Drug Maker Fixes Supply Chain With Social Tools

Ratiopharm Canada and its new parent company see improvements in service levels and manufacturing cycle times.

A few years ago, IT officials at pharmaceutical company Ratiopharm Canada turned to collaboration and Web 2.0 tools in an effort to fix a supply chain that was in constant crisis mode.

The company had been finding it increasingly difficult to react to changes in demand for its generic drugs. At times, the company's supply chain unit could be unaware for up to four months that manufacturing snafus or quality control issues were causing slowdowns.

IT officials at Ratiopharm, which was acquired by rival Teva Pharmaceutical Industries for $2.5 billion last year, determined at the time that better internal communication could solve at least some of the problems, said Antonio Martins, who was then Ratiopharm's vice president of supply chain.

The company decided to use Web 2.0 and social collaboration tools to help employees share information more efficiently. It initially used Microsoft's SharePoint, and later turned to collaboration tools from Strategy-Nets and then software from enterprise social networking firm Moxie Software.

The strategy worked, not only fixing the supply-chain problems but also improving service levels and, according to Martins, saving jobs during the recession.

The supply chain team is now using social tools and the expertise it has acquired over the past several years to similarly improve proc-esses at Teva Canada, said Martins, now Teva Canada's vice president of supply chain.

Prior to the Ratiopharm acquisition, Teva Canada was struggling through industry upheaval caused by the recession. Its service level -- the percentage of orders filled on time -- was below 90%, and its manufacturing cycle was around 80 days, Martins said.

After Teva Canada started using Ratiopharm's tools earlier this year, its service level rose to over 95% and its manufacturing cycle time -- the period from order to sale -- improved to 35 to 40 days. The company expects the cycle time to drop to 25 days by the end of the summer.

Ratiopharm had experienced similar results. Before it started to use collaboration software, its service level was around 82% to 85%, which Martins described as "terrible."

"When you're talking about medication, it can be very serious," he said. "We raised service levels in the first six months to around 95%. 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 said Teva Canada now hopes to improve its service level to a consistent 98%.

Dan Olds, an analyst at Gabriel Consulting Group, said Ratiopharm and Teva Canada were smart to turn to social tools.

"It's easier to get people to chime in on something like a collaboration tool," said Olds. "It's harder to get them to attend and participate in meetings."

This version of this story was originally published in Computerworld's print edition. It was adapted from an article that appeared earlier on Computerworld.com.

Copyright © 2011 IDG Communications, Inc.

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