Financial success thanks to stock optimisation
The Low Down
Escapo Group is a wholesaler/distributor of pharmaceutical and para-pharmaceutical products in Belgium. It offers over 100 local pharmacies and 50 homecare shops an assortment of 80,000 products from 600 suppliers. Handling this many products, stock calculations become a time-consuming hastle. Having too many products in stock can become very easily very expensive in the pharmaceutical industry. Yet not having enough products in stock can lead to unhappy customers and be a risk for patients in urgent need of their medication.
One of the most important operational systems at Escapo is the management of central stock and the stock of the partners in their distribution channel. The key challenge for Escapo is finding the balance between the availability of the products (service level) and the costs of keeping these products in stock. Escapo asked 4C to build a stock management system that enables them to amend stock level, taking into account the expectations of the different organisations within their supply chain.
Stock management system
The central stock of Escapo was optimised using operational research techniques, combined with forecasting and demand prediction. The predicted sales services as input for the optimisation process next to other important parameters such Escapo’s product’s holding cost, order cost and the desired customer service level. After optimising Escapo’s central stock, also the stock levels of the participating “Surplus pharmacies” were optimised.
4C created a full-automatic system, delivering better results compared to the original, experience based system.
Reduction of idle stock
Thanks to a variety of services including Customer Intelligence, Customer Insights, Analytics Demand and Forecasting Optimisation, 4C was able to reduce Escapo’s stock significantly. Escapo’s idle stock was reduced with more than 30% while the stock rotation was decreased from 27 days to 19 days without implying any extra efforts by the Escapo team.
By executing this optimisation Escapo is now able to provide the right amount of stock at the right place and time, so pleasing it’s customers whilst keeping their stock costs and logistic movements under control.
Stock optimisation system
Day reduction in stock rotation
Reduction in idle stock