Most people know that I spend at least 60% of my time in the field with customers. For instance, this week I will be in the office on Monday and the rest of the week listening and working with customers to solve their problems. The source of all our innovation comes from customers. Many are fond of telling me when and where we thought of that specific feature or capability.

As I was reflecting on my past few weeks of fairly intense travel and interactions, it became clear to me that the pace, magnitude and criticality of change at our Pharma/Bio customers is accelerating. The reality of $267 Billion of product sales losing patent protection over the next 6 years has shifted from planning for the impact to executing on a strategy to lead the organizational changes at the company. One thing is certain; there are no magic bullets since there are no new blockbusters that will fill the large revenue holes.

In the last five years, there have been many strategies openly discussed and shared within the industry. Therefore there is no secret strategy that one company has as its secret sauce. The following press release, IMS Forecasts Global Pharmaceutical Market Growth of 5-8% Annually through 2014, indicates the approaches the industry will take for continued growth. These strategies include:

• Growth from emerging markets
• Personalized medications and complex therapies
• Graduated approvals with on-going evidence of outcomes

The supply chain organizations are the most impacted by these changes, because they need to transform. A recent PwC report, Pharma 2020: Supplying the future, concluded by saying: “The supply chain is simultaneously becoming more important, as the medicines the industry makes get more complex and the opportunities for generating value from pure product offerings diminish”. These changes thrust the supply chain organizations into a strategic role within their company.

In all cases, the transformation of the supply chain involves driving more visibility and collaboration upstream all the way to raw materials suppliers, downstream to patients and across geographies into emerging markets. Here are some quotes from the field that demonstrate the imperatives:

• “The company is banking on emerging markets for revenue growth and we need to ensure secure distribution”
• “Emerging markets have 10x the counterfeiting and diversion and the trust factor is material to our revenue opportunity”
• “Three out of five new product launches this year will be with products manufactured by outsourced providers”
• “We need to track outcomes in order to enter the market and maintain FDA approvals for most new medicines”
• “We want to be at the center of our virtual network and have all our partners connected to us with real-time visibility”

In the technology industry, we went through a similar stage for personal computers when the value of product innovation merged with the value of operational excellence. Dell and HP emerged as winners because they were able to combine product innovation with supply chain execution excellence. Change and transformation was not a matter of optimization but a necessity for survival.

Of the companies we work with, the ones that understand the moment are moving at a fast pace with determination that clearly sets them apart as leaders. They recognize that change is accelerating and Wall Street is very unforgiving of execution failures. Traditional and safe decisions are not acceptable when they don’t deliver the results necessary for the business. There is no buffer for mistakes or being a year behind.

At TraceLink, we are embracing the change and working with the industry to support their transformation. The velocity of the transformation will hit higher levels every day and we will be there with you delivering the visibility and collaboration your business needs.

NoBullWhip!

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In 2003, a few of us founded SupplyScape Corporation (the predecessor to TraceLink, Inc.) with a simple vision. We believed that the next wave of enterprise value generation was in integrating people, processes and information between companies. Our focus and core competency to the industry was to provide the integrative network for supporting the rapid selection and deployment of multi-enterprise applications. Today we express our mission as:

“TraceLink is Creating the Predictable Supply Network by Executing Any Business Process with Any Partner at Any Time.”

This month we announced our strategic partnership with Patheon, Inc. to promote supply optimization in Life Sciences. In our deep collaboration with the executive team at Patheon, we identified a number of immediate value propositions for Multi-Enterprise integration between contract partners and their customers. We have seen these core value propositions validated by every Pharmaceutical and Biotech company we are engaged with on building the Predictable Supply Network.

These value propositions can be classified into 5 areas:

1. Transactional Integration: This is the basic level of integration that allows for business documents representing inter-company transactions to be executed seamlessly. It is always surprising how hard it is to get large and small companies integrated into a common protocol and harmonized data sets to conduct business.
2. Data Synchronization: Beyond transactional documents there is a need to share information about process status, inventory disposition and goods flow between companies. Today teams on both sides are constantly generating reports from one system and sending it to the other company in order for it to be keyed into their system. Cost of labor and inaccuracies impacts execution and planning.
3. Synchronization Frequency: The use of manual processes limits the frequency at which information is exchanged. Monthly snapshots are the norm and weekly are the best one can envision. The ability to automate daily or event based synchronization of information provides both companies an advantage in managing demand and fulfillment. Predictability of supply has an immediate top line effect on revenue as well as a bottom-line effect on inventory costs.
4. Shared Visibility: Too often planners and production managers are looking at separate systems with different versions of the truth. With the TraceLink solution the network synchronizes the harmonized information into shared visibility that is available to teams from both companies. We are able to link and analyze the information and the application is shared between the companies.
5. Ad-hoc Collaboration: Teams need the ability to share documents and notes in order to efficiently execute in a dynamic marketplace. Each team we work with always has a need that cannot be adequately captured through a structured business process. Therefore they need to be able to exchange notes and documents representing instructions, documentation, artwork and many more pieces of information that cannot be categorized a priori.

In order to ease the adoption and maximize the value, we agreed to build an SAP Adapter to integrate SAP implementations with the TraceLink network. Patheon will work collaboratively with us to define and develop the SAP Adapter. This will be of significant value for the industry since SAP is the largest installed base of ERP implementations and the clear leader in the top 50 Pharmaceutical and Biotech companies.

The value propositions represented here are just the tip of the iceberg. In all our collaborations with the industry, we can easily identify more and more business process integrations that will drive higher and higher value. I compare where we are today with where SAP was 30 years ago. The initial value of SAP was to consolidate the information and reporting from a single general ledger. ERP was built from those roots.

The Predictable Supply Network is being built on these five foundational value propositions stemming from our Multi-Enterprise Application.

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