How Streamline reduced materials inventory by 40-50% in pharmaceutical industry
- Materials inventory reduction opportunity in the range of 40% to 50% during the following 4-6 months
- Service level to customers was improved
- Full visibility of inventory excess and stockouts was achieved by using the KPIs dashboard
- The process was standardized for all buyers aligned to best practices.
About the company
Success story provided by a GMDH’s Implementation Partner, Logyt. Logyt is the strategic partner that collaborates with clients to optimize the Value Chain of their business through practical, flexible, and sustainable solutions, with the ability to deploy and operate them.
“In addition to being very competent, Logyt has a high ethical level that favors projects success” Supply Chain Director
The complicated supply planning process and the challenge of the excess inventory
Logyt`s client from the pharmaceutical industry had faced the challenge of the excess inventory and complicated supply planning process. The supply Planning process is performed by the buyers in Excel spreadsheets, starting from a forecast produced in ForecastPro by the planning area. Excel spreadsheets were not standardized, and the quantities placed in purchase orders are subject to the buyer criteria and experience. Logyt identified a big opportunity for reducing inventories in this company. The mid-term strategy was to implement SAP planning modules, but the reducing of the inventories was urgent.
The solution proposal consisted of a full redesign of the Supply Planning process (MPS, MRP) and implementation of a pilot test with a selected contract manufacturer through a transitional tool that enables process standardization and alignment with best practices. The new tool has been possible to implement in Excel or specialized software Streamline that allows visibility of the inventory reduction potential. The company decided to go with the Streamline solution. The implementation of the project took 5 months ( from October 2019 till March 2020).
“Good job with the MRP developed for the Supply Chain Director” CFO
“Good team by Logyt, on one hand, a lot of experience, and on the other someone young with the desire to contribute” Key User
Supply Planning Process re-engineering and the implementation of an already developed commercial tool Streamline has resulted in the following benefits:
- Materials inventory reduction opportunity in the range of 40% to 50% during the following 4-6 months, maintaining or improving service level to customers.
- Standardized process for all buyers aligned to best practices.
- Process and tool replication capability with the remaining local contract manufacturers, and eventually on the global level.
- KPI’s integrated into the selected tool that among many other features, provide visibility of inventory excess and stockouts, as well as the corrections needed in the plan to avoid them.
- Capability to replace ForecastPro functionality with Streamline and integrate Demand/Supply Planning in a single tool.
- Ability to feed Streamline directly from other systems, in particular from the company’s ERP (SAP).
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- 99+% inventory availability.
- Up to 99% forecast accuracy.
- Up to 98% reduction in stockouts.
- Up to 50% reduction in excess inventory.
- 1-5 percentage points margin improvement.
- Up to 56X ROI in one year. 100% ROI in the first 3 months.
- Up to 90% reduction in time spent on forecasting, planning, and ordering.