The effort vastly improved the company’s planning and execution functions, created and implemented a new stock policy that accounted for specific SKUs and key variables, streamlined the order preparation process and reduced distribution transport times.
Family Law Appeals
Applying commercial excellence in chemicals
For one leading pharmaceutical laboratory, success and double-digit sales growth came with a cost: an overburdened supply chain that threatened to reduce market share.
Challenge
Supported by a robust sales force and tight cost controls, Pharm Ltd. experienced sustained double-digit growth over a number of years, only to find that their supply chain struggled to keep pace. In particular, the initial state of the company’s sales and operations planning capabilities limited their ability to account for demand variability or raw material lead times in production and distribution. The work addressed three critical issues for Pharm Ltd.:
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Improve sales and operations and production planning:
The teams focused their efforts on a few of the highest-value S&OP levers in order to review the current planning process, identify gaps in the planning infrastructure and analytically understand demand and supply variability.
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Determine the right inventory level:
The diagnostic determined the stressors that affected sales and service levels. The teams focused on resolving issues related to higher-than-normal back-orders and lead times, which stressed the entire supply chain and led to delays in medications reaching consumers.
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Optimize the supply chain for perfect order planning:
With hundreds of medications in the market, Pharm Ltd. needed a proper method to predict and manage their inventory. Using a mean absolute percentage analysis (MAPE), the teams defined appropriate levels for raw materials and finished products by mapping actual versus forecasted sales on the most important SKUs.
Solution
The teams developed tailored recommendations for Pharm Ltd.’s specific challenges on each dimension of the effort. The work also included a comprehensive review of the necessary tasks associated with implementing each supply chain improvement, including reviewing the IT and talent capabilities that would allow Pharm Ltd. to continue to grow.
The work also included a comprehensive review of the necessary tasks associated with implementing each supply chain improvement, including reviewing the IT and talent capabilities that would allow Pharm Ltd. to continue to grow.
Result
My work with Pharm Ltd. resulted in a number of significant improvements that moved their supply chain from a reactive one to a source of competitive advantage.
The effort vastly improved the company’s planning and execution functions, created and implemented a new stock policy that accounted for specific SKUs and key variables, streamlined the order preparation process and reduced distribution transport times.
By the numbers, the effort:
- Reduced lead time by 43%;
- Decreased variability by 50%;
- Lowered the risk of back-order by 95%;
- Increased stock for finished goods by 10%.
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