Offering over 500 products in 65+ countries, Adamed Group is one of the largest manufacturers of pharmaceuticals in Europe. Their distribution network covers the markets of Central and Eastern Europe, the Caucasus and Central Asia. With over 150 scientists, 94 pharmaceutical patents and a long presence on the market, they are a trusted partner for patients, healthcare professionals and business associates alike.
A top priority for a large manufacturer like Adamed is being able to forecast demand across multiple product lines effectively. This is a challenge as the demand for pharmaceuticals is impacted by a range of factors: marketing spend, competitor actions, seasonality and product and brand attributes must all be taken into account.
Forecasting this demand requires not only that multiple inputs be considered but that each brand be treated independently. For example, seasonality is crucial for forecasting the demand for flu medicine but significantly less important for stomachaches. Forecasts are frozen during manufacturing and distribution – it is the lead time.
Forecasting challenge
Historically, Adamed Group has relied on subject matter experts to generate 18-month forecasts across product lines. This solution was held back by several challenges. Human expertise was labor-intensive and required huge amounts of time, especially given a large number of unique products that had to be considered and forecast individually.
It was also not immediately clear how data was informing forecasting decisions, making the process less transparent than it should have been. Furthermore, if a subject matter expert left the company, so too would their knowledge. Taken together, these issues resulted in an inefficient process with poor data visibility and considerable forecasting error.
Opportunity
Seeking to modernize their forecasting and planning, Adamed approached Predica, a multinational IT consulting company that helps customers focus on larger goals and free them of repetitive tasks. As a full-stack Microsoft Partner, Predica specializes in Azure cloud & security, data analytics, machine learning, and apps development.
They also wanted to leverage predictive analytics to reduce the margin of error of their forecasts. Predica designed and developed a fully extensible platform based on Azure Data Services and Power BI that allowed Adamed to generate automated forecasts and optimize their supply chain and marketing decisions.
Architecture
In order to build an accurate forecasting model, mountains of data (both internal and external) from different business areas had to be consolidated. These included marketing spend and customer data from CRM, budget data as well as data on competitors and the attributes of medicines. Azure Data Factory was used to connect to, process and unify data from multiple disparate sources. All of the transformed data was consolidated inside Azure SQL.
Predica then used this dataset to build and train a forecasting model leveraging Azure Machine Learning Service. For each product line, numerous models were tested, including logistic regression, random forest and gradient boosted decision trees. The forecast was generated for an 18-month period, with updates to be done every month.
Once the team was satisfied with the model’s performance, they deployed it as an Azure web service, making it accessible for Power BI as well as third party applications. To ensure the forecasting remains as accurate as possible, the model is retrained on a monthly basis on new data.
Reporting
Thanks to out-of-the-box connectivity to Azure SQL, Predica steered all of Adamed’s business data directly into Power BI. Adamed could then leverage the seamless integration of Azure Machine Learning inside Power BI to enrich the data with product forecasts, all done in a couple of clicks.
Once the data was cleansed and enriched, Power BI reports could be built on top of it. Predica built a set of reports addressing business problems for different types of personas, such as the board, managers and sales representatives.
This gave analysts access to a validation report that allowed them to compare the output of the Azure Machine Learning model to both the previous system and the actuals. The superior performance they discovered gave analysts confidence in the new model. They could also now track trends and behaviors across different markets, brands and SKUs every month, further assuring the Adamed’s analysts that they could trust their new forecasting system.
The new Power BI reports enabled product managers to monitor forecast product demand for the coming 18 months. For their part, users were now able to drill into all of Adamed’s brands and to investigate competing products. This helped product managers answer important business questions like:
- Which products are likely to be market leaders?
- Based on competitor momentum, where should we prioritize marketing spend?
- How much of a given product should we manufacture in the next 3 months?
Results
Predica’s Azure and Power BI solution allowed Adamed to fully automate its forecasting process. The centralized data strategy, meanwhile, saved the company time and vastly improved visibility into data and insights.
Finally, adopting a data-driven approach reduced Adamed’s forecast errors to less than 5% across all of its product lines.
