Seeking a new 3PL provider to enhance quality and save costs

Background

THE GREEK SUBSIDIARY OF A BELGIAN PHARMACEUTICAL COMPANY WAS NO LONGER SATISFIED WITH ITS 3PL (THIRD-PARTY LOGISTICS) PROVIDER.

The Greek subsidiary of a Belgian pharmaceutical company was no longer satisfied with its 3PL (third-party logistics) provider, responsible for distributing its products across mainland Greece and, particularly, the islands. The logistical challenges in these regions are significant, involving complex factors such as ferry transport, remote locations, and extended delivery times.

The current provider struggled to meet KPIs, especially concerning quality standards (GXP) for pharmaceutical distribution (timeliness, temperature control, storage, packaging, etc.), with performance declining since the beginning of the collaboration. Additionally, the contract, which had been in place for eight years without any revisions, no longer met the company’s evolving needs or the increasing demands for quality standards.

Furthermore, costs were spiraling, particularly in handling and transportation, due to poor anticipation in product routing, inadequate communication with the client, and underestimation of packaging and labeling expenses.

As a result, the Belgian company turned to Altesia Procurement to find a replacement for the failing logistics provider.

The objective: to elevate service quality and establish a long-term partnership with a reliable supplier.

Approach

Altesia assigned this mission to its procurement consultant, Aurélien Huyghens. Aurélien began by meeting with the logistics manager of the Greek subsidiary, who had raised concerns about the poor performance of the subcontractor. He then took the full lead of the project, managing every aspect from start to finish through several key steps:

1. Definition of the needs

Aurélien started by consulting all internal stakeholders, beyond his direct client, the logistics manager, to ensure a perfect alignment of needs. He worked closely with:

The Operations Director
The Quality Manager to ensure compliance with GXP standards
The Controlling Department to understand the financial impact and streamline financial processes.

The identified needs included:

A streamlined communication process between the Belgian subsidiary and the subcontractor, ensuring seamless integration into the pharmaceutical group's logistics chain and full adherence to industry best practices
Establishment of a quality charter
Commercial requirements, including easier contract termination options

Based on these needs, Aurélien defined a list of KPIs and a SLA, and set penalties and incentives tied to these KPIs.

He also focused on cost rationalization and precise scope definition.

Example 1:, the previous supplier used excessive labeling where a single label would suffice, allowing cost reductions without compromising quality.

Example 2: the supplier could consolidate order management into a few days per week for greater efficiency. A new Master Service Agreement (MSA) was drafted to incorporate these elements.

2. Market analysis and supplier shortlisting

Building on the defined needs, Aurélien created a Request for Information (RFI) and collaborated with a market intelligence firm to survey the 3PL pharmaceutical subcontractor market in Greece.

Seven 3PL companies were identified: four Greek (including the previous subcontractor) and three international. The smaller firms, unable to serve all the Greek islands, were automatically excluded. The remaining companies were invited to participate in the next stage.

3. RFP and selection process

Aurélien managed the entire process, from drafting the requirements to the final selection of suppliers:

- RFP drafting:

Aurélien crafted the Request for Proposal (RFP), coordinating inputs from internal stakeholders and ensuring it was precise and aligned with the identified needs. This RFP was then distributed via an online bidding platform, ensuring an impartial evaluation of the suppliers.

- Pre-Audit of suppliers:

To ensure the reliability of the shortlisted candidates, Aurélien suggested a pre-audit. A quality control team was sent to inspect the warehouses of the two shortlisted suppliers, assessing their facilities and compliance with the required standards.

- Process management:

Aurélien developed a detailed agenda for the entire process, covering all key steps from audits to meetings. He organized and facilitated the bid defense meetings and Q&A sessions, allowing suppliers to present their proposals and address stakeholders' questions.

- SPOC and stakeholder management:

As the single point of contact for the suppliers, Aurélien ensured smooth communication. He also managed the internal stakeholders, organizing meetings, facilitating discussions, and challenging both the suppliers and client expectations. Through this work, he ensured a pragmatic, realistic, and ethical approach, laying the groundwork for a long-term partnership based on mutual interests.

Thanks to this rigorous approach and smooth process, three Greek 3PL companies, competitors of the former provider, were shortlisted and had the opportunity to present their proposals.

Results

With Aurélien’s support, the company successfully signed a contract with a new 3PL provider for secondary distribution across Greece, including the islands.

With Aurélien’s support, the company successfully signed a contract with a new 3PL provider. This new partnership allowed the company to break free from the constraints imposed by its former provider and revitalize the Greek market.

Now, the company ensures strict adherence to its rules and needs while benefiting from new procedures that significantly improve communication with the supplier. The contract, far better structured than before, is built on clearly defined KPIs and a SLA, setting the stage for a long-term partnership.

Best of all, the new contract didn’t just enhance service quality—it also led to substantial cost savings. By rationalizing needs and integrating more options into the base price, the company was able to reduce its costs by €300,000 per year.

The client expressed its high satisfaction towards the collaboration with Aurélien:

" Aurélien always had a positive approach in challenges. One thing that was really impressive is that he captured the “feeling” of the Greek market needs and vendors capabilities even from distance."