This study aimed to design an improvement model to reduce picking errors and increase the service level in the warehouse operations of a pharmaceutical distribution company. A comprehensive diagnostic of key performance indicators (KPIs) revealed inefficiencies in product placement, traceability, and process standardization. The proposed model integrates 5S methodology, slotting optimization, batch traceability, and KPI-based monitoring. Functional validation was conducted through process simulation. The pharmaceutical sector contributes approximately 1.2% to Peru’s GDP and is crucial for national health coverage. A regional leader firm serving over 1,500 pharmacies, currently loses about 12% of its gross monthly income due to returns, reprocessing, and delivery errors. Simulation results projected a service level increase from 70% to 95%, a reduction in picking errors from 15% to 5%, and a 50% decrease in returns. These findings suggest that the model can significantly improve operational efficiency, reduce costs, and enhance customer satisfaction. The structured approach offers a feasible solution for pharmaceutical distributors aiming to optimize warehouse performance under resource constraints.