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SCRC Article Library: Driving Change in the Pharmaceutical Industry: Getting Started - Part 2

Driving Change in the Pharmaceutical Industry: Getting Started - Part 2

Published on: Feb, 11, 2004

by: Rob Handfield


A number of other interesting elements came up in recent discussions I have had with pharmaceutical executives. The challenges discussed in the earlier version of this article must be met head on with a number of important changes, that are also applicable to many other industries.

Selling the Benefits is Key
In order to truly create collaborative solutions, people working in the logistics environment will need to think about how they can sell the benefits to other people within their organization. This won’t happen overnight, but will rather take place “one person at a time.” Since many enterprises are driven so much by marketing and R&D, it would be a good idea to include these people on process improvement teams. This ensures that they will get on board, support the idea, and identify the benefits. Everyone is already too busy, so this is a difficult proposition to sell – but must occur if logistics improvement is to really occur.

Roll up the Numbers
One of the ways that you can convince others to join teams is to capture the benefits of logistics improvements. A common requirement here is to review data from different sources on a regular basis to enable “adjustments” to current strategies and ensure that the outcome is favorable. For instance, recent research suggests that the first seven weeks of new product demand data is enough to establish a trend for planning – so why wait for twelve weeks of data before acting to plan on capacity, inventory, and other elements of logistics and manufacturing strategy?

Another critical element in establishing the credibility of logistics is to get someone from finance on your team to “validate” the numbers. A good finance person should be able to estimate inventory costs, establish cost savings through reduced complexity, less material handling, less obsolescence, and improved customer service. By establishing “total logistics cost” models on a single demand stream, you can quickly get others on board once you begin selling the benefits.

Run a Pilot
Don’t expect change overnight. Rather, it is better to run a small pilot improvement project, that is successful, and roll up the benefits with the aforementioned participation of finance, marketing, and other key players. A key to a successful pilot is ensuring that the data collection process is smooth, and that you collect both quantitative results, as well as qualitative insights from the supply chain participants. For example, a pilot run of a transportation event management system was studied carefully, prior to deploying the full project. It is also a good idea to collect product-level, geographical-level, and daily demand-level data, to be able to spot different trends and elements that you haven’t thought about. This should also provide you with some clues about what worked, what didn’t work, why it didn’t work, and how to alter the process in the future.

Don’t be Afraid to Share Data
In today’s current environment, the security of data appears to be sacrosanct, and many companies are leery of sharing any type of data with other suppliers or customers, lest it fall into the wrong hands. However, upon reflection, this type of restraint is largely unfounded. Rather, companies should ask themselves what is the cost of NOT sharing data, which may include lost sales, missed deliveries, obsolete inventory, and poorly planned promotions. There will always be a risk with sharing information with any other party, so in order to create a truly integrated value system out of our supply chains, we need to break the mold and try something new. Note that not everyone should have access to the data. If you’ve thought through this process, you should be able to identify the critical partners that can use the data to benefit both their operation, as well as yours. Here again – go with a pilot approach, sharing data with only a single supplier or distributor. This should reveal insights into how we use the data? What data is needed and how soon in advance is it needed? What happens if the data is not provided? Etc. By learning in this manner, we should be able to understand the process that is needed to be able to share information, and the criteria required for selecting those supply chain participants that we wish to share it with.

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