Healthcare-144

The Situation:

One of the largest diagnostic businesses in the world with customers in 100 countries and an extensive portfolio of laboratory testing, molecular testing and near patient care diagnostics systems and services for use in the assessment and management of health, including the areas of cardiovascular kidney disease, oncology, virology and women's health was confronted with the need to develop a distribution strategy to support the needs of the business (customer service requirements) and significantly reduce its worldwide distribution and logistics cost. They asked The Highland Group to help them design and implement a flexible and robust distribution strategy to meet their business goals.

The Driver Goal:

Design and implement a robust and flexible Distribution Strategy that supports the business plan revenues and:

• Reduce European and North American distribution costs by at least a 10% (run rate) by year end
• Define further distribution cost reduction opportunities in subsequent years
• Enable superior customer service levels of at least 96% full order shipments by end of second quarter next year
• Reduce inventory levels at 76 days on hand (the current performance) by 10% or more by end of second quarter next year

• Designed and administered a market requirements survey in both the U.S. and Europe. One hundred customers were surveyed in the U.S. and 120 in Europe
• Based on the survey results of what customer believed was more important, The Highland Group proposed recommendations to the company’s distribution policies, practices and overall strategy
• Developed a System for Managing to provide the Distribution and Logistics Management Team with a single source report summarizing the key operating indicators of the business
• Designed a new process for managing all proposed process improvement opportunities under one central authority
• Identified opportunities to reduce freight costs in the US and Europe by ~ $6 Million. Roughly 20% of freight costs
• Re-engineered the Planning and Forecasting Process. Through centralization and streamlining, the company will benefit in the areas of inventory management, scrap management, supplier management and productivity

• Specific recommendations in Freight Practices and Policies will result in ~ $6 Million in benefits
• Specific recommendation in Planning, Forecasting and Supplier Management will result in ~ $7 Million in benefits
• Customer Survey results will enable client to develop more cost efficient Distribution Strategy to support the overall business