Forecasting & Replenishment, Inventory Optimisation

Client: Symbion Pharmacy Services - Pharmaceutical Wholesaler & 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"
General Manager Supply and Logistics

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Testimonials

With a focus on both cost reduction and service improvement, we engaged GRA to design and lead a company-wide Procurement Transformation. GRA worked closely with us to design and implement a new operating model and deliver significant improvements in procurement governance, processes and systems, whilst also managing a program delivering multi-million dollar savings.

– David White, Manager Enterprise Procurement, Aurizon

Typical results

  • 20-40% inventory investment reduction
  • increased service levels ranging up to 99.9%
  • 10%-15% reduction in supply chain operating costs
  • 5%-20% spend management savings
  • the ability to fund business initiatives from operating cash flow (OCF) improvements
  • improved return on capital employed (ROCE)
  • a minimum 3:1 ROI (10:1 to 30:1 typical)