Where Is the Pharmaceutical Industry on Supply Chain Maturity? What Can They Learn from Consumer...
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Transcript of Where Is the Pharmaceutical Industry on Supply Chain Maturity? What Can They Learn from Consumer...
Building the Data-Driven Healthcare Channel
Improve Profitability and Unlock Shareholder Value Lora Cecere, Founder of Supply Chain Insights
Disclaimer: I am a Skeptic
A Social Scientist of Sorts….
A Curmudgeon…
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A Fortune-teller of Sorts….
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I Write for the Supply Chain Leader
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9 out of 10 Supply Chains are Stuck
Progress Across Industries
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Industry Snapshots (2006-2013)Industry Year –over-Year
Revenue GrowthOperating
MarginInventory
TurnsCash-to-Cash
CycleRevenue per
Employee (K$)SG&A Ratio
Retail Apparel Industry
18%39%
0.3927%
0505%
6826%
32518%
27%05%
Apparel Manufacturing Industry
14%82%
0.1232%
0568%
15008%
400355%
27%63%
Mass Retail Industry
09%50%
0.0620%
0606%
03148%
35048%
23%6%
Beverage Industry
09%61%
0.1916%
0204%
5346%
512 NC
24% 16%
Pharmaceutical Industry
08%47%
0.2329%
0316%
15547%
57232%
27%08%
Chemical Industry
08%45%
0.1010%
0604%
8723%
55723%
14%27%
Medical Device Industry
06%38%
0.1432%
0213%
20616%
35112%
34%04%
Grocery Retail Industry
06%31%
0.0337%
1701%
1050%
40554%
14%06%
Consumer Packaged Goods
05%25%
0.1473%
08482%
7217%
33314%
26% 09%
Food Industry
05%55%
0.1019%
07 17%
4004%
53455%
20% 18%
Progress Across Industries
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Today’s Functional Organizational
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Today’s Functional Organizational
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Growing Demand Volatility
A Project-based Focus
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What We Expected
My Learning
A Supply Chain is a Complex System
with Complex Processes
with Increasing Complexity
The Supply Chain Effective Frontier
Correlation to Market Capitalization
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Orbit Chart: Wal-Mart(Inventory Turns and Operating Margin)
Orbit Chart: Apple (Inventory Turns and Operating Margin)
Orbit Charts: Dow Chemical Company
Source: Supply Chain Insights LLC, Corporate Annual Reports 2006-2014
-0.10 0.00 0.10 0.20 0.30 0.40 0.50 0.604.0
5.0
6.0
7.0
8.0
9.0
10.0
2006
Eli Lilly and CompanyOperating Margin
2014
NVO0.31, 6.48
2014
2006
Best Scenario
LLY0.24, 8.30
Average (Operating Margin, Inventory Turns)
Inve
ntor
y Tu
rns
Novo Nordisk Making Progress
Measuring Improvement
Overall Ranking per Company
Balance: Return on Invested Capital & Revenue Growth Vector Trajectory (30%)Strength: Inventory Turns & Operating Margin Vector Trajectory (30% of score)Resiliency: Inventory Turns & Operating Margin Mean Distance (30%)𝑺𝒖𝒑𝒑𝒍𝒚 𝑪𝒉𝒂𝒊𝒏 𝑰𝒏𝒅𝒆𝒙=
𝟏𝟑𝑩𝒂𝒍𝒂𝒏𝒄𝒆 𝑭𝒂𝒄𝒕𝒐𝒓+
𝟏𝟑 𝑺𝒕𝒓𝒆𝒏𝒈𝒕𝒉 𝑭𝒂𝒄𝒕𝒐𝒓+
𝟏𝟑 𝑹𝒆𝒔𝒊𝒍𝒊𝒆𝒏𝒄𝒚 𝑭𝒂𝒄𝒕𝒐𝒓
Defining Supply Chain Excellence
PerformanceBeats the industry
average for operating margin, inventory turns and ROIC for 2006-2014
and 2009-2014
ImprovementRanks above peer
group average on The Supply Chain Index for
2006-2014 or 2009-2014
+
The Supply Chains to Admire
What Drives Improvement?
• Continuity of leadership• Supply chain talent development• Focus on a multi-year supply chain strategy• Clear governance to guide cross-functional decision-making
• Strength in horizontal processes• Excellence in supply chain planning, network design and inventory management
Building the Data-Driven Healthcare Channel
What Can we Learn from Other Industries?
Retail & Consumer Goods Collaboration
SHARED VISION + SKILLS + INCENTIVE + RESOURCES + PLAN + LEADERSHIP = CHANGE
SKILLS + INCENTIVE + RESOURCES + PLAN = CONFUSION
SHARED VISION + INCENTIVE + RESOURCES + PLAN + LEADERSHIP = ANXIETY
SHARED VISION + SKILLS + INCENTIVE + RESOURCES + LEADERSHIP = FALSE STARTS
SHARED VISION + SKILLS + INCENTIVE + PLAN + LEADERSHIP = FRUSTRATION
SHARED VISION + SKILLS + RESOURCES + PLAN + LEADERSHIP = GRADUAL
CHANGE
Looking Back….
Bar codes were first used at Marsh Supermarket in 1968
Vendor Managed Inventory
Retail Scorecards
The Result
Confluence of Technologies
Supply Chains Don’t Play by the Rules
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But, what if
they could?
Analytics Maturity
Having a New Dialogue
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Currently we Work in the Dark Blue Circle
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Today 9 out of 10 supply chains are stuck.We must learn from the past to adopt new approaches for the future.The focus needs to be on new outcomes for the patient and for health/wellness.
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Questions?
For Additional Reading
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WileyDecember 2012
Wiley December 2014
Self-publishedSeptember 2014
Self-publishedSeptember 2015
Founder: Lora Cecere
• Founder of Supply Chain Insights• “LinkedIn Influencer”• Guest blogger for Forbes• Author of 4 books: Bricks Matter (2012), Shaman’s Journal (2014)
and Supply Chain Metrics That Matter (December 2014), Shaman’s Journal (2014)• Partner at Altimeter Group (leader in open research)• 7 years of Management Experience leading Analyst Teams at Gartner
and AMR Research• 8 years Experience in Marketing and Selling Supply Chain Software at Descartes
Systems Group and Manugistics (now JDA)• 15 Years Leading teams in Manufacturing and Distribution operations for Clorox,
Kraft/General Foods, Nestle/Dreyers Grand Ice Cream and Procter & Gamble.
Contact Information: • Email: [email protected]• Blog: www.supplychainshaman.com (10,000 pageviews/month)• Forbes: http://www.forbes.com/search/?q=lora+cecere• Twitter: lcecere (6500 followers)• LinkedIn: linkedin.com/pub/lora-cecere/0/196/573 (50,000 followers)
About Lora
Thank you
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integrichain.com 609.806.5055
888.362.0867 or 609.986.1520www.integrichain.com/blog
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