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Tuesday, 11 August 2009 10:37

Benefits of $100K-plus a month from SAP deployment, says Ego

Australia’s largest pharmaceutical skincare company, Ego Pharmaceuticals, is to roll out SAP Business All-in-One software in a $2 million investment in software and systems which Ego says will realise benefits of over $100,000 a month to the company.

In a deal with SAP announced today, Ego said the new software is expected to increase the production and supply capacity of the business and meet growing local and export demand for its range of pharmaceutical skin care products.

Ego Pharmaceuticals managing director, Alan Oppenheim, said today that implementation will get underway immediately with SAP services and business partner, Clarity Consulting Group Australia.

Oppenheim said that working with SAP Value Engineering, Clarity was able to quantify total monthly benefits of over $100,000 a month from improved inventory control and warehouse management. Other benefits the company expecting to see from the software rollout include improved forecasting and supply chain management., ensuring timely product supply to retailers and avoidance of ‘stock-outs’, where retail orders outstrip Ego’s ability to supply goods immediately.
“Clarity clearly articulated the business case for change. One of the key challenges for the business relates to the management of warehouse space. Because we produce pharmaceutical products, we get audited by the Therapeutic Goods Administration (TGA) to ensure we comply with product quarantine standards on finished goods.

“The new software will allow us to quarantine electronically instead of the current physical quarantining methods, meaning we can optimise the warehouse space that is allocated for quarantined goods.”


Oppenheim said the Melbourne-based manufacturer of well-known brands including QV, Aqium and SunSense, would invest just over $2 million in software and systems to move the company from its existing Pick-based system and reduce the application landscape from eight to one.

According to Oppenheim, growing markets in the Middle East, UK and Asia are providing additional warehouse, supply chain and financial challenges and, he said, with exports making up one-quarter of production output, it was identified that “consistent, best practice processes were needed to drive transparency across the business and effectively increase the capacity of the warehouse without further investment.”

The first phase of the roll-out will focus on core functionality relating to financials, controlling, asset accounting, sales & distribution, inventory management, procurement, warehouse management and production planning software.

Oppenheim said “stock-outs have been a significant issue for our business, as most retail outlets, especially in our export markets, simply won’t accept backorders – that is, they won’t wait until the product is in supply.  Insufficient product quantity in stock leads directly to the loss of sales and disappointed consumers. The new software will enable us to use better forecasting and production planning tools, which we expect will reduce stock-out occurrences significantly.”

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