How leading Pharma distributor increased sales by 32% and employee engagement by 25% in 8 months.
Client
One of the leading Pharma distributors in Central Asia
- Annual revenue over $350m
- 10 regional branches & warehouses
- Over 11,000 SKUs
- Over 7,000 active clients
Challenge
Following years of expansion and acquisitions, a shift in the market conjecture quickly translated into a number of troubling signs:
- Profit & margin decline
- Routine stock shortages
- High share of unmarketable stock
- Cash deficiency
The client has requested our support in:
- Optimising the product matrix
- Introducing a more efficient procurement
- Introducing a system of budget planning & control
- Growing profit
Stage 1: Diagnostic
Following a macro environment audit, AVDO ran organisational and cross-functional diagnostic, engaging stakeholders across teams and layers. In addition to stated challenges, we found that:
- The sales team focused on selling whatever they happened to buy rather than analysing what the market required
- The product mix was overextended and, to a substantial extent, produced low return
- Procurement didn’t take into account seasonality: the stock was low at peak times & high during periods of low demand
- There was no method to determine the necessary procurement volumes
- There was no planned approach to selling unpopular products
- And no expense planing or revenue/expense interrelation control
Stage 1: Recommendations
Having discussed the findings with the client, we agreed to add a number of strategic and operational project goals:
- Refine business positioning
- Form a market intelligence unit
- Introduce market requirement analysis (by distribution channel)
- Increase procurement efficiency
- Establish a stock control system
- And find a solution to the unmarketable stock problem
Stage 2: Strategy sessions
Aligned on the situation, AVDO worked with a wide client team to establish a strong base for further works:
- We developed mission & vision – key strategic goals to progress towards
- Clarified company’s positioning, to direct future investments
- Agreed core growth priorities for the next 2 years
Stage 3: Strategy development
Once the overall strategic guidelines were set, the team proceeded to planning
- Developed a structure of responsibilities, authority and rewards
Empowering individual problem-solving, transforming a pool of demotivated workers into a team of entrepreneurs
- Developed corporate and functional strategies, including detailed plans and budgets for each department
Stage 4: Change management & sustainable growth
With the strategies set, the team advanced to implementation:
- We’ve established market intelligence operations
- Developed procurement standards and processes
- Produced a sales plan & key distribution channel requirements
- Audited stock and cleared it of non-priority low margin products & suppliers
- Defined KPIs for sales & procurement teams
- Established a system of individual authority & responsibilities
- Produced methodology for dealing with unmarketable goods
- Produced zero-based budgets for all business units
- Established a system of regular audits & course-correction activities
- Organised talent development and mentorship pathways for all departments
Outcome
Eight months after the core project the client reported:
- 32% increase in sales
- 3.5% Profitability growth
- 60% increase in liquidity
- 25% increase in employee engagement
- Sustainable budget & product assortment optimised to 8,000 SKUs
