Bespoke digital
"IT can also support the actual sales forecast."
A decisive factor in developing a successful corporate IT strategy is adapting it to the challenges that are specific to the respective industry. IT requirements in the pharmaceutical industry and among manufacturers of medical devices illustrate just how much new overall conditions can also change the demands made on IT systems and what problems result for the responsible CIO.
For a long time, the entire industry was less subject to cost pressures than other industries, thanks to its high margins and stable revenues. However, sales have recently been falling here, too, as a result of rising sales of generics and re-imports from other EU countries, as well as new remuneration systems. As a result, margins are shrinking and the pressure to change is growing. IT solutions are not spared. They must make their contribution to the necessary cost reductions throughout a company's value chain. Industry-specific requirements stem on the one hand from the legal and regulatory framework, on the other from the process steps in production, logistics and marketing/sales. Moreover, research, discovery and development processes vary considerably from one company to another and are therefore the focus of attention here.
Legal and regulatory environment
Both pharmaceutical companies and manufacturers of medical devices must, by law, provide a detailed validation of every IT component that is in use, together with an explicit documentation of all business processes. Knowledge management can fulfill the documentation requirements, for example, by electronically administering security data sheets and dossiers in conjunction with an automated exchange of data with external systems. Collaboration solutions such as WebEX make it possible for widespread organizations to work on a task together. A reliable validation process for IT systems requires suitable means to be available for system tests and acceptance examinations before any new IT component is introduced. This ensures that a thorough comparison is made with the original requirement. Although a lot of effort is needed in the beginning to plan and introduce the necessary auxiliary tools for the tests, this pays off in the long run because it reduces the additional effort needed for tests and validations that require changes to be made to the existing systems.
Production
In production, IT's primary task is to support quality audits and any exceptional cases that might crop up, such as product recalls. To do this, the software must be able to capture every batch of material used for both finished and semi-finished products. This is possible, for example, by keeping an electronic batch record. Ideally, this is integrated into an existing ERP system, so that all products sold can be traced back as quickly as possible to the batches of material used. The enormous damage that can be done to a company by delays in handling product recalls shows how important it is to be able to make batch data available electronically without losing any time.
Logistics
Particularly in the pharmaceutical industry it is essential to always have a sufficient quantity of finished products – e.g. special preparations for high-risk indications – in stock to ensure a secure supply for patients at all times. The same applies to the availability of expendables for medical equipment, such as blood tubing for dialysis. This means that the company's level of current assets and cost of capital are correspondingly high. In order to be able to keep stock levels down to an acceptable level, the respective merchandising information system must support a structured approach to delivering all products and restocking inventories (e.g. "first-expire, first-out"). If IT stock management is poor, expiring batches may not be delivered in time and will have to be destroyed as rejects.
Stocks can best be controlled by an accurate demand forecast. To do this, sales, production and logistics planning must be closely integrated with the help of IT. This requires interfaces between the different planning systems, which are built up on a uniform data base and specifically network the "standalone solutions" that are common in the planning of individual areas.
IT can also support the actual sales forecast: for example by continuously providing historical data on sales figures, delivery times and incoming orders and automatically generating suggestions for planning from this data. In practice, continuously updated stochastic models have proven particularly useful for this purpose.
Marketing & Sales
Efficient management of the sales force is extremely important for the pharmaceutical industry. Furthermore, new challenges are developing specifically for medical-equipment manufacturers as the existing product business is extended to provide additional services. These "package deals" include, for example, maintenance services and training customers in the operation of the company's own devices. Such deals require IT to improve the management of customer and sales information.
IT can support the sales division by pooling and uniformly processing all information about customers and transactions within the company. Both data-warehousing solutions and customer relationship management (CRM) systems can make a contribution here. Electronic territory management systems (ETMS) can also support the systematic management of marketing and the sales force by dividing sales territories not only by geography, but also by criteria such as customer size or customer type.
Integrated, electronic contract management is required to map the new business models and determine the profitability of package deals. Transparency in the sales division can be improved by coordinating the IT tools used in sales monitoring across all countries.
The article was written bei Dirk Möbus, Project Manager for the InfoCom Competence Center of Roland Berger Strategy Consultants. It was published in the CIO magazine.
