How could pharmaceuticals distribution company APL win and retain new clients and better serve the people of the world’s largest island nation? By building digital workflows based on SAP HANA® applications running on IBM® Services for Managed SAP Applications, APL cuts costs and enables deep insight into healthcare needs.
Operating in an intensely competitive market, medical distributor APL wanted to cut logistics and operational costs, while delivering precious sales insights to help win new pharma clients.
Upgrading to SAP® ERP powered by SAP HANA running on IBM Services for Managed SAP Applications enables APL to digitize workflows, launch mobile apps, cut costs, and generate deep customer knowledge.
With more than 260 million people living on more than 17,500 islands, delivering healthcare supplies in Indonesia is a very challenging task. PT. Anugerah Pharmindo Lestari (APL) is the country’s largest pharmaceutical distributor, shipping medicines from over 50 leading pharmaceuticals majors to thousands of hospitals, clinics and drug stores across the nation.
APL holds more than 5,000 unique stock-keeping units, and most of the products the company transports need to be stored at specific temperatures to remain effective. In addition, APL ships the medication to every healthcare provider across the nation in remarkably short lead times—delivering most items to major islands within a day, and outer islands within one or two days.
Currently, APL provides aggregate sales and distribution data to its healthcare clients. To help differentiate itself from competitors and attract new clients, the company saw an opportunity to provide deeper insights as a value-added service. For example, this data could help clients to identify which vaccines are in highest demand, compare sales between islands, and understand whether patients prefer to visit drug stores, clinics or hospitals.
To manage core business processes, APL relied on an SAP ERP environment supported by a legacy Oracle Database. Running an older SAP version prevented APL from taking advantage of new functionality. If problems occurred, APL would need to restore the full SAP landscape including 5 TB of data—a colossal task that had the potential to interrupt business-as-usual operations.
How could APL realize its marketing ambitions, even as it continues to press down on operational costs?
As a first step, APL migrated its entire SAP landscape to IBM Services for Managed SAP Applications. This fully managed Platform-as-a-Service offering relieves APL’s IT staff from tasks such as server management and network monitoring, as the solution includes automated failover and disaster recovery options. A local IBM team worked with APL to achieve a smooth transition to cloud.
As part of the Managed SAP Applications offering, IBM also manages third-party “satellite applications” that are closely linked to the SAP environment. For example, IBM manages APL’s application for applying bulk-buy or promotion discounts to customer orders, and a third-party mobile app that tracks customer deliveries.
Dannarjaya Harinta Sri, Vice President for Information Technology at APL, says: “IBM Services for Managed SAP Applications offers APL more flexibility, uptime and innovation. Cloud enables us to spin up resources rapidly when we need them, giving us freedom to experiment and enabling us to achieve a faster time-to-market for new products. At the same time, cloud lets our IT team focus on partnering with the business to pioneer digital transformation initiatives.
“We chose IBM as our cloud provider because IBM Cloud offers excellent security for sensitive data. Our migration to Managed SAP Applications is going very well. From day one, there has been strong engagement between APL and IBM, and the project is running right on schedule. The IBM team has been extremely flexible in accommodating our requirements. For example, after we signed the contract, we wanted to add SAP Process Orchestration to our list of requirements, and IBM was able to incorporate this request seamlessly.
“Another deciding factor was IBM’s option of a managed service. Choosing Managed SAP Applications means we hand off SAP installation and management to IBM, so it’s one less thing for our IT personnel to think about.”
As part of the strategy, APL is working to upgrade to SAP ERP applications powered by SAP HANA. The SAP HANA in-memory database supports very rapid analysis of massive data volumes and the SAP ERP applications empower employees to work more efficiently.
For example, to serve its 26,000 direct customers, APL sends sales representatives to drug stores, clinics and hospitals. In the past, the sales representatives recorded customer orders on paper, then manually dialed the APL call-center to key the order into SAP. Since the process was manual, mistakes occasionally crept in, resulting in customers receiving incorrect orders.
With the new applications, APL is now able to create and launch applications that enable sales representatives to place customer orders using their mobile devices, connected directly to core SAP sales order systems – saving time and reducing the risk of human error.
Modernizing the SAP environment puts APL in a stronger position to provide rich market insight to its clients. The data required to produce these reports resides in the SAP Business Warehouse application, which APL has moved to the faster SAP HANA database. As a result, APL can run analyses and produce complex reports more efficiently. Providing market insights is one of APL's lines of business, thus enhancing the company’s revenue stream and sharpening its competitive edge.
Dannarjaya Harinta Sri explains: “Previously we provided basic sales figures to clients via an automated email sent every morning, containing data from the previous day. With the new capabilities from SAP HANA, we can refresh the data every hour, giving drug manufacturers near-real-time insight into inventory and sales.
“Because we can provide much more granular data, we can help clients study historical trends, predict future trends, and slice and dice the figures to examine particular medicines, product categories or provinces in finer detail. We currently deliver information to clients via a webpage, and in future we can offer dashboards in SAP Fiori.
“By serving pharma companies with deeper insight into how their products are sold, we are transforming from a distributor into a real value-added healthcare services provider. We are confident that our new services will strengthen customer loyalty, help us attract new clients, and—of course—provide better healthcare to the people of Indonesia.”
Upgrading the SAP environment is helping APL deliver world-class logistics services across Indonesia’s intricate network of islands. Already, the company delivers 97 percent of customer orders on time.
Moving to cloud presents dramatic time savings and flexibility gains, as Dannarjaya Harinta Sri explains: “In Indonesia, hardware acquisitions come with long lead times. Ordering the kind of powerful server required to run SAP HANA would usually take eight weeks, but with Managed SAP Applications we have the resources ready in half the time. Faster allocation of compute resources cut our SAP HANA deployment time by two months compared to an on-premises installation.
“Managed SAP Applications offers excellent system uptime and eliminates the reliability issues of the older on-premises systems. What’s more, moving to the IBM Cloud enables us to shift 59 percent of expenditure from Capex to Opex. We are saving even more than we expected, because APL now spends less on managing SAP and satellite applications in IBM Cloud than we previously spent managing just our SAP landscape.”
APL has also migrated from SAP HANA 1.0 to SAP HANA 2.0 on cloud. This migration is a vital stage on the route to SAP S/4HANA, to which APL will move when its parent company, Zuellig Pharma, decides to do so.
In addition, APL looks forward to building on its strong relationship with IBM to explore new technologies such as artificial intelligence, Internet of Things and Blockchain. For example, APL sees potential to use Blockchain to provide robust traceability of medicines throughout the supply chain, ensuring patient safety.
Dannarjaya Harinta Sri concludes: “Digital transformation is high on our agenda, and SAP is a crucial element of our transformation, because it stores the company’s most important information. Running SAP applications on IBM Services for Managed SAP Applications is transforming APL’s business, enabling even closer engagement with pharma clients and patients, making healthcare more accessible for all.
“APL is one of the first Indonesian companies in the healthcare sector to run critical workloads such as SAP on IBM Cloud. In doing so, we demonstrate our position as an innovator and early adopter, setting the tone for the transformation of healthcare in Indonesia.”
PT. Anugerah Pharmindo Lestari (APL) (link resides outside ibm.com) is Indonesia’s largest pharmaceutical distributor, serving tens of thousands of customers across 434 cities nationwide. The company operates 33 warehouses in 28 cities, and has sales teams based in 104 cities. Its services include clinical trials, sales and marketing, distribution, pharmacy programs, and patient-centered services. Founded in 1985, APL is a member of the Zuellig Pharma Group.
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