How Social Collaboration and “Spontaneous Association” Drove Drastic Service Level Improvements at TEVA Canada

jvaishnav    October 28, 2015

Organization name: TEVA Canada

Industry: Pharmaceuticals

Name of contact: Antonio (Tony) Martins, formerly Vice President, Supply Chain at TEVA Canada and Ratiopharm 

Web references: – The Social Side of Supply Chain Management 

The WallStreet Journal – Teva to Acquire Generics Firm – Drug maker goes social to end supply chain crisis

Article: Want a Fast-Response Supply Chain? Facilitate People-to-People Communication

Soundcloud – The Social Supply Chain

Video Interview with Tony Martins, Vice President of Supply Chain at TEVA Pharmaceuticals

About TEVA Canada

Have you heard of Fentora, Divigel or Alertec?  These are just some of the 400+ medications and proprietary drugs produced by TEVA Canada, a leader in specialty brand-name and generic pharmaceuticals.

TEVA Canada is a division of TEVA Pharmaceutical Industries Ltd. – the number one generic drug manufacturer and one of the world’s top 20 pharmaceutical companies. TEVA Canada prides itself on its generic medications – claiming to save the Canadian healthcare system $3 billion annually thanks to the substantially lower price of its generic products in comparison to its equivalent branded drugs.

TEVA’s success in generic drugs was spurred by its $5-billion acquisition of Ratiopharm in 2010.  This is where our story about social collaboration and supply chain improvements begins.

Solving a supply chain crisis with social collaboration

Prior to being acquired, Ratiopharm had a supply chain crisis. The supply chain team was often in the dark about manufacturing issues and this was causing service levels to sit at 82 – 85%. These levels, which represent the percentage of orders fulfilled on time, were way below the company’s target of 98%.

In this ComputerWorld article, the company’s major challenge was identified as communication.  If something went wrong anywhere in the manufacturing process, it might be two to four months before the information about the problem got to the supply chain staff that required the information.

Antonio Martins, VP of Supply Chain spoke with Computerworld and explained:

“The supply chain gets interrupted many, many times because of surprises…. Any time there was a problem to stop the supply chain, like a technical problem or customers’ wanting more product, any time there was a surprise, it took a long time for that information to get out.”

Martins tackled the communication challenge with collaboration tools, starting with Microsoft SharePoint.  This system offered message boards where posters could present a problem, and other staff could post a solution.  This simple approach helped get information into the right hands in record time – within a few days instead of a few months.  Services levels rose from 82% to 95% within 6 months of utilizing the SharePoint system.

When new regulatory pressures came about, Ratiopharm deployed additional collaboration tools with a goal of involving more departments in the collaboration effort. According to Martins,

“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.”

In 2007, Strategy-Nets software was implemented within the supply chain, customer service, sales and marketing organizations.  Following this, the open-source platform Moxie Software was adopted and delivered tools for real-time conversations, blogs, wikis and document sharing.

Following the social collaboration network implementations the company achieved service levels of 98%, three years in a row.  Martins claims that it was the speed of communication that made the difference:

“If you have an operation where people can respond to changes very fast, it’s an enormous weapon…You have to be able to deal with surprises because the world has more surprises than nonsurprises…I had the fastest supply chain in the industry.”

In a 2012 Webinar with the University of Waterloo’s Peter Carr, Martins talks about “spontaneous association” which he says is based on the idea that if humans understand a problem exists, they can come up with a solution very quickly – more quickly than a business system can.  In supplementary articles, Martins further defines this as “the capacity that a group of individuals of multiple skills have to spontaneously combine their skills to respond to a problem without being directed”. This was the basis on which Martins turned to social collaboration solutions to help solve his supply chain crisis.

When TEVA acquired Ratiopharm in 2010, it reaped the benefits of Rationpharm’s social collaboration culture and systems. TEVA was suffering with service levels below 90%.  The Moxie software solution was implemented into Teva’s operations and the company’s service level rose between 90 – 95%, cycle time was cut in half and the lead time from upstream suppliers was improved by as much as 60%.

In the article Want a Fast-Response Supply Chain? Facilitate People-to-People Communication the author analyzes the TEVA story and advises his readers that, “this is not a one-size fits all strategy and solution”. He goes on to explain that,

 “Spontaneous association” is ideally suited for highly-dynamic supply chains where exceptions are the norm and response time is critical. Likewise, not all suppliers and customers will make good collaboration partners under this (or any other) model, so you have to be selective in who you decide to collaborate with.”

