A few thoughts & questions to stimulate thinking for a
Demand Driven Model for Healthcare:
Need to provide downstream visibility to improve efficiencies and reduce costs
Need to capture tracking information throughout the distribution channels
Need to provide more insights on delivering value to clients (draw the entire value chain closer to the client)
Manufacturing need to improve their efficiencies
Distributors need to better understand demand and how to respond to it
Need to create joint value with our trading partners
Pressure from the retail pharmacy chain to drive max efficiency in mfg’s delivery
Mfg’s need better data management, need to better understand customer demand and react with more agility to meet customer demand
Mfg’s are pushing for direct distribution system (looking to unlock the data from distributors)
Moving away from speculative model to more of a predictive model for demand planning
Cost & profit, data & accuracy are all at disjointed cross-roads between the members across the value chain (mis-aligned objectives)
Basic distrust between the various partners (discussions always require lawyers…need to move past this)
Time to evolve the healthcare value chain -------------------
Need to develop a value chain view by all parties with a focus on the customer
Same evolution took place years ago in CPG industry and now look at the level of cooperation that exists
Look at how the CPG partners have aligned their Cost, profit, data & accuracy of information.
Need to connect the demand side with the sales & operations planning across value chain members
Begin thinking Outside => In (start from customer and work backwards)
Companies will need to improve collaboration amongst themselves
Companies are paying more attention to the transactional instead of strategic aspects of collaboration
Information sharing is key !
Mfg’s are becoming much more sophisticated at delivering services
Distributors are moving towards more of an information brokering capability
Look at Annheiser-Busch and their advanced information mgmt capability
P&G and Pepsi are also tier 1 models to emulate
Inability to predict demand impacts perfect order performance, capacity utilization & supply chain costs
Need to look at value chain using Outside-In metrics to measure performance
Deep intelligence provides an ability to create demand using anticipatory capabilities
Hospitals modeling their supply chains after the CPG retailers (grocery chains)… ----------------------
Where do you think your company is in the Healthcare Value Chain Maturity level ?
Are you jointly moving (orchestrating & collaborating) markets with the members of your value chain or are you on the other end where you are reacting to your market & distribution channels (silo model of information exchange) ?
Need to move focus from Products to Services to achieve a more consistent balance
Need to leverage data and downstream information (from distributors) so you can determine how to optimize your percentage of perfect orders (migration to category management ???)
When do you focus on our customers as part of our future end customer ?? (requires collaboration with our downstream partners).
How often do you forecast demand ? (monthly, weekly, daily) ?
Again, reference the CPG model which does an excellent job of demand forecasting. Need for more real-time data to provide On Demand forecasting and supply chain management.
How quickly do you need to “sense” demand changes ?
Need to focus outwardly and move away from your inward focus.
Perfect Order Rate is Directly Proportional to your ability to reduce the time lag in forecasting & reacting to Demand (where reacting = agility). -----------------------
Establish downstream repositories for Sales Data to create insights
Establish collaboration and sharing of inventory and distribution data
Are you willing to pay more money for the additional data (and associated services) from the downstream value chain members ?
Need to re-purpose the monies for ERP to address Sales & Operations planning
Need to re-purpose these monies for aggregation & analytics to support Sales & operations planning
Need to leverage the key metric of S&OP driving success of new product launches + Supply Chain Efficiencies (a.k.a. Demand Planning).
Need to drive joint value creation across the company and eventually across the value chain. S&OP are the right team to drive this value creation.
Again, let’s shift the focus from Inside out to Outside in (ERP isn’t the driver…its’ the Customer !)