Pharma Distributor Upgrades IT for Better Order Filling

If a customer wants goods delivered up to four times a day or within three hours after placing the order, the feat is much easier to accomplish if the order comes in online. By upgrading its information technology (IT) system, a major Swiss pharmaceutical distributor cut order reception time by 30 percent. The system now handles up to 70,000 order lines per hour and delivers within a maximum of three hours. Eleven distribution centers have been consolidated into three and inventory levels have dropped 10 percent. All this translated into savings of more than $8 million (euro).

As the distribution wing of Switzerland's leading pharmaceutical group, Galenica, Galexis has a long history in the pharmaceutical industry. The company keeps local healthcare providers stocked with more than 65,000 products ranging from medicines and surgical supplies, to cosmetics and daily hygiene products from 1,000 different suppliers. More than 8,000 hospitals, pharmacies, drug stores and doctors rely on Galexis' daily deliveries.

Business issues

Many Swiss healthcare institutions rely on Galexis for delivery of medical supplies. It is not uncommon for a single client to make up to six orders on any given day. As the vital link in the Swiss pharma-ceutical supply chain, Galexis must process and ship all orders from clients 24/7. The company is typically pressed to process 200,000 order lines per day, and sometimes as much as 70,000 per hour. It is essential to eliminate order-processing errors as much as possible, in order to fulfil the stringent demands of quality and reliability of service.

Faced with pressure from Switzerland's increasingly cost-conscious medical professionals, Galexis had to seek a comprehensive solution that would see its business operations being cost-efficient and customer friendly. This is critical in a market where profit margins are shrinking and international competitors are establishing a greater foothold.

Michel Troyon, the IT director at Galexis, says the aim of www.e-galexis.com is to make business more cost-effective for Switzerland's increasingly cost-conscious medical professionals. Coupled with the threat of the infamous millennium bug just a few years away, Galexis felt that its outdated, in-house distribution software fell short in accommodating the rapid changes to its business, and in achieving cost efficiency and customer service excellence. An internal reorganization of the entire Galenica Group — due to recent acquisitions —- gave Galexis the perfect opportunity to upgrade its IT systems. As Michel Troyon, IT director at Galexis, put it; “Our goal is to base our distribution, between manufacturing and retail sales, on the most reliable foundation possible.”

Solution and capabilities

Galexis undertook an extensive evaluation process to determine the ideal software solution for logistics and pharmaceutical distribution. The primary selection criteria were functionality, scalability, multi-company handling and multi-language handling.

The system also had to be able to process a minimum of 50,000 order lines an hour. The list of relevant systems was reduced from 200 to 10. The conclusion of the intense nine-week evaluation saw Galexis choose IBS' business software — ASW — as the basis of its new distribution software solution.

Galexis worked closely with IBS to build an Internet and EDI-based ordering system that allows customers to place their orders and make inquiries online rather than over the telephone, increasing efficiency and convenience. The online ordering solution proactively delivers information regarding prices, product availability, product details, promotions and order status, making the service more personalized.

IBS software is a reliable foundation for Galexis’ distribution operations. The IBS solution provides complete support for fast order entry with phonetically, fuzzy and approximated item searching, customer call plans, optimized picking and interfaces to automatic pickers, high transaction volumes, fast customer deliveries, traceability, security and product availability.

Implementation

The customization and implementation of ASW at Galexis was completed in 18 months. The IBS project team adapted the software to meet Galexis' unique business needs.

The implementation itself was divided into four main phases by functional area to minimize risks during the software transition. A functional error at any stage would have meant a loss in turnover that equated to several million euros per day. The appropriate Galexis department manager was placed in charge of each project phase, so that the implementation was under the control of the business responsible person who had to use the software day-by-day.

Benefits and value

Since the new system's implementation, Galexis has seen a decrease in lead and distribution times. Manual reception via reception notes has been replaced with the use of scanners, as supported by the new software. By feeding data into the system directly with an EAN code, the company has been able to cut reception time by 30 percent. This has led to significant improvements in delivery reliability and frequency. In some warehouses, the rate of errors has been reduced to less than one tenth of one percent.

During peak-hours, the system handles 70,000 order lines per hour, ensuring that all products are delivered to the customer within a maximum of three hours. This in turn enables clients to save money on inventory capital by maintaining lower stock levels.

Galexis has also benefited from ASW's ability to handle multiple languages. In a multilingual nation such as Switzerland, customers can place their orders in German, French or Italian, while Galexis receives them in German.

ASW acts as one seamless software solution for all Galexis' logistics processes. It has replaced six antiquated IT systems, which resulted in significant IT cost reductions for the company. Galexis has also been able to provide better customer and supplier services.

By consolidating 11 distribution centers into three, Galexis has also been able to realize considerable savings in costs. Concurrently, inventory levels have dropped ten percent, translating to impressive savings in excess of EUR 8.1m.

ASW software by IBS; www.ibsus.com