Galexis to partner with RELEX to optimize supply chain management
Galexis supplies medicine, hygiene and drugstore products to pharmacies, hospitals, doctor’s offices, nursing homes, and drugstores. Its offering is comprised of more than 80,000 items, over 42,000 of which are replenished from the distribution center in Niederbipp, south of Basel.
The company, which is part of the Galenica group, processes around 370,000 sales order rows per day. In total some 370,000 packages are delivered to Galexis clients in 2,100 shipments every 24 hours. Galexis’ existing ERP system is limited to estimating demand based on average historic sales data.
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“Exceptions such as item-specific seasonality or supplier and client campaigns cannot be taken into account by the system,” explained Semra Taş, SC Demand Planner at Galexis in an issued news release. “It’s also very time-consuming having to continually enter data into the system manually.”
In order to automate its replenishment, better anticipate changes in demand, and optimise its inventory, the leading Swiss pharmaceutical wholesalers is now starting to use RELEX scm software. The two companies were initially put in touch by Pekka Niskanen of Fennobiz Sàrl, who manages RELEX operations in Switzerland. Taş says the very quick project start, extremely productive initial workshops and RELEX’s highly professional team were all key reasons Galexis decided to go ahead with the project.
More reliable deliveries and optimised inventory thanks to accurate demand forecasts
RELEX’s software uses more than 3,000 combinations of different forecasting models and a range of parameters, including sales patterns from previous years, seasonal effects, minimum order quantities, or freight-free limits, which RELEX extracts from Galexis’ ERP system. Based on its own accurate daily forecasts, the software then automatically assembles order proposals. In order to ensure a high degree of delivery reliability, the SCM software also flags potential bottlenecks and demand peaks in time for users to take action.
As Galexis also ships some client orders direct from the supplier, supplier campaigns pose a particular challenge for the wholesaler’s planners. In the past, Galexis only picked up on increases in demand resulting from these campaigns as a result of larger sales orders for the promoted products. Consequently, proactively monitoring and managing these promotions and campaigns was very time-consuming.
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With RELEX’s SCM solution, Galexis is now able to distinguish between the regular daily demand and demand stemming from a campaign. Procurement is also optimized by RELEX, as the software is able to calculate when ordering larger quantities or at a particular price will generate an overall saving.
“We expect that this high degree of automation will lighten the load for the members of our replenishment team so they can focus on their core skills,” Taş explains.
Galexis also benefits from the system’s processing speed, which allows for demand forecasts to be calculated in real time. Data from the ERP system is stored in RELEX’s proprietary big data database. Thanks to its columnar layout, millions of data sets can be compressed efficiently and calculations can be done in-memory, within the RAM. This allows huge quantities of data to be processed up to 100 times faster than with comparable systems.
Founded in 2005 by three logistics scientists, RELEX is the fastest growing company in its field in Europe and employs over 100 people at its offices in the UK, Germany, Sweden, Norway and at its Helsinki headquarters.
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The challenges to vaccine distribution affecting everyone
While it is comforting to know that vaccines against COVID-19 are showing remarkable efficacy, the world still faces intractable challenges with vaccine distribution. Specifically, the sheer number of vaccines required and the complexity of global supply chains are sure to present problems we have neither experienced nor even imagined.
Current projections estimate that we could need 12-15 billion doses of vaccine, but the largest vaccine manufacturers produce less than half this volume in a year. To understand the scale of the problem, imagine stacking one billion pennies – you would have a stack that is 950 miles high. Now, think of that times ten. This is a massive problem that one nation can’t solve alone.
Even if we have a vaccine – can we make enough? Based on current projections, Pfizer expects to produce up to 1.3 billion doses this year. Moderna is working to expand its capacity to one billion units this year. Serum Institute of India, the world’s largest vaccine producer, is likely to produce 60% of the 3 billion doses committed by AstraZeneca, Johnson & Johnson and Sanofi. This leaves us about 7 billion doses short.
Expanding vaccine production for most regions in the world is complicated and time-consuming. Unlike many traditional manufacturing operations that can expand relatively quickly and with limited regulation, pharmaceutical production must meet current good manufacturing practice (CGMP) guidelines. So, not only does it take time to transition from R&D to commercial manufacturing, but it could also take an additional six months to achieve CGMP certification.
