Sep. 30, 2008 Research scientists at SINTEF have developed a control dashboard for the pharmaceuticals industry. This enables all pharmacies, wholesalers and manufacturers to check where products are in the supply chain, availability, what stocks the neighbouring pharmacy has and the future prognoses.
When a packet of pills is scanned at the pharmacy checkout today, information is simultaneously transferred to the wholesaler about the remaining stocks on the shelves, which in turn results in a stock order. Several Norwegian pharmacies have such automatic supply systems, and it takes only 24 hours before out of stock products are back on the pharmacy shelves.
Automatic for the entire industry
“For a pharmaceutical manufacturer on the other hand, in the worst case it can take three months before they are able to supply products that are out of stock,” says Heidi Dreyer at SINTEF Technology and Society. “For essential medicines, such as with the bird flu and severe influenza epidemics, there can be advantages in cutting this time down.”
“And time is money,” adds her colleague Torbjørn Netland. “The pharmaceutical companies themselves will profit by being better able to supply products faster.”
When the research scientists commenced the AUTOMED project three years ago, they wanted to incorporate this demand and develop a system where automatic product supplies could apply to the entire pharmaceutical industry, including the pharmaceutical manufacturers. The project was commissioned by pharmaceutical wholesaler Holtung AS, which wanted a closer collaboration with customers and suppliers in the supply chain.
The new control dashboard has been developed in collaboration with Oracle Norway, while the three-year AUTOMED project is funded by the Research Council of Norway.
In recent years, strong deregulation and commercialisation has led to a substantial increase in the number of pharmacies in Norway. Today, small pharmacies, such as Apotek1, Vitus Apotek and Alliance, are located in most shopping malls. The ownership is dominated by three international corporations with head offices in Germany and Great Britain.
The more actors that have entered the playing field, the harder it is to have an overview of products and availability. The partitions between the various actors have also become tight – and this has not invited collaboration.
With the new dashboard developed by SINTEF and Oracle, everything that occurs in the line between manufacturer, wholesaler and pharmacy becomes visible.
The images and information appearing on the computer screen depend on who the user is. While a pharmacy employee in Trondheim will see availability at their own and neighbouring pharmacies, a wholesaler like Holtung can search by counties, select a pharmacy and see what orders have been placed with the manufacturer and what are expected to be the best and worst sellers next year.
“You can see the current demand,” says Dreyer. “If a health worker comes to the pharmacy and wants to buy 20 packets of nitro glycerine and the pharmacy only has 10 packets, an order currently needs to be placed with the wholesaler. With a control dashboard, it’s easy to see that the neighbouring pharmacy has stocks of the product and the customer can get it far quicker.”
Raising service and operation
The Director of Logistics at Holtung AS, John-Erik Tønnessen, believes the new flow of information will provide a better basis for decision-making as well as improved customer service.
“We service 140 pharmacies throughout Norway, and it’s all about having the right products available at any given time,” says Tønnessen. “By supplying information down the supply chain about product availability and how the products are moving, we can improve customer service levels as well as operation.”
“This will work particularly well at the rear of the chain. With information about what the true demand is at any given time, pharmaceutical manufacturers won’t need to have huge inventories. If the turnover of one type of medicine suddenly increases, the manufacturer can quickly make the necessary readjustments.”
Even though the new control tool will increase the collaboration between the independent actors and could provide greater efficiency and profits for all parties, the industry is in no real hurry.
“This is an industry with traditionally strong actors who are afraid to give away more information than they get in return,” says Netland. “Trust needs to be established before a tool like this can start being used.”
Tønnessen adds in conclusion: “It remains to be seen what the real effects are and to convince the surrounding companies about the benefits. But we will continue working to make cases and test out the system to document the effect and demonstrate savings.”
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