“The overall target was to improve profitability by £12m per annum – this meant investing in a new state of the art NDC in Stoke On Trent, new working practices and, of course, a new Warehouse Management System. We had used AWARDS at our previous Warehouse and knew what Brentech Data Systems Ltd could deliver- and, after investigation of the marketplace, we implemented it in our new Warehouse.” Grant Sharman, Head of IS Operations – The Co-operative Pharmacy
The Co-operative Pharmacy is the third largest retail pharmacy in the UK and its National Distribution Centre (NDC) manages the supply chain for nearly 800 Pharmacy branches in Scotland, England, Wales and Northern Ireland from its depot in Stoke-on-Trent.
In 2007 the United Co-operative and the Co-operative Group merged to become the world’s largest consumer co-operative. As part of the merger between the two businesses, the two pharmacy divisions came together. Each had different processes for the management of the pharmacy supply chain – The Co-operative Group (servicing 500 Pharmacies nationwide) had outsourced the entire supply and fulfilment operation to AAH whilst United Co-operatives (servicing 300 branches mainly in the North-West of England) had developed and run its own supply chain operation for the most common products required by their branches with other products outsourced to third parties.
After 12 months a review was undertaken of the benefits and constraints of the different operations. This review led to a revised business model that would bring improved commercial benefits and advantages to customers and members.
The new business model aimed to save £12m per annum in the handling, storage, supply and delivery of medicines, supplements and healthcare products to its network of Pharmacies.
The business decided to build a 180,000 sq ft, fully automated, fully batch controlled NDC in Stoke on Trent to store the best performing products for ‘in-house’ delivery to the 800 existing branches with room to expand to 1,200 branches over a five year period. It is one of Europe’s largest and most technologically advanced distribution warehouses in Europe.
To accommodate this change in the business model, The Co-operative Pharmacy needed a warehouse and distribution management system that would provide the depth of functionality required for the pharmaceutical supplies market and a business partner who understood this highly complex and legislative marketplace.
As the existing supplier to what had been United Co-operatives pharmacy business, Brentech Data Systems Ltd was invited to submit a proposal for the provision of the system for the new enlarged business.
After a competitive process Brentech Data Systems Ltd was selected due to proven ability to deliver a solution to meet the new requirements. In addition, the business had unrivalled knowledge of the Pharmaceutical supply chain and worked with a range of relevant customers including Mawdsley-Brookes, DM Wood and United Drug.
A full process review was undertaken by The Co-operative Pharmacy and Brentech Data Systems Ltd. This covered every aspect of the supply chain model – from Supplier Rating, Goods-In, Automated Product Routing to put-away, Replenishment, Optimisation of Order Assembly, Automated Invoice Inclusion with goods and Despatch Segregation management.
Changes to the business model included:
- The move from ‘twice daily deliveries’ to a single ‘next day’ morning delivery for all orders received prior to 7pm. This has reduced workload on the branch network, and has had a significant impact on The Co-operative Pharmacy’s carbon footprint by cutting mileage by 678,240 miles as a result of the new logistics strategy.
- The introduction of the ‘AWARDS EASY ORDER SYSTEM’ – a single portal for all of the Pharmacists requirements – whether stocked at the NDC or not. It acts as an order management system for all requirements, fulfilling what items it can from the NDC stock and ordering the remaining products from other partners. This allows The Co-operative Pharmacy to guarantee the highest margin for the Pharmacist and customer satisfaction. The ‘portal’ has freed up time and effort at the branches allowing the pharmacist more time to deal with their customers personally as opposed to sourcing products.
- Fully automated BATCH control ensuring the integrity of the supply from the manufacturer, through the NDC and onto the branch. Not only does this automated functionality ease any product recall / quarantine requirement, this unique facility within Europe has convinced several manufacturers, who were operatingtheir own ‘Direct to Pharmacy’ policies, to include The Co-operative Pharmacy within their supply chain models.
The target go-live for the pilot system was January 2010 giving a project implementation period of 18 months. During the implementation the go live date was brought forward by 6 months.
The system went live in July 2009 in line with the revised timeframe. The success of the project enabled the NDC to move to a fully serviced operation across an estate of 800 branches in just six weeks.
AWARDS Benefits to the NDC
- Reduced stock holding requirement
- Average handling cost per SKU reduced by 36%, increasing margins
- Reduced distribution costs and CO2 emissions – shared vehicles, once-a-day deliveries
- Single NDC using the same processes to service the whole estate
- Capacity for a five-year expansion plan of 50%
- Streamlined and automated processes that reduce errors and removes paper
- Intelligent control over processes and workforce with role-based responsibilities
- Full visibility of the delivery process from the NDC to branch
- Full product traceability with benefits for any required product recall and improved relationships with manufacturers
AWARDS Benefits to the Pharmacists
- A single, guaranteed morning delivery allowing branches to better manage staff rotas and duties
- Guaranteed highest margin for branches on all products ordered through the AWARDS Easy Order System.
- All orders placed through one system which automatically allocates to relevant supplier
- Pro-active alerts to discrepancies with orders and deliveries
- Stock and margins managed by NDC system – Pharmacists can focus on managing their branch and more importantly their patients.
- 106,000 Order Lines are delivered the NDC every day which translates into weekly averages:
- 1.7 million SKUs
- 28,000 tote boxes
- £4 million in sales value
- 97% service levels
“The system has been designed around users and managers to meet the needs of different roles within the business. Everyone involved signed off the system at specification stage. The new system has been instrumental in improving the efficiency of our business where we can now serve all of our branches with the same processes and have the capacity to expand in the future” said Grant Sharman.
Brentech are hosting four regional Supply Chain business workshops in November to demonstrate how efficiencies can be gained across the entire wholesale distribution supply chain. See event information for details and free registration: www.brentech.co.uk