Forecasting & Replenishment, Inventory Optimisation
Client: Symbion Pharmacy Services – Pharmaceutical Wholesaler and Distributor
Background
As a wholesaler and distributor of ethical and over-the-counter (OTC) pharmacy products in a fiercely competitive and low margin environment, Symbion identified the need to optimise its inventories and enhance its demand planning process with a view to:
- freeing up cash and improving working capital performance
- improving inventory turn rates
- improving delivery-in-full-on-time (DIFOT)
- improving forecast accuracy
- improving the efficiency of the planning process
Challenge
With a significant investment in inventories and a national supply chain comprised of over 400 suppliers, a diverse range of 100,000+ products and thirteen (13) distribution centres directly supplying over 3,000 pharmacies up to twice daily blended with intense service level and competitive pressures, the scale and complexity of the task was daunting.
Approach
GRA worked closely with Symbion to:
- factually identify the inventory, service and cost opportunities
- map the supply chain
- define enhanced planning processes and performance measures
- establish the appropriate inventory, service and supply chain policies
- implement and advanced Demand Planning, Inventory Optimisation and Replenishment Planning tool called GAINS
- work side-by-side within the business to up-skill the planning team and embed the new process disciplines
- create a supply chain performance management framework covering forecast accuracy, inventory performance, DIFOT, process compliance and vendor performance
Outcome
The following outcomes were delivered:
- 26% inventory reduction
- service levels increased to above 97%
- significant inventory turn rate improvement
- significant forecast accuracy improvement
- planning process is now managed by exception
Quote
"Inventories reduced by 26% whilst 'first fill' service levels (excluding manufacturer stock-outs) increased from 96% to more than 97%. Noting that inventories are a significant item on the balance sheet, the inventory reduction boosted Return on Assets (ROA) whilst freeing up capital, and the increase in stock turns improved supply chain efficiency. Forecast accuracy has also improved markedly. SPS is now managing by exception and operating with less inventory, improved service levels and lower costs. That's the bottom line, and it's a good result, particularly because it is sustainable." Simon Coates, General Manager Supply and Logistics