For a long time, the entire industry was less subject to cost pressures than other industries, thanks to its high margins and stable revenues. However, sales have recently been falling here, too, as a result of rising sales of generics and re-imports from other EU countries, as well as new remuneration systems. As a result, margins are shrinking and the pressure to change is growing. IT solutions are not spared. They must make their contribution to the necessary cost reductions throughout a company's value chain. Industry-specific requirements stem on the one hand from the legal and regulatory framework, on the other from the process steps in production, logistics and marketing/sales. Moreover, research, discovery and development processes vary considerably from one company to another and are therefore the focus of attention here.
Legal and regulatory environment
Both pharmaceutical companies and manufacturers of medical devices must, by law, provide a detailed validation of every IT component that is in use, together with an explicit documentation of all business processes. Knowledge management can fulfill the documentation requirements, for example, by electronically administering security data sheets and dossiers in conjunction with an automated exchange of data with external systems. Collaboration solutions such as WebEX make it possible for widespread organizations to work on a task together. A reliable validation process for IT systems requires suitable means to be available for system tests and acceptance examinations before any new IT component is introduced. This ensures that a thorough comparison is made with the original requirement. Although a lot of effort is needed in the beginning to plan and introduce the necessary auxiliary tools for the tests, this pays off in the long run because it reduces the additional effort needed for tests and validations that require changes to be made to the existing systems.
Production
In production, IT's primary task is to support quality audits and any exceptional cases that might crop up, such as product recalls. To do this, the software must be able to capture every batch of material used for both finished and semi-finished products. This is possible, for example, by keeping an electronic batch record. Ideally, this is integrated into an existing ERP system, so that all products sold can be traced back as quickly as possible to the batches of material used. The enormous damage that can be done to a company by delays in handling product recalls shows how important it is to be able to make batch data available electronically without losing any time.
Logistics
Particularly in the pharmaceutical industry it is essential to always have a sufficient quantity of finished products – e.g. special preparations for high-risk indications – in stock to ensure a secure supply for patients at all times. The same applies to the availability of expendables for medical equipment, such as blood tubing for dialysis. This means that the company's level of current assets and cost of capital are correspondingly high. In order to be able to keep stock levels down to an acceptable level, the respective merchandising information system must support a structured approach to delivering all products and restocking inventories (e.g. "first-expire, first-out"). If IT stock management is poor, expiring batches may not be delivered in time and will have to be destroyed as rejects.
Stocks can best be controlled by an accurate demand forecast. To do this, sales, production and logistics planning must be closely integrated with the help of IT. This requires interfaces between the different planning systems, which are built up on a uniform data base and specifically network the "standalone solutions" that are common in the planning of individual areas.
IT can also support the actual sales forecast: for example by continuously providing historical data on sales figures, delivery times and incoming orders and automatically generating suggestions for planning from this data. In practice, continuously updated stochastic models have proven particularly useful for this purpose.
Marketing & Sales
Efficient management of the sales force is extremely important for the pharmaceutical industry. Furthermore, new challenges are developing specifically for medical-equipment manufacturers as the existing product business is extended to provide additional services. These "package deals" include, for example, maintenance services and training customers in the operation of the company's own devices. Such deals require IT to improve the management of customer and sales information.
IT can support the sales division by pooling and uniformly processing all information about customers and transactions within the company. Both data-warehousing solutions and customer relationship management (CRM) systems can make a contribution here. Electronic territory management systems (ETMS) can also support the systematic management of marketing and the sales force by dividing sales territories not only by geography, but also by criteria such as customer size or customer type.
Integrated, electronic contract management is required to map the new business models and determine the profitability of package deals. Transparency in the sales division can be improved by coordinating the IT tools used in sales monitoring across all countries.
The article was written bei Dirk Möbus, Project Manager for the InfoCom Competence Center of Roland Berger Strategy Consultants. It was published in the CIO magazine.
Sprache
English | German
More news
A world without agents?
Imagine a world without insurance agents - It is hard to picture, but some in the European insurance... >>
Pricing in wealth management
Times in wealth management have been difficult since the recent developments in the financial... >>
New restructuring study from...
German businesses have come out of the financial and economic crisis in good shape: 63% expect to... >>
Roland Berger Strategy...
As new Partner and Competence Center head, Martin Erharter has been working on pharma &... >>
IN DIALOG - Prof. Dr. h.c....
In an interview with Germany's "Top Career Guide Automotive", Roland Berger, Founder... >>
Have we whined enough? (Die...
In an interview with the German daily newspaper Die Welt, Burkhard Schwenker, Supervisory Board... >>
