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Hospital Supply Chain Survey Points to Needs for Broader Education and Alignment Across Healthcare Delivery Support Supply Chains

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Global integrated healthcare services and products distribution company Cardinal Health has released findings of a recent Hospital Supply Chain Survey and the results once again reinforce the need for far more supply chain management focused efficiencies among hospitals, along with broader stakeholder alignment across healthcare delivery supply chains.  _DSC0083

The survey, conducted in late October 2016 included responses from slightly over 400 doctors, nurses, service line leaders or supply chain administrators. What especially caught our Supply Chain Matters interest were the findings indicating that 57 percent of physicians did not have the right products needed during a planned procedure. The study highlighted that one in four hospital staff have observed or heard of an expired product being used on a patient and 18 percent have observed or heard of a patient being harmed due to a lack of necessary supplies at the right time. The responses further indicate that nearly 20 percent of front-line caregiver time is consumed by supply chain management expediting or follow-up which then amplifies further to service line and other administrators.

A fundamental tenet of our community is that the supply chain exists to serve the needs of the end-customer, and in the case of healthcare, patients and frontline caregivers. Ladies and gentlemen of the healthcare focused supply chain community- these findings point to continuing systemic issues in your supply chain processes and they well should be garnering added calls-to-action.

Then again, from our lens, it is yet another indicator of the current stakeholder misalignments across healthcare supply chains. While most care givers, those on the front lines for delivering quality patient care and managing healthcare delivery costs, believe that the seamless operation of the supply chain is critically important, the other supply chain participants seemed aligned to other conflicting interests.

For the first time, we included pharmaceutical and drug supply chains in our industry-specific predictions for 2017. The principal reasons were twofold and somewhat inter-related. The increasingly global reach of the industry’s various supply chains is adding continued possibilities for risk and disruption. According to the U.S. Department of Commerce, the United States is now the biggest importer of pharmaceuticals from other countries. Pharmaceutical and drug production is now global in scope. Incidents of counterfeit drugs and medicines have been a constant challenge and lately, conformance to generally accepted production practices have become troublesome. Second, within the U.S. especially, there remains an enormous groundswell of political and social backlash directed at what is perceived as artificially high and inflated pricing stemming from conflicting buyer self-interests across the industry’s extended supply chain. Pharmacy Benefit Managers (PBM’s) negotiate pharmaceutical and drug prices on behalf of heath insurance plans and de-facto now include a far higher share of control over the supply network. The latter challenge alone is beyond explanation in a single blog commentary.

Latest Survey Responses

Survey responses from this latest Cardinal sponsored survey indicate a fair to poor rating among 52 percent of respondents for having the right product when needed, 53 percent indicate a fair to poor rating for the ability to keep track of recalled products or tracking product expirations, and 56 percent a fair to poor rating for the ability to manage inventory volumes. The full details of this hospital supply chain survey report can be downloaded at this Cardinal Health web link.

Let us be blunt and to the point. Processes for supporting timely supply of right product with the ability to manage updated and timely product information have proven business process solutions that have been acquired both in healthcare process pilots and from many other industries. Likewise, the technology needed to support accurate and timely product data is available today in either new product labeling, active item-level chip or other Internet of Things (IoT) enabling technology.  The missing element seems to always come back to the alignment of stakeholders across the extended supply chain and to leveraging process and technology investments consistently across the healthcare supply chain. Buying influence is a big determinant as well, especially when state and federal government are factored as buyer influences.

Frontline care givers should not be having to constantly manage supply and inventory tasks and similarly, hospital supply chain administrators should be allocating time to occasional supply and demand alignment exceptions. As the survey responses and the Cardinal report findings reinforce, such time is better freed-up for patient time.  Once more, today’s integrated supply chain planning and customer fulfillment systems are up to the task for planning healthcare supply needs.

We agree completely with the conclusion that improvements are long overdue and they are centered on the current conflicting stake holding interests. However, supply chain inventory management is basic and has proven solutions.

Again, by our lens, hospital teams should be viewing these challenges as both local supply chain management education and in external supply chain network-wide process alignment perspectives. Seek out supply chain management business process and technology experts for education. Work with your major supply distributors and PBM’s on the most efficient and cost affordable means to align with existing automated supply response management processes that link both manufacturers, distributors, and your local facilities in extended supply chain inventory supply visibility.  As we have noted in a prior Supply Chain Matters commentary, Cardinal Health supports its own supply chain innovation laboratory. Likewise, other distributors and manufacturers are willing to collaborate on overall supply chain visibility and addressing more automated local supply chain processes and decision-making needs.

