Australia’s largest pharmaceutical skincare company undergoes systems refresh to meet growing local and export markets

Ego Pharmaceuticals to increase production and supply capacity with SAP Business All-in-One and realise benefits of over $100,000 a month

Melbourne, AustraliaAustralia’s largest pharmaceutical skincare company, Ego Pharmaceuticals, has signed an agreement to roll out SAP Business All-in-One software. 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.

The Melbourne-based manufacturer of well-known brands including QV, Aqium and SunSense will 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. Growing markets in the Middle East, UK and Asia are providing additional warehouse, supply chain and financial challenges. 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 Ego Pharmaceuticals implementation will get underway immediately with SAP services and business partner, Clarity Consulting Group Australia. 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.

“Clarity clearly articulated the business case for change,” said Ego Pharmaceuticals managing director, Alan Oppenheim. “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.”

Other benefits Ego Pharmaceuticals is expecting to see from the software rollout include improved forecasting and supply chain management. This will ensure timely product supply to retailers and avoid ‘stock-outs’, where retail orders outstrip Ego’s ability to supply goods immediately.

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.

“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,” added Oppenheim.

“For example, Saudi Arabia is a large export market for us. But the Saudis don’t allow us to ship our products in the height of their summer. The alcohol base in some of our sunscreen products makes them flammable and they can’t refrigerate flammable items on ships. That means that if we miss the shipping timeframe because we’re out of stock, then we miss the summer sales of these items. This can have huge implications for our business.”

The new software system is also expected to save Ego Pharmaceuticals on labour costs, as multiple data entry and manual reconciliation of data between systems will be eliminated.

Clarity Consulting Group was chosen to implement and service this project because of its business advisory skills, which provided Ego with the impetus to transform their business and build the internal capabilities they need to drive further growth and competitive advantage.

“We selected Clarity because, very early on, they identified a need in our business to rationalise our internally developed IT systems, spreadsheets and manual processes. They demonstrated to us the tangible value of our investment with SAP.

“We chose SAP software because SAP has the ability to scale with the demands of our growing business, their substantial investment in R&D means we will continue to benefit from our investment, they work with over 1,500 pharmaceutical companies worldwide and have a good reputation in the mid-market,” said Oppenheim.

Australian-owned and operated, Ego Pharmaceuticals Pty Ltd has been a pioneer in skincare since its inception in 1953 and currently manufactures and markets over 110 leading products such as QV, MOOV, Aqium, Pinetarsol, DermAid and Australia’s number one sunscreen SunSense.

Ego has become the largest Australian-owned pharmaceutical business specialising in the research, manufacture and marketing of high-quality skincare products. Ego now employs 240 people in 23 cities in nine countries. International sales have almost doubled in the last four years to $16 million across 24 nations. Exports are expected to account for one third of the Ego Pharmaceutical business revenue this year.