Better forecasts and better access to SAP
Escapo reduces storage costs ánd improves service level
Every year, thousands of new products arrive on the pharmaceutical market. This makes it extremely difficult for distributors to manage stock levels cost-effectively. Yet, Escapo Group succeeded in reducing its stock value by 1.2 million euros in only six months. At the same time, the Group boosted its service level to 97.5 percent. The key to this success is the demand forecasting solution based on SAS technology and developed by 4C Consulting.
Escapo Group is a Belgian wholesaler/distributor of pharmaceutical and parapharmaceutical products. It offers over 100 local pharmacies and 50 homecare shops an assortment of 80,000 products from 600 suppliers. Escapo Group, however, operates differently than its competitors. "We are a cooperative organization. All of the pharmacies that we service are Escapo Group shareholders. Consequently, they demand top-level service from us," explains Koen Ceulemans, CFO at Escapo Group. "Our shareholders/customers want to be able to choose from virtually every product available on the market and at a favorable price. This means that we have to manage our stocks in an extremely cost-effective way. Accurate demand forecasting is indispensible towards this goal."
Looking for a highly accurate demand forecasting tool
Previously, Escapo Group had been using a self-developed Excel sheet to forecast product demand. However, it was no longer manageable for a number of reasons. First, the tool could only be used by two key users. Their insight was required for the accurate interpretation of the forecasts. Secondly, it was a very time-consuming way of working. Every month, the two users needed to dedicate an entire weekend to reviewing all of the articles in stock. Thirdly, the Excel tool was at its limits and could no longer cope with the thousands of new — mostly generic — products that enter the market every year. Therefore, Escapo Group decided to look for a partner that could build them a new and improved demand forecasting tool.
Analytical strength of 4C Consulting makes the difference
Escapo Group teamed up with 4C Consulting, a preferred SAS partner. "They had already realized a similar project at another cooperative organization, making them the ideal partner for us," says Ceulemans. "The 4C consultants also have a strong analytical background, which is a crucial factor for improving our forecasting accuracy."
Ever better forecasting accuracy
4C Consulting used SAS technology to create an online tool that automates every step of the demand forecasting process. The tool no longer requires the specific knowledge of the two key users; it uses the stock data in the central SAP database to detect trends and seasonal patterns. This not only results in highly accurate demand predictions, it also identifies opportunities to negotiate discounts with the supplier; for instance, when large quantities need to be purchased.
In addition, the tool continuously improves its forecasting accuracy. "Every week it compares the actual demand with the forecasts. The solution registers any deviation and takes it into account in its future forecasts," exclaims Ceulemans.
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The results illustrated in this article are specific to the particular situations, business models, data input, and computing environments described herein. Each SAS customer’s experience is unique based on business and technical variables and all statements must be considered non-typical. Actual savings, results, and performance characteristics will vary depending on individual customer configurations and conditions. SAS does not guarantee or represent that every customer will achieve similar results. The only warranties for SAS products and services are those that are set forth in the express warranty statements in the written agreement for such products and services. Nothing herein should be construed as constituting an additional warranty. Customers have shared their successes with SAS as part of an agreed-upon contractual exchange or project success summarization following a successful implementation of SAS software. Brand and product names are trademarks of their respective companies.
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Enhancing service level, while minimizing shelf and handling costs
SAS® Demand-Driven Forecasting
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“ SAS enabled us to enhance our demand forecasting accuracy. As a result we reduced our central stock value by 15 percent as well as handling costs, saving approximately 1.2 million euros. ”
CFO at Escapo Group