This blog and this Editor is willing to do our part in broadening industry education and in visibility to new, more cost affordable technology or business practices. However, we as healthcare consumers, along with frontline healthcare providers need to be far more vocal in influencing the broader industry that local supply chain management supply and decision-making needs need to be far more intelligent and far more simplified for hospitals and services providers.

Bob Ferrari

© Copyright 2016. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.

 


Supply Chain Matters Attendance at Oracle Modern Supply Chain Experience Conference- Part Five Summary Impressions

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Supply Chain Matters has been attending the Oracle Modern Supply Chain Experience conference being held this week in San Jose California, drawing over 2800 attendees.  OracleSCME_2

In our Part One posting, we provided some highlights from the first’s day’s keynotes.

On our Part Two posting, we shared impressions of the Oracle S&OP Cloud application currently in-development.

Our Part Three posting provided highlights of the second day’s keynotes that were focused on future dimensions of transformation.

In Part Four, I shared impressions related to supply chain related transformation, and how this conference again reinforced the increased external forces of change impacting many industry supply chains.

In this final conference wrap-up commentary, we share, in no particular order, our takeaway impressions from the various sessions and conversations we were able to participate in this week.

Let’s begin with attendance, namely upwards of 2800 attendees at a supply chain management information technology focused conference. That ladies and gentlemen, is quite extraordinary and significant.  And yes, for those cynics out there, not all wore Oracle on their conference badge. Our sense from various conference Q&A and attendee indicators during sessions, many came to learn and better educate their organizations on Oracle’s evolving platform and applications strategies related to the broad umbrella of processes within supply chain management and to the implications of Cloud.

While we once were critical of Oracle regarding our perception of a slow, somewhat glacial development pace involving Oracle SCM Cloud, this week’s event demonstrated much more momentum that is underway, including the new Cloud S&OP application highlighted in our Part Two commentary. Attendees were informed that over 1300 customers are now on various transition paths involved with Oracle SCM Cloud, which is a doubling of last year’s number. Attendees further witnessed a real-time manifestation of the development release dynamic in one of the on-stage keynotes.  Oracle CEO Safra Katz was featured in a fireside chat format, and among her many remarks to the audience, she indicated that one of the company’s key strategic goals was to implement Oracle SCM Cloud within the company’s hardware manufacturing operations by the end of this calendar year. To that end, she indicated her view that development has to deliver at faster pace. That should have resonated with IT and systems implementation attendees. When joined onstage by Cindy Reese, Senior Vice President of Worldwide Operations, both acknowledged a little sweating and concern to make the December implementation milestone, but that in the end, it will get done. We highlight this since we felt attendees should have perceived that even Oracle internal operations teams are not immune to new technology implementation and change management dynamics. Reese indicated to the audience that her teams needed the Cloud based technology because they could not execute required supply chain process changes needing to get done with the existing Oracle E-Business Suite capabilities. “The architecture is so much simpler than EBS and the built-in analytics of Cloud is a huge benefit for our supply planners.  It’s a game changer.”

Supply Chain Matters will keep a keen eye on Oracle’s own implementation and hopefully have some added updates for readers.

We sat in on an Oracle Procurement solution roadmap update session and learned that Oracle will begin to partner with E2open in extending procurement process needs across a B2B network. In fact, there was another session at the conference to educate attendees on the initial phases. This is noteworthy and bears watching.

We planned our agenda to attend as many customer focused sessions as we could. Besides the theme of increased external business change that we shared in Part Four, we noted further common themes reflecting that upgrading of existing behind-the-firewall applications has indeed been determined to be too disruptive for many supply chain organizations. That has led to the motivation of customers to begin to either pilot elements of SCM Cloud, begin efforts to develop strategies for phasing into Cloud, or gather more education and feedback from Oracle customers and partners on best strategies to take advantage of what Cloud can provide over the coming months. This is different than last year’s conference in that customers appear to be more engaged in various levels of active interest. Obviously, this implies a critical phase for Oracle in assuring that pilot customers have what they need to insure successful current and future phases of SCM Cloud.

One of the albeit, indirect benefits of Oracle’s full embodiment of Cloud is the development work being performed in improving the user level productivity and interfaces of existing licensed Oracle E-Business Suite, Oracle Procurement, and Oracle Advanced Supply Chain Planning (ASCP) applications.  Most all the roadmap sessions we attended regarding these application suites made mention of improved user interfaces and user productivity enhancements. They occurred because a lot of the functionality had to be moved to Cloud instances as well, which implied needs to improve both. Such efforts were further high on the priority lists of Oracle customer advisory teams, and hopefully, will yield a win-win for both camps.

