Comifar builds an S&OP process to accelerate growth

Developing a roadmap and taking the first steps

The project began with an assessment, which led to recommendations from the NTT DATA and internal teams to the Comifar board of directors. With the board’s counsel and recommended timetable, the resulting steps were prioritized into a comprehensive roadmap. The priorities included forecasting, purchase planning, stock optimization and a reduced potential for lost sales. A revision of the logistics KPIs guaranteed the tracking of proper metrics, the improvement of gross margins and the consolidation of Comifar’s enduring market leadership position.

Delivering the correct stock levels to the ideal locations

Comifar’s revised demand planning process now delivers timely statistical forecasts using an algorithm suited to the historical profile. It presents AI entries that can readily identify lost sales due to lack of stock from suppliers, recover market share as product becomes available and reduce out-of-stock codes by reallocating pharmacy orders based on the time of day. Through the application of AI/ML, the company was able to work with data at a high level of granularity and develop increasingly accurate plans with their billions of inventory records.

The distribution planning process determines the ideal level of safety stock to maintain a high level of customer service. It also determines the ideal supply of economic lots and provides a medium-term plan for both logistics and warehousing so they will be ready to accommodate and deliver required safety stock.

Planned purchase orders aid in the maintenance of stock levels. Last-minute POs are also issued to make beneficial speculative buys and satisfy stockouts from the previous day. By using dynamic deployment, Comifar reallocates inventory between 21 Italian distribution centers, realizing potential savings while maintaining key stock and service levels.

A structured planning process leads to big results

Six months after the implementation of the S&OP process all 1,300 suppliers were fully integrated into the system. Comifar began to realize improvements in service levels, product flows, and the quality and quantity of its stock.

These savings have led to healthy gross margin growth, as much as €1,3 million per year. The company now has a reliable structured planning process, and its planning staff has acquired new capabilities and experience, which is reflected in its measured performance. Forecast accuracy increased 14%, lost sales decreased 53% and wasteful intra-warehouse orders dropped 37%. Reliable forecasts made lower stock coverage levels possible, down a remarkable 18%. Lines per order fell 21% and non-assortment stock is down by nearly half at 47%.

The most profound benefit is a conspicuous increase in total supply chain visibility. It’s easier to stay ahead of the market, allowing Comifar to continue leading the industry.