Paragon Software Helps AAH Pharmaceuticals Achieve Substantial Transportation Cost Savings

AAH Pharmaceuticals is reaping the rewards of a more efficient transportation operation, having introduced Paragon’s vehicle routing and scheduling system as a planning tool for rationalizing the delivery routes of its 600-strong fleet.

Implementing the new Paragon-calculated routes at three of its largest DCs, AAH is already reporting a transportation cost reduction of over $1 million per year as well as improved delivery consistency and customer service.

AAH Pharmaceuticals – a large pharmaceutical wholesaler, with over 30% market share – delivers to over 6,500 retail pharmacies, hospitals and doctors’ surgeries. Operating a fixed route network, serviced by approximately 600 vehicles out of a network of 19 DCs, AAH is responsible for the distribution of over 27,000 different products.

Faced with the challenge of overhauling a fixed route network that had evolved over a period of years, and having identified the potential benefits of using an automated system for route rationalization, AAH turned to Paragon Software Systems, the established leaders in routing and scheduling software.

Aided by logistics consultancy Logistech, AAH has been using the Paragon software to re-model its regular twice-daily delivery routes, many of which need to take pharmacy peak periods of lunch time and early evening into consideration. The software takes account of customer requirements, typical delivery quantities, time windows, drivers’ hours regulations, shift details and fleet specifications to formulate a more efficient fixed route-based transportation plan. As well as calculating improved routes and schedules, the system also calculates transportation resource requirements, drivers’ hours, mileages, vehicle utilization and the overall cost.

Now in place at three sites, the new Paragon-generated routes are resulting in cost savings. Consequently, AAH Pharmaceuticals is well on its way to exceeding its predicted annual transport cost saving of $1,000,000 by the end of the first quarter of 2003, which equates to a 10% reduction in fleet size.

“Paragon has enabled us to effectively re-evaluate our transportation operation with minimum fuss. We are already seeing huge cost savings which will only continue to increase as we roll out Paragon-calculated routes at additional sites. In addition, the accuracy of the Paragon routes has resulted in significant improvements in customer service – we are now able to guarantee customer delivery times to the nearest 15 minutes. Overall, Paragon has succeeded in making the rationalization of our longstanding fixed route network a straightforward and highly effective process.” Steve Anderson, Organisation Manager, AAH Pharmaceuticals