Managing a pharmacy's front-end can be a time-consuming and complex task. But there are ways to make life easier. In this interview with ComputerTalk's Maggie Lockwood, ECRS President Peter Catoe talks about how the company's Supplier Gateway can connect its Catapult point-of-sale (POS) system with supplier ordering systems to reduce the time spent on ordering, pricing, and other activities.
CT: What steps does the ECRS Supplier Gateway save in the ordering process?
Catoe: ECRS's Gateway service is designed to automate the most time-consuming stages of the front-end replenishment process. Our research shows that many independent pharmacies spend 10 to 15 hours a week ordering and receiving front-end inventory. The majority of that labor is consumed with the process of manually building purchase orders, either on paper or on a hand-held terminal by walking down aisles and looking for holes on shelves. This data is either re-entered into an online supplier ordering system or batch uploaded to the wholesaler. This process is commonly performed by pharmacists or pharmacy technicians. This method, in addition to being time-consuming, is fraught with the potential for error. The staff does not have accurate data with which to make good business decisions about product restocking by taking in to account criteria such as seasonality, item movement history, and the impact of promotions or sales on item movement. Without good data, you risk having a less than adequate item mix, or worse, stock-outs on products customers want.
CT: How does POS offer advantages over a manual process?
Catoe: ECRS has a unique two-phase approach to solving this problem. First, our Catapult POS solution removes the manual process and inefficiencies by suggesting which items should be purchased and what the optimal order quantity should be. The suggested order is based off actual item data. This is not just a simple min max calculation, but one that uses optimized movement data, auto lead time calculation, auto safety stock calculations, promotional data and a statistical formula to determine the optimum order amount for each item. Once the order is calculated by the Catapult system, the buyer is then allowed to make changes where necessary. The second phase of automation is equally impressive. Once the buyer commits to the purchase order, Catapult automatically transmits the order via Supplier Gateway. The order is transmitted with one mouse click directly to the supplier's ordering system. The buyer receives an email acknowledgement confirming receipt of the order. Pharmacies can save up to 50% of the labor previously allocated to ordering tasks. This labor is typically reclaimed for high-value tasks such as customer service and prescription processing.
CT: Does the supplier ordering information flow back into the ECRS system and can the pharmacist print a report?
Catoe: Yes, once the order is fulfilled by the pharmacy's supplier, ECRS's Gateway service processes an electronic invoice and shipping notice and updates the Catapult purchase order with correct acquisition costs and shipped quantities. Back orders for shorted items are automatically created. And the buyer receives email confirmations of each step in the supply chain process. This automatic purchase order update also saves stores a tremendous amount of labor on the receiving end because a store's staff frequently will accept the receiving document and note any discrepancies as they restock the shelves. It's important to remember that one of the key benefits of this system is its automated nature. All communications and file transfers between the store and the supplier require zero user intervention.
CT: Getting correct, current acquisition costs sounds important. Tell us more about that.
Catoe: As I mentioned earlier, as each Catapult PO is received, the correct item acquisition cost is automatically updated in the Catapult database. The Gateway then dynamically compares the last cost for each item purchased with the invoice cost on the current order and generates a worksheet for those items where costs have risen and affected margin. This margin alert functionality is extremely popular with pharmacists because it provides them with timely data they can use to quickly address margin changes on the floor before their bottom lines are affected. This addresses an important issue for pharmacy owners, who frequently say that they lack the time and data to accurately manage pricing and margins in the front end.
CT: I understand that there's functionality for managing retail pricing as well, right?
Catoe: Yes, in addition to the ordering and receiving process, Supplier Gateway also eliminates manual processes associated with updating retail prices. This service maintains an up-to-date copy of the supplier price catalog and regularly compares these with the current retail prices for the pharmacy that are set in Catapult. When retail prices change on items stocked by the store, the Gateway creates a price change worksheet and notifies the store staff by email that they need to review the price updates. The staff simply goes through the worksheet, makes any necessary changes, commits the price updates, and generates new shelf stickers. All this is driven by the same automatically generated worksheet. Traditionally, it's a challenge for independent pharmacies to maintain their shelf prices in the front-end, particularly in high-volume stores.
CT: What other manual processes can the Supplier Gateway help automate?
Catoe: The Gateway can also help customers with promotional and marketing programs. For example, Cardinal customers can use this service for the Leader Ad program. Each month, Supplier Gateway can build a Leader promo in the store's Catapult system, inputting the start and end dates of the sale, affected items, and promo prices for those items. The store receives a notification a few days before the sale begins that a new promo is available for review in Catapult. The store reviews the promo, makes any necessary changes, accepts it, and prints shelf stickers for the sale items - all from one screen. Accepted promos then begin and end automatically, returning the items to regular price on the date the sale expires. Before increased automation through the Gateway, stores might not have participated in programs such as Leader Ad promotion because it was simply too time-consuming for them to change prices each month. Automating this process allows stores easier access to this and other promotional programs and the opportunity to benefit from participation.