Drug maker goes social to end supply chain crisis

Pharmaceutical company uses social collaboration to get everyone communicating

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"When you're talking about medication, it can be very serious," he added. "We raised service levels in the first six months to around 95%. It was extremely important. When you go from 10% shortages to 5%, you have half the shortages. The stress in the supply chain and the company is cut substantially."

Martins noted that, at that point, the company didn't achieve the 98% goal but it did maintain a level of 95%.

Dan Olds, an analyst at Gabriel Consulting Group, said Martins turned to enterprise 2.0 technology in a smart way.

"He used the right tool -- collaboration -- to get the right parties talking," Olds said. "He wasn't just using social technology to use something new and fun. The lesson is that collaboration in business is a tool that helps bring about solutions to big problems. It's easier to get people to chime in on something like a collaboration tool. It's harder to get them to attend and participate in meetings."

He added that Web 2.0 tools can be highly useful in the enterprise, but he stressed that companies should have a specific goal or a specific problem to solve before they deploy them.

"It's important to keep in mind that these are tools and that they need to be implemented in a way that makes them useful and not just time-wasters," Olds said. "You have to have a good idea of what you want the end result to be before you just willy-nilly put something in place."

Martins and Ratiopharm did have a specific goal in mind when it decided to start using collaboration software, and the technology continued to be useful when the pharmaceutical industry was hit with Canadian regulatory changes in 2006. The changes, which varied by province, adjusted prices and imposed limits on the discounts manufacturers could offer, leading to fluctuations in sales. Ratiopharm and other drug makers were hit hard by those changes. And to deal with the tougher times, Martins once again turned to social software.

Sharepoint had worked well, but Ratiopharm wanted more social tools, so in 2007 Martins moved to Strategy-Nets software and extended the collaboration program beyond the supply chain to include customer service, sales and marketing.

From Strategy-nets, Ratiopharm moved to Moxie Software, which includes tools for real-time conversations, blogs, wikis and document-sharing. Martins said he also liked Moxie's offering because it has a sound architecture and is based on an open-source platform.

"That's how we came out of the hole," said Martins. "Prior to 2006, the market was very stable. Customers purchased pretty much in the same way all the time.... In 2006, the market became less predictable because of regulations and price changes. We were in a position where we couldn't supply the right things because we couldn't predict it. We had to connect customer service, sales and marketing in the front with supply chain so the supply chain people would know what to expect."

And it worked.

Once people in different departments were connected, they could make better market predictions and "react before business flash-floods hit," Martins said.

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