A pharmaceutical co-op with a competitive edge

Sophisticated and flexible software is key to Itriafarma, an Italian pharmaceutical cooperative, which takes pride in being a technology leader in its industry.

The individually-owned pharmacy may be a dying breed in many countries, but in Italys fragmented retail environment, it is very much alive. Small pharmacists, to ensure some clout when dealing with manufacturers, often unite in cooperative associations. Itriafarma, a pharmaceutical cooperative located in Martina Franca, near Taranto in southern Italy, is one of these.

Service is key
Our motto is service, availability, convenience, says Francesco Lembo, president of Itriafarma and the son of one of the co-ops founding members. These attributes are not possible in our industry without advanced technology.

The cooperative was created in 1978 to give small pharmacies more negotiating power when dealing with large pharmaceutical manufacturers. We began with 18 members and two employees, recalls Dr. Lembo. Today the cooperative has 175 members, 222 regular customers and 47 employees.

Growing needs
Because of the importance of technology to Itriafarmas day-to-day activities, the co-op has always looked for solutions that would give it a competitive edge. Before changing to IBS in 2004, it used a software system developed in Italy that was advanced for its time. We were the first company in our industry to adapt that system, back in 1997, recalls Sandro Quarta, the companys controller. Eventually it came to be the standard for all companies in our industry here, so it no longer offered us a competitive advantage.

As a matter of policy, Itriafarma changes its software about every 5-7 years. By 2002-03, it was time to look around for a new solution. We wanted a more sophisticated and flexible system that would give us a competitive advantage, explains Mr. Quarta.

Our previous IT software was customised to reflect Italian realities, which are different from those of other countries in Europe, Dr. Lembo points out. But it had limitations. It was written in an old language, it was not open, we could not add newer applications like CRM, business intelligence or intranet functionality.

A cutting-edge solution
At the same time IBS, was looking to introduce its pharmaceutical distribution solution, IBS Pharma, to the Italian pharmaceutical market. The timing was perfect!

IBS invited Itriafarma to see its pharma solution in action in Switzerland, where the logistics of pharmaceutical distribution are somewhat different. In Switzerland, information demands are spread out over the course of a day; at Itriafarma, activity is concentrated in two intense spurts. The showcased system handles an average of five items per order, whereas Itriafarma handles 110. The Swiss are known to pay promptly, while many Italian payments occur well beyond three months (Itriafarma is an exception; its members pay in less than 90 days).

Despite the differences, we were impressed, admits Dr. Lembo. We saw the systems potential. It was an integrated package, more cutting-edge, and it covered everything from orders to distribution. We bought it all for financials, distribution, production, analysis and so on.

Fast delivery
Technology was essential from the very beginning because the entire distribution process is information-based. A pharmacy sends an order to Itriafarma electronically and the system checks whether the items are in stock.

We carry 16,000 items in our inventory, notes Dr. Lembo. This encompasses all items legally required for pharmacies and a number of para-pharmaceutical products.

If all items in the order are in stock, the order is picked by employees who add each item to a yellow basket moving through the warehouse area on a motorised track. Each item is swiped with a barcode reader. The filled basket then goes to a separate area where the order is wrapped, labelled and sent to one of 13 docks to be loaded on delivery trucks. The trucks make their rounds twice a day, serving an area that stretches from Bari to Brindisi.

If an item is not in stock, the pharmacy is notified electronically and Itriafarma requests the product from one of its suppliers. When a special request arrives, a truck delivers it immediately.

Many advantages
IBS opens the door to many applications not previously possible. Marketing manager Anna Maria Grippa points out that she can now pick any number of products and monitor how sales are affected by a promotion. She can analyse by product, size, manufacture, geography and more. Although I was able to do this with our previous system, she explains, it was a time-consuming process. Now I can collect everything quickly from my desk.

Training is another promising area. Every year, Italian pharmacists are required to take a number of training courses. This activity will eventually be linked to the IBS solution.

A major objective is to link Itriafarmas customers to the co-op through an intranet instead of the EDI-based system currently in use. Dr. Lembo, who has his own pharmacy in Martina Franca, looks forward to this transformation. That way I can manage my business from my office and enjoy my free time at home.