Rahma Putri Hapsari

29120450
YP64C

Chinese Pharmaceuticals (HK) Limited: Effective Forecasting for Optimal

Inventory Management

No Topic Description
 Chinese Pharmaceuticals (HK) Limited
was a successful company which sold
Chinese herbal medicine product in Hong
Kong. The best-selling product was
Noto37, medicine for controlling
1 Introduction cholesterol and blood pressure levels.
 Mannings was a leading drugstore and
retailer of Noto37 from this company
(important client).
 Jason Kwok was the general manager.

 Jason needed to review the supply chain

for Noto37 and sent the product as soon as
2 Business Problem possible. Hence, the company would not
miss the chance to supply Mannings.

3 Chinese  1998: It began the business in Chinese

Pharmaceuticals herbs.
(HK) Limited  As the fast growth of the business, the
government encourage to enlarge this
sector. Hence, Chinese Pharmaceuticals
developed their medicine products.
 2007: Developing Hong Kong Science and
Technology for R&D office.
 Noto37 was their first signature product. It
contained Notoginseng which well-known
was good for cholesterol and
cardiovascular health.

Product
 Other products:
-Gaba: insomnia
-Banana Detox: herbal colon cleansing
and detoxification regimen
 -Water-Bean: slimming
 Noto37: 80% of sales and revenues

Markets
 Hong Kong: the main focus market with
95% sales.
 Macau: sold to Chinese community in the
U.S.

Main Brands in the Market

 Chinese traditional medicines were used
since a long time ago by the Hong Kong
Society.
 Eu Yan Sang (name of the brand) was
established the business model and
developed several sub-brands.
 It proposed the capsule packaging
 PuraPhram developed other Chinese
herbal medicine products.

The Hong Kong Chinese Pharmaceuticals’ Market Share

4 Market for Chinese  It captured 40% of market share for
Herbal Medicines Chinese herbal medicines targeting
cholesterol, blood pressure, and related
cardiovascular ailments.
 It used special promotions in mall every
week and invite celebrities.

Customer Awareness of Health Issues

 The importance of consuming Chinese
herbal medicines increased by the
information that were spread through
several platforms.

5 Supply Chain for China Vendor

Noto37  The high quality of Notoginseng was
delivered Yunnan Province in China
wintih four to six weeks.

Testing of Raw Materials

 Testing sample for quality check
conducted to ensure that Notoginseng was
 safe.

Hong Kong Manufacture

 Notoginseng from the warehouse was sent
to the Hong Kong based contract
manufacture to produce Noto37 until
deliver it to customers.
 Itu tokk 90-100 days.

Weekly Deliveries of Noto37

 Deliver to local customers: once or twice a
week
 The largest customer was Mannings (300
stores) in Hong Kong, Watson (180 outlets
in Hong Kong and Macau, and 500 local
markets in Hong Kong
Seasonality of Sales
 Winter month-Chinese New Year Festival
Were peak season for Noto37

Management of Inventory at the Hong Kong

Warehouse
Inventory
6  They prepared three months stock for this
Management
season
 Reorder when the stock levels shrunk to
1.5 months’ supply
 Jason decided to assign the intern to
develop in inventory level

The Intern’s Recommendation

 Based on the data that the company dah,
the intern reviewed. Then, the intern could
forecast the demand
7 Forecasting Tools
Concern about Accurate Forecasting
 What intern had done about the data could
help Jason in managing the inventory for
Noto37
8 Conclusion  Chinese Pharmaceuticals sold noto37 as
their best -selling product. The company
needed to prepare their stock for the
retailer when the product out of stock. The
higher the demand of the product, the
higher the company should prepare.