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A simulation study to quantify opportunities for E-business in a drug distribution system

This paper presents and quantifies some of the opportunities of E -business tools to material flow effectiveness. The study was developed at a Brazilian drug distribution system. Results are based on comparing historical data against the simulation of an alternative, which manages the distribution process employing an E -business solution embedded with simple replenishment methods to coordinate the flow of materials along the distribution system (manufacturer, wholesalers and drug retailers). Simulation results show that there is an opportunity to reduce total cost and improve service level to drug stores (and as a result to consumers) at the same time. Another important result was the reduction of the bullwhip effect.