The problem becomes even more complex when considering the co-products required. Glass vials and syringes are just two of the most essential co-products needed to produce a vaccine. Last year, before COVID-19, global demand for glass vials was 12 billion. Even if it is safe to dispense ten doses per vial, there is certain to be significant pressure on world supply of the materials needed to package and distribute a vaccine.
It is imperative drug manufacturers and their raw material suppliers have clear visibility of production plans and raw material availability if there is any hope of optimizing scarce resources and maximising production yield.
It is widely known by now that temperature is a critical factor for the COVID-19 vaccine. Even the regions with the most developed logistics infrastructures and resources needed to support a cold-chain network are sure to struggle with distribution.
For the United States alone, State and local health agencies have determined distribution costs will exceed $8.4 billion, including $3 billion for workforce recruitment and training; $1.2 billion for cold-chain, $1 billion vaccination sites and $0.5 billion IT upgrades.
The complexity of the problem increases further when considering countries such as India that do not have cold-chain logistics networks that meet vaccine requirements. Despite India’s network of 28,000 cold-chain units, none are capable of transporting vaccines below -25°Celsius. While India’s Serum Institute has licensed to manufacture AstraZeneca’s vaccine, which can reportedly be stored in standard refrigerated environments, even a regular vaccine cold chain poses major challenges.
Furthermore, security will undoubtedly become a significant concern that global authorities must address with a coordinated solution. According to the Pharmaceutical Security Institute, theft and counterfeiting of pharmaceutical products rose nearly 70% over the past five years. As with any valuable and scarce product, counterfeits will emerge. Suppliers and producers are actively working on innovative approaches to limit black-market interference. Corning, for example, is equipping vials with black-light verification to curb counterfeiting.
Clearly, this is a global problem that will require an unprecedented level of collaboration and coordination.
Disconnected information systems
While it is unreasonable to expect every country around the world will suddenly adopt a standard technology that would provide immediate, accurate and available information for everyone, it is not unreasonable to think that we can align on a standard taxonomy that can serve as a Rosetta Stone for collaboration.
A shared view of the situation (inventory, raw materials, delivery, defects) will provide every nation with the necessary information to make life-saving decisions, such as resource pooling, stock allocations and population coverage.
By allowing one central authority, such as the World Health Organization, to organize and align global leaders to a single collaboration standard, such as GS1, and a standard sharing protocol, such as DSCSA, then every supply chain participant will have the ability to predict, plan and execute in a way that maximises global health.
Political influence and social equality
As if we don’t have enough stress and churn in today’s geopolitical environment, we must now include the challenge of “vaccine nationalism.” While this might not appear to be a supply chain problem, per se, it is a critical challenge that will hinge on supply chain capabilities.
In response to the critical supply issues the world experienced with SARS-CoV-2, the World Health Organization, Gavi, the Vaccine Alliance and the Coalition for Epidemic Preparedness Innovations (CEPI) formed Covax: a coalition dedicated to equitable distribution of 2 billion doses of approved vaccines to its 172 member countries. Covax is currently facilitating a purchasing pool and has made commitments to buy massive quantities of approved vaccines when they become available.
However, several political powerhouse countries, such as the United States and Russia, are not participating. Instead, they are striking bilateral deals with drug manufacturers – essentially, competing with the rest of the world to secure a national supply. Allocating scarce resources is never easy, but when availability could mean the difference between life and death, it becomes almost impossible.
Global production, distribution and social equality present dependent yet conflicting realities that will demand global supply chains provide complete transparency and an immutable chain of custody imperative to vaccine distribution.
The technology is available today – we just need to use it. We have the ability to track every batch, pallet, box, vile and dose along the supply chain. We have the ability to know with absolute certainty that the vaccine is approved, where and when it was manufactured, how it was handled and whether it was compromised at any point in the supply chain. Modern blockchain technologies should be applied so that every nation, institution, regulator, doctor and patient can have confidence in knowing that they are making an impact in eradicating COVID-19.