Route optimization and transportation cost reduction in pharmaceutical distribution

The company and its commitment to pharmaceutical distribution in Europe

The pharmaceutical distribution sector is under increasing pressure to ensure accessibility and reliability in the delivery of medication, amid steadily rising demand, specific regulatory requirements, and the need for strict control over logistics costs. The inherent complexity of distribution networks—which connect central warehouses to thousands of delivery points—makes operational efficiency a critical factor for competitiveness.

The organization in question is a leading pharmaceutical network in Europe, with a well-established presence in over 20 countries. Its operations span the retail sales sector through physical and digital pharmacies, as well as the wholesale distribution of pharmaceutical products. The company is part of a group that invests heavily in the healthcare sector, committed to the continuous expansion of its network and to improving the accessibility and sustainability of its services.

The challenge in optimizing transportation and distribution

The distribution network identified a set of improvement opportunities with a direct impact on operating costs and the ability to respond to growing demand:

High mileage and frequent use of additional vehicles

Distributing products to pharmacies involved a high number of kilometers traveled per delivered unit, compounded by the recurring use of additional vehicles to handle demand peaks, which significantly increased transportation costs.

Low capacity utilization of shipping containers

The utilization of shipping containers was below capacity, which resulted in the need for more trips and more vehicles than were strictly necessary for the volume being distributed.

Lack of standardization of operational processes

Planning, load preparation, loading, and invoicing processes were not standardized, which made it difficult to identify deviations and monitor the operation in real time.

Data integration between systems

The lack of integration between the different systems used made it difficult to obtain reliable and consistent data for analysis and decision-making.

Regulatory and commercial restrictions

Regulatory decisions in the pharmaceutical sector, as well as contractual and commercial restrictions with external logistics partners, limited some of the gains that could otherwise have been achieved.

The approach to optimizing transportation and distribution

The improvement program was built on four fundamental pillars, supported by KAIZEN™ Events and the application of the A3 structured problem-solving methodology:

Review of distribution routes

New optimized routes were implemented, a database of delivery schedules by pharmacy was created, and lower-capacity vehicles were replaced with higher-capacity ones. A planning tool was also developed to increase the accuracy of load allocation and reduce the need for additional vehicles.

Increased utilization of shipping containers

Solutions were implemented such as automatic container initiation, that is, the system’s automatic triggering of a new container, an increase in the occupancy limit in certain picking areas, and the combination of automated systems with traditional processes, which made it possible to reduce the number of vehicles required.

Optimization of transfers and local distribution centers

A specific transfer route was integrated into a regular distribution route, and a project was launched to change the delivery model, making it possible to carry containers over to the next day and reducing the need for additional vehicles.

Operational drivers and performance management

Standards were created for loading, load preparation, and invoicing processes; a real-time shipment control process was implemented; and a visual management tool (dashboard) was developed for continuous monitoring of operational indicators. Routines were also established for gemba walks, along with an internal tool to forecast vehicle loading capacity based on actual volume.

In addition, a new minimum capacity standard was set for contracted vehicles, resulting in a replacement plan for more than 60 vehicles, to be carried out between 2026 and 2028.

Results achieved through transportation optimization

Quantitative results

• Annualized savings of 1,300,000 €, above the initial target of 900,000 €.
• A 20% increase in the number of units delivered, accompanied by a 3% increase in distribution kilometers traveled, demonstrating a significant efficiency gain.
• Reduction in distribution kilometers per 100 units, from 9.5 to 7.5.
• 25 additional vehicles spared through route optimization.
• Increase in shipping container utilization of 5% (which would have reached 6% if not for a regulatory restriction).
• Savings of more than 25,000 € from the integration of a transfer route.
• Warehouse productivity gains of more than 90,000 €.
• Ongoing initiatives with the potential to generate additional savings of more than 400,000 €/year, through the transition to smaller containers and an estimated reduction of 70% in the need for additional vehicles with the new delivery model.

Qualitative results

Collaboration between the warehouse and transportation teams was strengthened throughout the project, supported by well-structured communication and governance routines between the project team and management. The ability to resolve problems and escalate constraints was strengthened, and the weeks of on-site work fostered closer proximity to the gemba and stronger alignment among the teams.

“KAIZEN™ projects always present an opportunity to look at the day-to-day operation from a different perspective. Finding new ways to boost efficiency remains one of the most rewarding aspects of the job.” – Logistics Manager

Cases like this show that gains of this nature rarely result from a single intervention. They arise from the combination of process standardization, the optimization of routes and transport load, and data integration that supports faster decision-making — and it is precisely on these areas that Kaizen Institute works: whether through logistics and transportation consulting services, or through warehousing and distribution optimization — expertise that, as a whole, converges in our pharmaceutical consulting services.

We are committed to respecting our clients’ confidentiality. While we have altered or omitted their names, the results are genuine.