Distributing 80,000 pharmaceutical and parapharmaceutical products from 600 suppliers to 100 pharmacies and 50 homecare retailers can pose enormous problems for stock forecasting. The company which distributes these products specializes in medicines, supplements, hospital supplies, baby food, sterile material, and dermatological products. Many of these products are perishable – keeping the stock on the shelves too long can result in waste, but not having it available for customers at critical times can be devastating.
To manage their stock and forecast product demand, the company was using an Excel system developed in-house. Thousands of new products were entered annually and the Excel sheet had reached its limit for handling data. Additionally, only 2 users were handling all this data, whose input was required for accurate interpretation of the forecasts. At times the individuals had to spend an entire weekend reviewing every article in stock. This was not scalable or sustainable.
Stock calculations were very time-consuming, stockouts were frequent, and customers were not always happy when their needed medicines or supplies were not available. This was especially problematic when prescription medicines were out of stock, or too much medicine with a short shelf life was in stock. The company needed to manage their stock with precision and in an extremely cost-effective way. Accurate forecasting was a necessity.
The company’s goal was to strike a balance between the availability of products and the cost of keeping those products on the shelves. They needed a demand forecasting system that allowed them to adjust the stock level while considering the expectations of customers and organizations within their supply chain.
The new forecasting solution was built on SAS® Demand-Driven Planning and Optimization with Forecast Analyst Workbench. The solution was designed to maximize the company’s service quality while minimizing shelf and handling costs.
In only 6 months the company increased their service level up to 97.5 percent, a full 2 percent improvement. DDPO helped them reduce workload and automate processes, which cut rotation time by 32% and reduced central stock value by 15%. They also reduced the stock value of their top 100 products by 27%. Overall, the new solution helped them realize an overall cost savings of 1.2 million euros.
The DDPO solution is designed to operate on various levels – Group, stock management and at the individual pharmacy level.
SAS DDPO has been deprecated – the new solution is the SAS Intelligent Planning Suite.