August 9, 2016
Katie Ledecky obliterated the world record Sunday night, when she won the 400m women’s freestyle swimming race at the Rio Olympics. Even though she described the win as “pure happiness,” it didn’t come easy. Ledecky swims between 55,000 to 70,000 meters a week at practice, 6 days a week.
Achieving success in the supply chain isn’t all that different. There’s that glorious moment at the end of the road when the CEO notices just how much you boosted profit margins, improved revenue and decreased inventory, but that moment doesn’t happen without lots of unseen prep work beforehand.
With the Summer Olympics upon us, we’ll be taking the opportunity to break down some of the elements you need to have a gold medal supply chain. Today, we’re taking a look at service level, and how having better supply chain intelligence can make your service level a gold medal contender.
What do gold medal service levels look like?
From the time of the first Olympics, taking place in 1896, all the way to today, new innovations and thinking have been applied to help athletes efficiently prepare to win, and to push their limits even further. The same can be said with the available technology that helps businesses support their ever-increasing service level expectations.
A best-in-class service level, measured by on-time in-full (OTIF) deliveries, for pharma companies is 99.5%. The average is 98%. While that 1.5% may not sound like a lot, it can make the difference between losing customers or gaining market share. Less than 3.5 seconds separated the gold medalist from last place in the 200m women’s individual medley in the 2016 Rio Olympics.
Here are three tips for how you can use supply chain intelligence to stay ahead of the competition:
1. Standardize service level metrics across the business
Having inconsistent calculations across plants, DCs or regions makes it hard to know how well you are actually servicing customers. When it comes to improving customer service, it’s important to use multiple standardized service metrics and know when to use one over the other to drive improvement. Allen Jacques, our VP of Pharma Supply Chain, wrote about this in-depth back in June. A good baseline metric is the industry standard on-time and in-full (OTIF) percentage, measured at both customers’ requested date as well as your promised date.
2. Get rid of information silos with end-to-end intelligence
Gold medal supply chains are able to pull data from all sources and display it in a way that makes crystal-clear sense for all stakeholders. Everyone, from the boardroom to the shop floor, should be able to see precisely what’s holding them back. FusionOps does this by providing key service level metrics across inbound supply, manufacturing sites and end customers. Diagnostic capabilities enable anyone to drill in at any point to find out exactly what went wrong to avoid similar problems in the future.
3. Get prescriptive
Relying on a select few data whizzes to collect and interpret data can take weeks when you are trying to make recommendations. It doesn’t allow your supply chain to move fast enough to take advantages of new opportunities or avoid unforeseen challenges. The human eye can also miss important data points that can lead to huge upsides for your business. FusionOps uses prescriptive analytics to automatically recommend the best course of action based on the latest information. Prescriptive inventory optimization, for example, adjusts your safety stock to achieve your desired service level goals. It can also identify late orders with inventory available to ship so you can execute on revenue and avoid cancelled orders.
To see what a gold medal supply chain looks like, look to H.D. Smith. As a pharmaceutical distributor and health care consultant, the Springfield, IL-based company had some unique supply chain challenges on its hands. While it’s critical to make sure that pharmacy and hospital shelves have the supplies they need exactly when they are needed, overstocking is costly and can significantly eat away at the bottom line. By using FusionOps to look at a variety of service level metrics and other related data points at least once a day, H.D. Smith is able to meet or exceed its service level goals 99 % of the time.
“We’ve achieved an actual reduction in inventory on hand and an improvement in service levels,” said H.D. Smith CIO David Guzman, according to CIO. “Those are the holy grails of supply chain.”
Who will win the gold next? Check back with us and we will see how a gold medal-worthy supply chain involves increased forecast accuracy. In the meantime, check out this webcast to learn how supply chain intelligence can help you with services levels and, ultimately, help you be a market leader.