Practical Data in an Insights-driven World
By Kevin Hallinan |
Without product differentiation, access and availability become even more important as lack of access could mean a switch and a loss in market share.
KnowledgeDriven: How are brand manufacturers and generic manufacturers looking at data differently — and why?
Kevin Hallinan: In terms of distribution data, brand and generic manufacturers have different needs based on their evolution, respective business models and internal analytics capabilities.
For brand manufacturers, basic sales and inventory insights are not enough. These companies evolved their own data reporting and analytics when the fee-for-service model first arose around 2004 or have subsequently leveraged third parties to provide these insights. For these manufacturers, end-to-end supply chain analytics are required to surpass the analytics capabilities that they have in-house. These manufacturers are looking for ways to leverage data and analytics to optimize their interactions with their distribution partners both operationally and financially.
For generic manufacturers, basic sales and inventory insights are very much in demand as many of these companies have not made the internal analytics investments to develop these capabilities. Moreover, these manufacturers want the same operational and financial insights that brand manufacturers have, but they depend more on us for the basic sales and inventory insights. These manufacturers are also more sensitive to managing their service levels and formulary position. Without product differentiation, access and availability of the product whenever it is needed become even more important as lack of access could mean a switch and a loss in market share.
Despite these differences, both types of manufacturers share similar high-level goals around optimizing product access for the patient.
KD: When it comes to supply chain data, what's available, how is it used and what insights can be drawn from it?
KH: From the time a product is ordered, through order confirmation, shipment, distribution center receipt, storage in inventory, the customer sales event and then the prescription to the patient, a large amount of metadata is generated along the way. You can think of this metadata as the breadcrumbs that mark the path of the product from the order event through prescription.
Additionally, this journey includes multiple data exchanges or “handshakes” of data between the wholesaler and manufacturer, marking the major steps and business events, such as the order event, shipment, receipt, validation of inventory and sales information. Each one of these handshakes offers a rich opportunity for the wholesaler and manufacturer to collaborate and exchange data to align on the meaning of the event. Some questions include: Has the order been fully acknowledged; will the order be shipped on time; will the order be in one or more shipments; how long did the carrier take to deliver the product versus what was planned; what’s the product’s condition when it arrives; which distribution center is it stored in; and what customer has it been sold to.
The challenge for manufacturers comes when they have to sift through all of this data and make sense of it, as each of the above data exchanges occurs daily. Keep in mind, 3.2 million units are shipped in the average day. This means that, within our technology infrastructure, we are capturing that shipment data at the unit level (or 3.2 million times) and tracking that item’s shipment as it moves through our 26 distribution centers and, ultimately, to our 50,000-plus customers in all different classes of trade and to more than 15,000 retail pharmacies. The manufacturer receives these activity reports from us on a daily basis and needs major data storage infrastructure and analytics investments to make any of this information actionable.
KD: What are the gaps in what’s currently available?
KH: While many focus on sales and inventory monitoring, significant analytics and insight gaps exist from the time the product is ordered through the time it is stored in inventory and then after the sale to the pharmacy when chargebacks and returns are processed. Distribution partners should be filling these gaps with data insights tools and order analytics platforms that provide actionable information along this entire journey.
The right tool will reveal big data insights to manufacturers in the most usable, actionable way possible (i.e., delivery lead times comparisons and quantity comparisons for each step in the process — ordered vs. shipped, shipped vs. received and overall ordered vs. received).
The fact is, if you don’t understand everything that happens to a product before it gets into inventory, you’re not managing access.
KD: What issues do these gaps cause?
KH: Without insight into the order fulfillment process and the chargebacks and returns process, manufacturers can’t fully optimize their supply chain management or achieve their goal of optimizing fill rate or access to the patient.
For example, if a manufacturer incorrectly confirms orders or they use carriers that are consistently late or damaging product, they will not be able to optimize access. In the current state, manufacturers don’t have the tools to proactively identify and address these issues in real-time. They often have to wait for a quarterly scorecard from the distributor indicating performance issues, and then, each manufacturer needs to perform internal analysis to determine the root cause. While all of this is happening, their supply chain is not as effective as it could be and they aren’t optimizing access for patients.
In terms of returns and chargebacks, again it comes down to access and better operational control of financials. For returns, based on the product’s condition and expiry, a manufacturer needs to understand these details in order to ensure adequate access and sufficient product volumes exist to meet patient needs. If a lot of product will soon reach expiry, new orders must be placed to replenish the supply chain.
From a financial perspective, understanding returns trends is also critical so a manufacturer can manage its future financial exposure. Similarly, chargebacks analytics help a manufacturer understand its net price on a per-product basis and chargebacks trends to better manage financials. In the current state without these tools, a manufacturer faces an uphill battle in proactively managing these operational processes that have a large financial impact.
KD: How do manufacturers work around that and to what benefit? What are we doing to help?
KH: Today’s manufacturers are reacting to these specific challenges instead of being able to proactively identify and address the bigger underlying issues. While they often successfully address the specific challenges (i.e., service level declines, demand shifts, unanticipated returns activity, shipping delays), they still lack the big-picture views to be able to see trends and identify root causes to solve the bigger underlying issues and drive improvements in their operational processes (i.e., order fulfillment, shipment to distribution centers, returns and chargebacks management). Our vision is to work with our manufacturer partners with data insight tools to help them proactively manage these issues on a daily basis. Because the fact is, if you don’t understand everything that happens to a product before it gets into inventory, you’re not managing access.
KD: What changes do manufacturers ask for?
KH: Manufacturers look for us to partner with them to simplify the complexity of their day-to-day operations. Specifically, they ask for end-to-end supply chain analytics and integrated views, and they have been extremely excited about what we’ve been able to offer them and our roadmap for the future.
In fact, we are already closing the gap mentioned for generics manufacturers, particularly as it relates to insights from the product order event through inventory storage. Our new order analytics platform within our insights and reporting engine provides our manufacturers with unprecedented time- and quantity-driven insights into AmerisourceBergen’s purchase order fulfillment process for generic products — delivery lead times comparisons and quantity comparisons for each step in the process (ordered vs. shipped, shipped vs. received and overall ordered vs. received) plus detailed receiving conditions. This module is an industry first and has been specifically requested by our generics manufacturer partners.