November 22, 2022

Stock reduction in a pharmaceutical wholesaler

Testing new inventory strategies and policies

Stock reduction in a pharmaceutical wholesaler

At a glance

Challenge

With over 19 days of stock coverage across several warehouses, sustaining high service levels posed significant challenges. An initial diagnosis revealed issues with an outdated replenishment and transshipment policy, along with a lack of transparency in purchasing and distribution processes.

Solution

The project aimed for a fast return on investment through a simulation-based approach, allowing the testing and fine-tuning of new inventory strategies tailored to the company’s needs.

Results

The new policies acknowledged demand variability, multi-echelon operations, and service level differentiation, with a simulation helping implement them smoothly. In less than three months, the company reduced stock by over 20% while maintaining service levels.

Challenge

With over 19 days of stock coverage across several warehouses, sustaining high service levels posed significant challenges. An initial diagnosis revealed issues with an outdated replenishment and transshipment policy, along with a lack of transparency in purchasing and distribution processes.

Approach

Solution

The project aimed for a fast return on investment through a simulation-based approach, allowing the testing and fine-tuning of new inventory strategies tailored to the company’s needs.

Results

The new policies acknowledged demand variability, multi-echelon operations, and service level differentiation, with a simulation helping implement them smoothly. In less than three months, the company reduced stock by over 20% while maintaining service levels.

Our
AI-generated
summary

Our AI-generated summary

Our AI-generated summary

With more than 19 days of stock coverage in several warehouses and a necessity to sustain high service levels, the changes in inventory management were crucial but highly risky.

After an initial diagnosis, it was clear that there was a replenishment and transshipment policy that was not adjusted to their business setting and a lack of transparency within the purchasing and distribution processes.

This scenario posed the right opportunity to develop a project in which success meant a very fast return on investment. With the help of our analytical thinking, it was possible to undertake such endeavor.

Through a simulation-based approach, we were able to test new inventory strategies and policies that were fine-tuned to the company’s reality.

These new policies included the explicit acknowledgment of a dynamic demand variability, the multi-echelon and multi-site nature of the company, as well as the service level differentiation between products and clients.

Our AI-generated summary

Our AI-generated summary

Besides the ability to help us fit the policies, a simulation was also vital for a smooth implementation without any service drawbacks. In less than three months, the company had a fully operational replenishment policy with straightforward results: a stock reduction of more than 20% and a slight increase in service level.

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