CASE STUDY – Farmatodo, Drug Store Chain – Venezuela

Project Explanation

To develop the optimum distribution center for superior customer service & profitability; establish a 5-year business plan to improve customer service levels and reduce operating costs. 

Farmatodo is the largest retail drug store chain in Venezuela, one of the largest in South America. Their drug stores are known for offering a full line for drug store needs in a clean and friendly environment. Farmatodo has experienced impressive growth while maintaining superior service levels in a very challenging market. To help insure continued success, Farmatodo’s management asked the Facilities Planning Services Group to partner with them to optimize their distribution and transportation processes for the future.

Implemented the FPS Flow Optimization and Resource Management (FORM) program that organized the value stream and defined the process constraints over the 5-year planning horizon. This plan included the optimum layout that showed a phased growth plan.  

As a result of our studies, productivity technologies were implemented to support the proper methods and procedures for optimum productivity. This greatly extended the service life of the existing facility and clearly showed the path for continued success, in the true Farmatodo tradition.

After seven years with this client, FPS has regularly gone back to implement our planned growth phases. During this period, the client has gone from number 2 to number 1 in their market. Their major competitor has falling seriously behind during this period due to a lack of strategic planning, and runaway operating costs.

The client which had 58 percent of the regional market is positioning to purchase their next largest competitor to control 93 percent of their market. 

FPS worked closely with Farmatodo’s Logistics Manager, Antonio Rubio to establish a Strategic Five Year Plan for their nation wide distribution requirements. This defined the required service level that Farmatodo’s customers have come to expect. This was done on a quarterly bases specifying numerous critical operational indicators.

A detailed Flow & Cube Analysis of the optimum distribution process requirements was performed to determine the specific operational demands. An Operational Analysis of the current Distribution Center was performed to determine what could be done to optimize current processes in support of the Strategic Five Year Plan.

Based on this analysis, a detailed Facilities Design was developed for a world class facility, properly organizing the complete range of DC functions. Potential opportunities were analyzed to improve service levels and profitability such as increasing inventory turns, improving dock utilization, reducing damage, reducing errors, improving methods of handling returns, optimizing the order fulfillment process, team building, improving responsiveness, improving delivery truck densities, optimizing the various shift structures, improving the work environment, establishing safety procedures, improving human resource utilization, and improving ergonomics to name a few.


Flow Optimization and Resource Management