Barriers to social collaboration and networking solution adoption

The stories of success at TEVA and Ratiopharm give credence to the benefit of social networking solutions for supply chain management. So why aren’t all organizations racing to adopt these social platforms?

A survey of supply chain professionals revealed that the biggest barrier to adoption of these solutions is the lack of clarity about the business value.

Obstacles to social media and networking solutions

In this article, Adrian Gonzalez, founder and president of Adelante SCM, infers that the term “social” in itself, presents  an obstacle as organizations equate social solutions with fun – not realizing the business application and benefit.  Gonzalez explains:

“…. social networking is not about socializing, but about facilitating people-to-people communication and collaboration, which is at the heart of managing and executing supply chain processes. Social networking goes well beyond Facebook, LinkedIn, and Twitter – it includes virtually all of the leading software vendors that companies currently use to manage their business processes.”

In a separate presentation developed by Gonzalez, he summarizes the reasons that social media is not being readily adopted for supply chain management:Why companies aren't using social media for supply chain management

The Facebooks of supply chain management

In response to the finding that social media is too generic for supply chain use, perhaps organizations will become more open to adopting social platforms that are dedicated to specific functions.  For supply chain and logistics professionals, Facebook-like networks like  DescartesGT NexusElemicaE2openLeanLogistics, and One Network are on the rise.  These business networks help connect companies to their supplier networks by connecting companies together and mapping their relationships to one another.

Are enterprise social collaboration solutions the only answer?

We’ve looked at the success a very large organization has had with implementing an enterprise solution for social collaboration.  But what about start-ups and smaller organizations that have difficulty justifying large expenditures on enterprise systems – companies that may still be trying to implement an ERP or CRM system and don’t even have enterprise collaboration in their sites?

Today’s common social platforms, like Twitter, Facebook and LinkedIn, also offer benefits for supply chain leaders. In an interview with Ryan Wicklum, Manager of Supply Chain at Clearpath Robotics – a Canadian manufacturer of autonomous robots, I learned that LinkedIn is a vital platform for communication with potential vendors and for general knowledge gathering and sharing:

“Today’s supply chains are becoming more and more globally-based, making social media an integral segment of my purchasing and logistics methods. Using numerous avenues of social media – particularly, LinkedIn – has increased the effectiveness of our supply chain. LinkedIn has provided potential suppliers a direct path to my attention. Additionally, the advent of LinkedIn discussion groups allow me to learn about items, such as new manufacturing technologies, world news affecting logistics flow, and purchasing strategies.”

In The Social Supply Chain podcast, the Chief Knowledge Officer at GTNexus, supports this notion by advocating to take “the now generation of tools” like Facebook, Twitter and LinkedIn, and “apply them to the old-school supply chain rules” to “interact faster in a more convenient way”.

Lessons for others

As a social media professional, I often think about the benefits of social media from an external, customer-facing perspective. It’s easy for me to see the increased level of engagement that an organization can have with its customers through social media. Understanding the benefits of internal social collaboration and networking platforms is eye-opening and worth looking at more extensively.

TEVA’s use of collaboration and social networking solutions like SharePoint and Moxie Software gives an excellent example of how social media can be used to solve specific internal communication challenges. Key takeaways include:

  • Identify the root cause of your supply chain issues. A reason for TEVA’s success was that it correctly identified the root cause for it’s service level issues as an internal communication problem.
  • Start small. Initially, implement the social collaboration and networking solution with just one or two groups, and then expand as success is achieved. TEVA was smart to start with the two primary groups – Supply Chain and Manufacturing, and waiting until they had showed success to roll the systems out to their Marketing and Sales groups.
  • Define your success critera.  This should go hand-in-hand with identification of the problem. In TEVA’s case, the problems included long lead times from suppliers and an inability to fulfill orders on time.  Identifying these problems correctly, ensured that TEVA would measure success based on improvements to its service levels, with a target of 98%.

While TEVA had a critical problem and the funds to solve it – many organizations today will struggle with justifying the expense of an internal social networking platform.  For these organizations, I suggest walking before you run. Find some small wins working with free external social platforms like Twitter and LinkedIn to communicate with suppliers, engage with potential suppliers and learn about new logistics or technology opportunities. For example, if you work for a manufacturing company, you may want to join a LinkedIn discussion group on additive manufacturing, to learn how new technologies like 3D printing can help your supply chain efforts. While participating in this discussion group, you are bound to meet potential suppliers and their customers.

Social media – whether it be external or internal – is all about communication. Consider how social media can be applied to solve communication challengs at your organization.

Submitted by: Julie Vaishnav

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