 4

The chart 2 below shows the correlation between run size and output per hour

based on the representative sample of products packed on line 1

The run sizes are high when the average numbers of bottles produced per hour

are big. That is batch size increases with production of bottle increases. So when

high volumes are produced with high variety proper time schedule must keep in

order maintaining consistent run size. The best way to do this is reducing the

0

1000

2000

3000

4000

5000

6000

7000

8000

0 50000 100000 150000 200000 250000 300000 350000

Average output(bottles/hour)

Average output(bottles/hour)

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change in production type frequently. The same batches must produce

continuously and it can avoid the set-up times and increase the production.

The general market trend shows the acceptance of wide variety of Rumack

product under the successful brand Restolvic. So that, introducing new brand

which satisfy the customer demand will gain more business for Rumack. The key

order winners and qualifiers are product variety, Satisfaction of customers,

quality of the product, and availability according to the demand and delivery

speed

The mail two terms used in business is company profile and product/ service

profile. Product profile explains the characteristics of the product, its existing

market and manufacturing details. I briefly explain,

(T hill, 1998)

• Features. List the key features of your product that

• Benefits. Express them in terms of time or money savings

• Value Type. Decide whether the benefits are perceived or measurable.

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• Focus, Determine if the benefits have an internal or external focus or both.

• Unique Strengths and features

• Value Rating: comparison with competitors

(patricia terrone,2006)

This tool can be useful as the market of Rumack Pharmaceutical has evolved, and

the company had to react to these changes. Product profiling should allow seeing

if improvements are possible.

Suggestions and Advices

The strategic options that can be considered in the future are:

Process and product management

Customer involvement

New marketing approach

Coordinating Marketing and Manufacturing strategies

Continuous Improvement method

Product management is a full life cycle that starts from new product

development to customer support after sales. In each step in between this cycle

have significant role in success of the business. Rumack pharmaceuticals having a

current strategy of introducing new product every month. This should be

modified with proper planning and research and it should begin from the

customer and end with the customer. In the middle region it must involve all the

production process and coordinate with manufacturing process.

In the case of Rumack, the new product introduction can be re-written with

customer survey. They can research on customer need and introduce medicines

according to that result. This is Help Company to select the new product that is

apt for the market rather than testing each medicine in market after launch. Also

constant feedback system after the sales will improve in the new product

development. A strong R&D division can coordinate with the marketing team to

keep up the goals.

The marketing approaches can modify accordingly. Rumack is completely

depending on the brand image of successful product Restolvic. The branding can

be widen into new product and try to keep multiple key brand products. They can

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highlight other factors like quality, delivery time, availably in their sales

marketing. They can also adopt model marketing platforms like internet and

electronic media’s to boost the business. In the case of manufacturing strategies,

Rumack can first keep an eye on process arrangement. They need to analysis the

market demand and produced medicine in priority level. Proper work shift

should deploy for different type of products. The large volumes should

manufacture in single shifts so that we can reduce the setup time. Then long term

investment in machinery is good in the case of rumack because the demand curse

is steadily increasing for their product. For long term strategies like investing

machinery and expanding production process need to be decided after the market

trend analysing. They can use marketing trend analysers to forecast the upcoming

trend and demand of customers.

Conclusion

From the analysis of Rumack, the major point evolved is the relationship between

marketing and manufacturing strategies and their importance in the overall

business.

References

Adel I. El-Ansary, (2006) Marketing strategy: taxonomy and frameworks, European Business

Review Vol. 18 No. 4, 2006 pp. 266-293 q Emerald Group Publishing Limited

Brassington, F & Pettitt, S. (2002) Principles of Marketing, Prentice Hall London. [online] Source:

http://books.google.com/books?id=dBurtHQ-

iEC&lpg=PA1&ots=JcsQBOfTaz&dq=Principles%20of%20Marketing%203rd%20Edition&lr&pg=P

P6#v=onepage&q=Principles%20of%20Marketing%203rd%20Edition&f=false

Hill H Hill, (2009) Manufacturing operation, Palgrave Macmilan 3rd edition

Hill H Hill, (2009) Manufacturing operation, 1rd edition

Nigel Slack, (2007), Operations management, Pearson Education Limited, 5th edition.

Patricia terrone, (December 2006), the product profile sheet, Source: http://e-

articles.info/e/a/title/The-Product-Profile-Sheet/

http://books.google.com/books?id=dBurtHQ-iEC&lpg=PA1&ots=JcsQBOfTaz&dq=Principles%20of%20Marketing%203rd%20Edition&lr&pg=PP6#v=onepage&q=Principles%20of%20Marketing%203rd%20Edition&f=false



http://e-articles.info/e/a/title/The-Product-Profile-Sheet/

http://e-articles.info/e/a/title/The-Product-Profile-Sheet/

analysis on rumack pharmaceuticals

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