Miebach helps pharma firm realise key savings by optimising European logistics network
When a European pharmaceutical manufacturer looked to address its fragmented logistics chain, it soon recognised that it needed help to amend the complex situation. With support from experts at Miebach, the client significantly improved governance, and identified a possible €18 million in annual savings.
Operating across the Benelux, France, Germany, Italy, Spain, and the UK, a company in the pharmaceutical and life sciences sector will always depend on a large and complicated set of conditions. But for one leading brand in the sector, several acquisitions had led to a fragmented European logistics footprint – one which it suspected was costing more than it should.
When legacy set-ups from acquired businesses continued to run in parallel, they had created overlapping coverage, limited cross-country synergies and a high degree of operational complexity. The “as-is” network comprised 16 outsourced warehouses. When including distribution, it also had more than 25 logistics service providers (LSPs).
As such, the client needed a robust, scalable network that could reduce complexity without compromising service. That’s when it contacted consultants from Miebach to take the next step.
In an account of the project on the firm’s website, Senior Consultant Richard Nachar explained, “The project was designed to optimise the network footprint and remove redundancy created through inorganic growth. We were looking to reduce the number of LSPs to enable greater centralisation and governance; and to do that, we needed to run a structured tender (warehousing and transportation) to identify best-fit partners from a longlist covering both “local heroes” and larger multi-country providers.”
Solution delivered
Miebach began with a top-down network design to create transparency on the existing footprint and identify the optimal “to-be” structure across Europe.
A key element of the approach was recognising that not every country required structural change. In selected markets, the existing arrangement was intentionally retained due to country-specific constraints (e.g., tax considerations and service requirements), rather than forcing a one-size-fits-all model.
The outcome was a future network of eight outsourced warehouses, designed to balance cost, resilience and service. This included five warehouses awarded via tender (new 3PL solutions and/or re-awarded operations), and three existing warehouses retained to serve local market requirements (for example, Switzerland).
To make the target network something feasible, Miebach meanwhile led a comprehensive tender covering both storage and transportation.
As part of this, it screened more than 20 LSPs for a long list, ensuring competitiveness, transparency and a broad capability range. It then oversaw a lotting strategy designed to reflect market realities and encourage both local and international participation. Lot 1 covered Germany and Austria; Lot 2 was for Spain, Italy, France, and the Benelux; and Lot 3 targeted the UK.
Finally, Miebach’s experts recommended a streamlined partner landscape of five LSPs in total (including distribution), reducing fragmentation and improving manageability while maintaining the reach required for omnichannel fulfilment.
Results
Among the key outputs were €18 million in potential savings per annum, driven by footprint rationalisation and sourcing leverage; and a warehousing footprint halved from 16 to eight locations. Meanwhile the client’s LSP landscape reduced from more than 25 to just five – significantly lowering complexity and improving governance.
And importantly, coverage was maintained across over 25,000 delivery points throughout the project. This included controlled-temperature handling, across around 2,500 stock keeping units – vital to a pharmaceutical company of this size.
“The project delivered a more scalable, easier-to-manage European logistics set-up while protecting service requirements for B2B and B2C channels,” Nachar concluded.
