Harnessing the competitive advantage of South Africa’s direct pharmaceutical distribution model in Europe using SCOR “Lite”.

JG COWPER MSc. Bio Medical Eng UTI Strategic Services BI Supply Chain Specialist

International pharmaceutical manufacturers desire, both at a strategic planning and execution level, that their primary logistics supply chain partners offer an integrated services platform to gain visibility and derive insights into their distribution channels.

This presentation will detail how a simple rendition of SCOR has been used to encourage adoption of this direct distribution business model abroad and will show case how such a supply chain visibility tool can enable order responsiveness, the management of inventory levels and the mitigation of financial risk.

ABSTRACT SAPICS 2007

South African Pharma direct distribution value proposition

• Direct to pharmacy channel model• Ability to adapt to scale• Maintain product integrity• Migrate from a trading focus to a

fee for professional service • Accurate sales and marketing

detail• Responsive supply chain

performance

Multi-nationals delivering direct in South Africa

The Signature of Quality

®

Migrating a direct distribution business model abroad

ConsumerSupplier

Pharmaceutical Supply Chain Model

Plan

Deliver

Return

Manufacturer Customer

Make Make DeliverMakeSource SourceDeliver

Channel to Market

Source

Return Return

ReturnReturn Return Return

Source Deliver

Return

Pharmaceutical Multi-National

Chemical Supplier

Pharmacy Hospital Doctors Retailer

PatientDirect

Distributor Wholesaler

SCOR enables business model description across different European countries

Italy – Due Diligence

Greece -- Convert a wholesaler into a direct distributor

Germany– Separate Product and Information Flows

UK – Response to RFP

Slovakia – Integrated Service offering packaged into a Control Tower

Italy – SCOR handles the language barrier to facilitate a due diligence assessment.

PLAN (P1-5)

SOURCE (S1) MAKE (M1) DELIVER (D1)

RTSource (SR1) RTDeliver (DR1,3)

ENABLE

Greece- SCOR assist in defining the roles enabling a wholesaler to become a direct distributor

LSP

PLAN (P1-5)

SOURCE (S1) MAKE (M1) DELIVER (D1)

RTSource (SR1) RTDeliver (DR1,3)

ENABLE

Channels to Market (Germany 2005)

Germany - SCOR shows the value of separating product and data flows.

UK – SCOR gives context to a RFP

11

22

33

44

55

66

77

88

99

1010

Network design opportunity exposed through SCOR Mapping – Propose HUB building sequence

Slovakia – SCOR exposes the need for an integrated logistics services platform meeting strategic requirements

ConsumerSupplier

Pharmaceutical Supply Chain Model

Plan

Deliver

Return

Manufacturer Customer

Make Make DeliverMakeSource SourceDeliver

Channel to Market

Source

Return Return

ReturnReturn Return Return

Source Deliver

Return

Pharmaceutical Multi-National

Chemical Supplier

Pharmacy Hospital Doctors Retailer

PatientDirect

Distributor Wholesaler

Pharmaceutical Supply Chain Control TowerPharmaceutical Supply Chain Control Tower

International pharmaceutical manufacturers desire, both at a strategic planning and execution level, that their primary logistics supply chain partners offer an integrated services platform to gain visibility and derive insights into their distribution channels.

This presentation will detail how a simple rendition of SCOR has been used to encourage adoption of this direct distribution business model abroad and will show case how such a supply chain visibility tool can enable order responsiveness, the management of inventory levels and the mitigation of financial risk.

Prof Langley 2006 – Georgia Tech

IT capabilities are a key success factor for client bidsR

ela

tio

nsh

ips

Strategic/Planning

TransactionalVisibility

Clearing &Forwarding

WarehousingDistribution Supply ChainEngineering

Director of Account Solutions

Operational Manager

60% of clients specifically assess a 3PL’sIT capabilities when selecting a provider

(Capgemini Survey, 2006)

Single service Multiple services

Prof Langley 2007 – Georgia Tech

Visibility Tools -

Web-Enabled Communications -

Transportation Man (Execution) -

Warehouse/DC Management -

RFID -

Transportation Man (Planning) -

Collaboration Tools -

Supplier Relationship Man -

Transportation Exchange -

Supply Chain Planning -

Customer Relationship Man -

Customer Order Management -

Yard Management -

Source: 2006 Third-party Logistics – results and findings of the 11 th annual survey

Mu

st H

avesE

merg

ing

N

eeds

Clients are requiring an integrated systems offering supporting a range of logistics services

Re

lati

on

ship

s

Single service Multiple services

VISIBILITY & CONTROL

PLANNING & OPTIMISATION

Must Haves

Emerging Needs

Integrated Supply Chain Services Portfolio

Logistics Services

Logistics ServicesPlanning and Optimisation

-------------------------------------Visibility & Control

How does the Pharma Control Tower map to client strategy?

ADAPT TO SCALE

DIRECT TO PHARMACY

PHARMALOGISTICSSTRATEGY

Pharmaceutical Control Tower

What supports the Pharma Control Tower Functionality ?

Clients have outsourced the logistics function so hide the detail and offer the insights.

Control Tower Platform

Management of inventory – Pipeline Visibility

Order Fulfillment Accuracy

• Orderline completed versus orderlines requested

Sales Growth

• Orderline completed versus orderlines requested

Mitigation of financial risk – DSO Analysis

• Debtors age analysis

Lessons learnt to date, this project has illustrated that:

- SA is a beachhead for supply chain innovation

- SA logistics solutions can be world firsts

- International pharma companies are looking at logistics partners to offer them competitive advantage

- Visibility and control platforms offer a compelling value proposition that differentiate.

- Migrating innovation “overseas” requires significant investment.

QUESTIONS ?