DCS revolutionizes pharmaceutical logistics with Dynamics 365

This unique model allows manufacturers to stay competitive while providing medications at significantly reduced cost, including through the Federal 340B Drug Pricing Program.

Today, the company’s 150 employees act as the distribution arm for pharmaceutical manufacturers, shipping products to wholesalers and distributors and selling products to dispensers and pharmacies for direct distribution to clinics, surgery centers, and hospitals.

With growth comes a need for a smarter warehouse

DCS clients can sell their products to downstream customers without having to invest in or manage their own warehouses and distribution teams. Acting in an orders-to-cash role, DCS handles everything from order intake, credit checks, and pick-pack-ship processes to invoicing, collection, reporting, and returning receivables to the manufacturer with reconciliation. All this takes meticulous attention to detail, including license and regulatory compliance, proper storage and handling, and product tracking.

DCS initially used a warehouse management system (WMS) that was tailored for the 3PL industry, along with some other loosely integrated software systems, to manage its finance and logistics operations. With increased federal regulations, advances in technologies and therapeutic modalities, more medications being added to the 340B program, and organic business growth, the legacy system was showing its age and holding the company back. DCS leadership decided the time was right to buck tradition again by moving its data and operations to the cloud and then building a high-capacity, innovative “smart warehouse” just miles from the company’s original warehouse location.

The new facility would be the first such distribution operation in the US to support the pharmaceutical industry. Running such an operation successfully would require a technology solution that offered centralized data management, complex financial capabilities, advanced warehouse practices and supply chain management, the ability to meet rigorous regulatory and compliance requirements, robust reporting—and provide a web portal for clients to access information in near real time.

Breaking new ground requires an integrated solution

DCS leadership researched several software platforms. One of the key decision-makers had extensive experience with Oracle JDE, so the company explored that solution first. The team also looked at SAP and Microsoft. Comparing capabilities, ease of extensibility, frequency of updates, innovative features, and affordability, along with licensing and billing flexibility, leadership selected Microsoft Dynamics 365, which offered DCS everything it needed.

With solution architecture and implementation support from Argano, DCS began moving its operations to the cloud in 2021, starting with Dynamics 365 Finance, Supply Chain Management, and Sales, plus multiple automations using Power Platform. The implementation took a three-stage approach:

1. Go live first with the base financial package and warehouse management tools for the existing warehouse.
2. Add more robust features and advanced reporting.
3. Bring the smart warehouse online in 2022.

A distribution of benefits that everyone enjoys

Although DCS chose a staggered rollout, the benefits of Dynamics 365 were evident immediately and affected nearly every area of the business. As William Wells, Vice President, IT Infrastructure and Operations explains, "This ERP will last the life of this facility…It’s cloud-based, so we’ll always be updated. Additionally, I can now get more from my team. Instead of deploying them for tech maintenance, I can re-task them to serve the broader needs of the business."

Faster financial processes and robust reports are game-changers

DCS not only runs its own business but performs many financial operations on behalf of its clients. The company’s legacy software consisted of three unique systems that were loosely integrated, and critical data was contained in different locations. Employees spent significant time on manual accounting reconciliations and had to pull in an IT resource to create monthly and quarterly reports for each client. Closing the books every month typically took 14 days, making year-end reporting more complex and affecting the leadership team’s ability to make timely, informed financial decisions.

Now with Dynamics 365, all data is centralized, workflows are simplified, and month-end accounting takes just four days, saving the team 10 days of effort. Employees have more time to add value in new ways, such as reviewing and improving operating procedures and taking on higher volumes of transactions.

Both DCS employees and clients rave about the new Power BI reports that replaced the labor-intensive Crystal Reports and CSV files. With specific data exposed to employees, they can build their own reports as needed with less manual effort and zero IT resources. The level of detailed data DCS can pull from makes their reports more insightful and useful. Management appreciates the impact they make when presenting data in charts and reports that are as easy to understand as they are to create.  

Client web portal provides near real-time data on demand

Clients have become hungrier for data, but in the past, account managers couldn’t easily share up-to-date information. For example, when an inquiry came in for inventory levels or product expiration dates, employees had to make phone calls or send emails to the warehouse, and data was pulled manually. It could take up to two days to deliver the information to the client.

Now, clients have a Power Pages web portal and a personal dashboard where they can view important data like near real-time inventory, expiration dates, and order processing status. "With Dynamics 365, our clients have a secure, online portal that provides rapid near real-time inventory and order data so they can make informed decisions and better serve their customers," says William Wells. This allows them to, for example, offer a quantity based on what’s on hand or run a sale on products expiring within six months.

Efficiencies open new business opportunities

The new smart warehouse—running on Dynamics 365—increased output and time savings far beyond expectations. In DCS’s traditional warehouse, 90 workers typically cover up to 13 miles per day walking or driving a forklift to pick products up from their locations. The new 230,000 square-foot, seven-story, roboticized warehouse brings the products to employees. With orders moving along a conveyor for easy scanning and labeling, just 15 people per shift can process much higher order volumes. In the first year alone:

• Small parcel shipping throughput increased by 300% due to more flexible workflows, better processes, and improved efficiencies.
• Large order picking and processing time decreased by more than 90%—from two days to four hours. Orders can now be shipped on the same day, which wasn’t possible in the past.
• Order processing volumes increased by 1,100%—from 150 orders per day to 75 orders per hour. How? The 18 required validation checks are now automated. Employees scan products with hand-held devices that integrate with Dynamics 365, and most orders move along conveyors after they’re picked by a robotic system.
• Overtime has been eliminated thanks to new advanced warehouse processes, automated validations, and roboticized operations. Warehouse staff enjoy more predictable schedules and personal time now that contractual obligations can be met within standard work hours.
• Easy-to-use touchscreen scanning devices running Dynamics 365 replaced legacy text-based scan guns and now account for 60% of on-floor work.

"DCS is committed to helping get life-saving medications to the hospitals, pharmacies, doctors, and patients who need them, as affordably as possible. Now, our new facility and operations running on Dynamics 365 allow us to serve more of them faster than ever before," concludes William Wells.

Fewer meetings lead to more client connections and smoother sales

Before DCS implemented Dynamics 365 Sales, the sales team didn’t have a customer relationship management tool. Sellers relied on Microsoft Outlook, Microsoft Excel, phone calls, and staff meetings for status updates and deal discussions. Now with the Sales mobile app and native Microsoft Teams integration, sellers can check the status of any deal from anywhere, view conversation histories, and follow automated next-step recommendations, freeing them for more facetime with customers and prospects—and they’re closing deals faster. Says Wells, “Now, all sales data is integrated, and we don’t miss any conversations or threads of any deal or prospect.”

Logical next steps for a logistics leader

DCS continues to take advantage of more of the powerful features in Dynamics 365. For example, the company is in the process of moving from a cloud data warehouse model to Microsoft Azure Synapse. This will provide more analytics insights from all data sources faster with the help of Power BI and machine learning, while helping manage workloads and system performance.

The company is also interested in exploring how Microsoft Copilot can help sift through its trove of data to identify trends, uncover training opportunities, look for discrepancies during inventory checks, and forecast costs and order volumes to give clients even better near-term insights to help them improve planning.

Now, no matter how the pharmaceutical industry evolves or how many new medications enter the marketplace, with Dynamics 365 and its new smart warehouse, DCS has the capacity, agility, insights, and a logistics platform to ensure efficient, compliant, cost-saving distribution.