This author was impressed with Oracle’s ongoing efforts to provide deeper analytics and more predictive decision making support features in many of the Cloud based applications. This is bound to pay dividends for customers.

Before closing this Modern Supply Chain Conference impressions commentary, we would be remiss in not complimenting Oracle’s SCM conference planning team in once again, granting the opportunity for more than 120 university students majoring in supply chain management to attend and participate in a Future Supply Chain Leaders tract of sessions. This year, an invitation was also extended to select students from Design Tech High School, a free public charter high school, authorized by the San Mateo Union High School District, that includes co-sponsorship from Oracle and eventual physical presence on the Oracle headquarters campus. We declared last year that this was a great way to garner interest levels in careers in supply chain management and we again urge other tech providers to consider such efforts.

Oracle CEO Safra Katz also chaired a Woman in Supply Chain Management luncheon, and we heard some great feedback regarding the value of that event.

Conference organizers should further be complimented in taking to heart attendee feedback from previous year’s events. They asked for more customer focused educational sessions and more opportunities for peer networking and exchange. Again, from our observations, that seem to be accomplished. We were also a bit tired of previous endless sessions of a solution marketing context. This year’s sessions were more advisory and educational.

We leave the conference with upwards of 20 pages of notes, and we will continue to feature more Oracle focused blog commentaries on a monthly cadence.

Bob Ferrari

© Copyright 2017. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.

 


Breaking Supply Chain Tech News- E2open to Merge with Steelwedge

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Today, supply chain focused B2B business network tech provider E2open formally announced that it E2open_logo_JPG_highres_125x125has merged with supply chain planning and S&OP technology support provider Steelwedge. From our lens, the announcement is of little surprise and provides some interesting new dynamics in the market.

We note that the announcement is to be expected since two of our specific published 2017 Predictions for Industry and Global Supply Chains (available for complimentary downloading in our Research Center) called for either increased M&A activity or increased business intelligence investment in the B2B business network platform areas  in the supply chain tech area.

Today’s announcement is of little surprise since of late, Steelwedge has by our observations and sources, been struggling to gain further market momentum in the supply chain planning area. The company clearly needed an infusion of new capital and thought leadership as well as more savvy marketing and sales execution resources. Privately-held E2open continues its track record for augmenting its B2B network capabilities for synchronizing supply chain execution with augmented advanced supply chain planning, business intelligence and simulation capabilities. Since being taken private, prior planning and business intelligence acquisitions included Icon-SCM, and Terra Technology, both smaller providers providing augmented technology to add to the E2open platform, along with broader capabilities for E2open to offer in the market particularly those related to augmented sales and operations planning (S&OP) business process support. Both providers have been prior sponsors of this blog.

There is little information in the announcement regarding how the two organizations will come together in terms of organizational teams and strategy moving forward. We expect that will change and that E2open management will reach out to the existing Steelwedge user base with some added information. Obviously, this latest acquisition is part of a broader strategy to move E2open into a more augmented capability.  However, this provider has its own set of challenges in marketing and sales execution. The open question still remains as to the effectivity of current messaging to the market.

We initially advise existing Steelwedge users to take a wait and see perspective since the upsides far outweigh the downsides in terms of new capabilities.  One area to really focus upon is any future impacts regarding pricing strategies along with global support. We expect some eventual fallout in staffing.

In 2017 Prediction Six, we predicted a renaissance in supply chain focused business services and technology investments, That prediction called for one or two acquisitions involving high-profile supply chain best-of-breed vendors along with a continuation of acquisitions surrounding IoT focused technologies involving existing enterprise class providers. In Prediction Seven, we called for the existence of enhanced supply chain intelligence capabilities among B2B network platform vendors paying dividends for industry supply chains. That prediction called for supply chain B2B platform providers such as E2open moving in the direction of blending supply chain wide planning and execution related transactional data with analytics, cognitive and business intelligence capture across both horizontal and vertical extended supply chain networks. Such analytics and predictive trending information would then be moved to and from various existing business application systems related to planning and customer fulfillment.

We view this latest announcement a clear reinforcement as to both predictions.

Supply Chain Matters will provide further analysis on this development once further information is available. We view this to be one of other announcements to come in the supply chain focused tech area in the months to come.

Stay tuned.

Bob Ferrari

© Copyright 2017. The Ferrari Consulting and Research Group and the Supply Chain Matters© blog. All rights reserved.


