Galexis optimizes replenishment with IBS Pharma

Leading Swiss Pharma wholesaler has gained significant improvements in stock management and procurement efficiency, reducing stock by 25% while maintaining high service levels.

Switzerland on 15 November 2007

Galexis AG has gained significant improvements in stock management and replenishment with an inventory optimization solution from IBS. The Swiss Pharma wholesaler has achieved tangible cost savings in procurement and goods reception, and has also reduced its stock levels while maintaining a high availability rate. The optimization has been made possible by continuously monitoring and adapting the potential of the standard IBS ERP inventory management module on the basis of business experience and product sales development. The comprehensive solution implemented at Galexis also relies on industry-specific IBS Pharma software to cover all supply chain processes in pharmaceutical wholesale, from order processing to delivering products to pharmacies.

“The goals we set for ourselves were sustainable and reasonable stock reduction and increased automation of the replenishment processes,” says Niklaus Sägesser, procurement manager at Galexis AG and responsible for the optimization project. “These goals have been reached dead-on: Meanwhile all of the 40,000 items stocked in the three distribution centers have been integrated into the new system, and a warehouse concept based on optimum stock levels has replaced the one based on minimum stock levels. As a result we have reduced stock levels by 25% and increased stock turnover from 12% to 17% for common products and even up to 22% for specialty Pharma products – without influencing availability, which has always been considerably high. The proportion of fully automated procurement has risen from 38% to a current 50%.”

Joint project

IBS and Galexis set up a precise roadmap for optimizing procurement planning, which was rapidly and successfully implemented at Galexis’ distribution centers at Bern-Schönbühl, Zürich-Schlieren and Lausanne-Ecublens. At the center of this solution is a matrix with a volume value code, which quantifies the revenue ratio of each product based on traditional ABC classification. It also contains a movability code, which defines the throughput time from slow-movers to non-movers.

This provides a stable basis for a sophisticated solution that can cope with the various parameters for each stock item – for example, lowering stock levels for some product categories and minimizing procurement and reception processes for others. This two-dimensional matrix provides an accurate segmentation of the 40,000 stock items and supports accurate purchase suggestions, which improves inventory availability and reduces the time and effort required for effective procurement. The potential for increased efficiency, speed and profitability became evident after a short time across all three distribution centers.

“In the reception area, too, the reduction of procurement times by 20% will lead to a tangible increase of efficiencies,” adds Niklaus Sägesser.

A large potential in automation

A system-generated purchase suggestion based on past orders, as well as current and future stock data, is much more efficient, accurate and cost-effective than a manual suggestion. Galexis defines a purchase suggestion as “automatic” when the quantity suggested by the system is transferred to a purchase order without further review. In the optimization process the automation rate has increased from 38% to 50%. In addition, seasonal profile control and trend analyses are planned to refine forecasts and to improve the quality of purchase suggestions. Further aspects concerning product life cycles will play a more important role in the calculations.

Convincing results

Investment in the optimization of existing standard solutions has paid off for Galexis in many ways. For a comparatively small effort, Galexis now has a purpose-specific control instrument, which significantly improves critical processes in stock and procurement management. The solution also comprises a tool to verify which items have been ordered according to the system’s suggestions. This opens up the opportunity to quantify the automation rate in processing purchase suggestions, and procurement planners always have a reliable tool to check the relationship between system parameterization and procurement behavior.

“Galexis is yet another example of demonstrating how powerful our standard solutions are. Used consistently, they will yield enduring efficiency in mission-critical processes and therefore boost an important aspect of competitiveness on the market,” concludes Lukas Hostettler, Managing Director, IBS German Speaking Europe, with regards to the successful optimization project carried out at Galexis.

Galexis AG,

headquartered in the Swiss town of Schönbühl, was founded in 1927 and is today the largest pharmaceutical wholesaler in Switzerland. Goods are dispatched to customers (either on agreement basis or just-in-time within two hours) from three distribution centers in Bern-Schönbühl, Zürich-Schlieren and Lausane-Ecublens. www.galexis.ch

IBS (OMX STO:IBS)

is a world-leading provider of supply chain management (SCM) solutions for distribution, demand-driven manufacturing, financials and business intelligence with group revenue of EUR 250 m. IBS has a primary focus on large and mid-sized distributors as well as sales and manufacturing companies in international groups. IBS provides global ERP solutions for SCM, e-business, CRM and logistics with IBS Enterprise, as well as ERP solutions developed specifically for the Automotive, Electro, Paper-Packaging, Pharma and Publishing industries. www.ibs.net