Typhoo and sofco brew up a longer partnership
Background
- Headquartered in Switzerland, with over 5,000 employees
- Sales of $3.760 billion in 2022
- Operating from 50 sites in 40 countries
- Founded in 1981
Results
- Improved visibility on demand and volumes across the global Supply Chain
- Increased forecast accuracy by 15-20%
- Reduced inventory holding costs of up to €20m in several warehouses
Solutions
Galderma cuts down inventory in their global Supply Chain and continues to roll out sofco’s Sales & Operations Planning software.
Founded in 1981, Galderma is the leading company solely dedicated to skin and advancing the future of dermatology. Headquartered in Switzerland, with over 5,000 employees, operating from 50 sites in 40 countries and sales of $3.760 billion in 2022, the company continues to grow both internally and through acquisitions.
Through acquisitions, Galderma continue to globally roll out sofco’s Sales & Operations Planning (S&OP) technology to increase forecast accuracy, streamline production and supply in an increasingly competitive industry. The Pharmaceutical and Cosmetic sector faces multiple challenges. Over recent years, competition from generic drugs has increased – with skincare being no exception.
In addition, shorter patent lifecycles, industry consolidation, faster product launches and increased R&D expenditures, have led to greater complexity, which, overall, has called for new levels of operational efficiency. Galderma has been able to reduce its investment in inventory by up to €20 million in several of its central warehouses thanks to an internal global effort in process re-engineering, and the improved S&OP capabilities provided by the sofco software.
Why sofco?
Previously, the company relied on hundreds of spreadsheets for planning that were very complicated to manage. Standardising planning processes and technology was essential. Galderma says it chose sofco because of our expertise in S&OP and because of the flexibility of the solution to support the Galderma processes and evolving requirements.
The Challenge
Sandrine Angles, Supply Chain Manager at Galderma, explains: “Pharmaceutical and Cosmetics supply chains are highly complex: they were traditionally based on producing high volumes to avoid stock outs; but high inventory levels carry significant costs and run the risk of obsolete stock. Drugs and cosmetics – much like food – have a limited shelf life too. International regulations mean a proliferation of SKUs to manage, and the need for stronger innovation calls for greater agility from the supply chain.”
“In addition” – Angles continues – “not only have we grown rapidly, but our business model has evolved in recent years and Galderma is moving away from its roots primarily as a drugs company, to one offering also a larger range of cosmetics.” This includes some patented products, but many more over-the- counter products too, including more selling via major retailers and a growing network of wholesalers.
The opening up to new geographies, coupled with the evolution of the business model, has posed new challenges for Galderma – both from a forecasting and operational standpoint.
“Pharmaceuticals used to be a fairly stable market and easy to predict due to prescriptive products,” says Angles. But with an increased focus on highly promoted products such as cosmetics, things are much more volatile now, making managing inventory a challenge. “Best-sellers depend on each geography and product category (aesthetics and corrective products, drugs, cosmetics); we have to avoid running out of stock, but we only want to carry the bare minimum in reserve,” she adds.
With 4 manufacturing sites around the world (France, Canada, Brazil and Sweden), the long production lead-times which are typical to the sector, and over 80 markets to serve, this requires a certain amount of flexibility and prowess in the supply chain.
In 2007, Galderma started a forecasting and replenishment initiative with sofco, which evolved into a comprehensive Sales & Operations Planning project: “We wanted to reduce spare capacity and inventories through better visibility on demand and volumes,” explains Angles.
The Solution
The project with sofco started with the deployment of sofco’s forecasting and replenishment technology. In 2011, in parallel with a corporate ERP project and considering the results achieved, Galderma decided to extend the scope of the initiative to manage Sales & Operations Planning from End-to-End. The process includes a pre-S&OP phase, typically managed at plants, and regular S&OP meetings.
In the pre-S&OP phase, the sofco solution supports the formulation of the demand and shipment plans, through collaborative forecasting, capacity and inventory management functionality. The demand plan can be analysed against capacity constraints and look at any physical or regional factors that might impact on sales, such as advertising or promotions.
Simulation functionality helps the whole Supply Chain to be predictive, rather than reactive; and analytics integrated with planning means better visibility over the process as a whole. “Automatic reporting and analysis are now ingrained into the planning process,” says Angles. “With just a few clicks, we get the full picture on capacity loads – as a percentage – and how much we can produce, versus how much will be required by each market.”
S&OP meetings, held every month with involvement of all functions – from logistics, to sales, to finance – cover the demand plan and shipment plan proposals. The review of KPI’s (Key Performance Indicators) generated within the sofco system – reductions in inventory, forecast accuracy, plant service performance, and customer service levels – helps decisions on priorities in case of conflicts and lack of capacity, and resource adjustments over a 12 to 18-month horizon.
“KPI’s and automatic reporting means results are expressed in a meaningful way to all stakeholders and so there is a better understanding of the implications of each decision at all levels, which leads to more progressive discussions,” explains Angles.
The deployment of the S&OP process was supported by communication and training throughout the organisation and today, the software is one of the most globally used tools: a team of around 85 people use sofco. It’s respected throughout the business and integral to Galderma’s daily operations.
“Every decision is reflected in the system. sofco has helped us centralise our core processes – forecasting, capacity planning – and calculate inventory projections. It’s flexible to use: whenever we need to create an additional view, it’s extremely easy. Visibility and planning have already greatly improved across our global supply chain, and we envisage in- creased support as the business constantly evolves,” adds Angles.
According to Galderma, the solution has contributed to a 15-20% increase in forecast accuracy, providing global visibility on what volumes of goods are needed, as well as when and where. Soon after implementing the sofco software at its plant in France, the company managed to reduce its inventory holding by a month – the equivalent of €20 million in saved inventory costs. Moreover, shortly after implementing the software at its recently acquired sun care business in Switzerland, the new plant is already on track for decreasing stock levels. Overall, despite growing market volatility, Galderma has managed to maintain a stable level of inventory across the global business and customer service levels have consistently topped 99.5%