Kinaxis- A Named Sponsor of the Supply Chain Matters Blog in 2017

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We are pleased to announce to our Supply Chain Matters readership audience that Kinaxis has returned to be a Named sponsor of this blog in 2017.  KinaxisRegLogo-jpg-large

Kinaxis was one of the very first sponsors of this blog upon our founding in 2008, and once-again, we look forward to a continuing though leadership relationship during the coming year.

With origins that date back to 1984, and with its founding in 1995, Kinaxis and its flagship RapidResponse supply chain planning software application capabilities have been adopted by industry-leading companies across multiple industry verticals.

Kinaxis delivers a collection of highly-configurable Cloud-based S&OP and supply chain applications which are at the very heart of supply chain planning and decision making for manufacturing companies with complex supply chains and volatile business environments. What differentiates RapidResponse are the broad combination of planning support capabilities supporting role-based collaboration, what-if analysis and scenario simulation and supply chain analytics. The application is coupled to an extensible user-centric data and automated workflow model designed to address complex business planning.

As part of the 2017 sponsorship arrangement, Supply Chain Matters will feature a new market education series focused on future capabilities in supply chain response management. In addition, this Editor will be featured as a periodic guest blogger on the Kinaxis 21st Century Supply Chain blog where I will be contributing thought leadership on timely topics.

Join me in welcoming Kinaxis as our new Named sponsor of Supply Chain Matters.

For further information regarding Kinaxis and its technology capabilities, click on the logo included in our Named sponsor panel.

Bob Ferrari, Founder, and Executive Editor


Apple’s December-Ending Performance Provides Indications of Supply Challenges

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Supply Chain Matters provides added insights to recent financial and operational performance reports from major companies. We reflect on Apple’s latest report of December-ending (Fiscal 2017 Q1) financial and operating results which acknowledged supply constraints as limiting even more sales growth.  Apple Logo

Wall Street headlines were generally positive as the iconic consumer electronics provider reversed three straight quarters of declining iPhone sales. Total revenues grew 3 percent to a record $78.4 billion while net income was reported as $17.9 billion, $400 million lower than the year-earlier period. International sales accounted for 63 percent of total revenues. Total inventories grew by $580 million in the latest quarter.

Overall iPhone shipment volumes reportedly increased by 5 percent. The irony is that sales could have been higher but uncharacteristic supply chain challenges were encountered.

During the company’s management briefing, CEO Tim Cook, whose background DNA includes prior leadership of global supply chain operations acknowledged some planning and operational missteps that could have impacted additional sales. Insufficient supply impacted several product lines, including the newly announced Air Pods wireless earbuds, the iPhone 7 Plus model, and the Apple Watch. The former garnered a lot of visibility early in the quarter, delaying the actual product launch. We venture a guess that many of our readers had first-hand visibility to some of these supply issues.  Cook indicated demand for the larger iPhone 7 Plus was:

the most we’ve ever seen by far and we under-called it. We clearly missed some sales because of that

In other words, Apple’s sales and operations planning process likely planned for higher product demand for the baseline iPhone 7. As early as October, customers placing an iPhone 7 Plus order on Apple’s website were being informed of a wait time of up to eight weeks for the device to arrive, especially for its new “Jet Black” finish. This was also the period of the spillover from Samsung’s Galaxy Note7 product recall due to battery fires, and consumers were trying to substitute their product choice for the iPhone 7 Plus model.

Further, supply chain information leaks leading up to product launch had indicated that Apple had initially planned for three model variants, the largest being a “Pro” model that would include more features and a 5.5-inch screen, offered at a higher price point to compete with Samsung’s now ill-famed and suspended Galaxy Note 7 smartphone. That was later scrapped for the two-model product strategy. and during volume build further pointed to usual volume ramp-up challenges related to new components.

Readers may also recall that a major earthquake struck Taiwan a year ago, in an area that includes major suppliers such as semiconductor fab supplier TSMC and other lower-tiered consumer electronics component providers. Throughout 2016, apple placed additional pressures on component suppliers to reduce prices to boost margins on the company’s iPhone revenues.

Upon reviewing Apple’s performance in the all-important holiday fulfillment quarter, readers can take solace in the takeaway is that even the world’s most admired, most visible, and influential supply chain is not immune to S&OP product forecasting and planning mix challenges, supply disruption and capacity constraints. Even when the CEO has first-hand supply chain leadership experience.

Apple performed well in spite of many challenges but it could have performed better.

Sales and operations planning is a continuous process of product demand and supply balance supported by the most contextual and timely decision-making. That applies to all industry supply chains including the most admired and most visible.

Bob Ferrari

© Copyright 2017. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.

 


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