Legacy Foundation Business and Leadership

Archive for September, 2009

The Clinical Research Market in India is growing at a very rapid rate according to anyone’s statistics…It is exploding according to all the hype.

For a long time, India has been a hotbed for companies in several major industries looking to outsource and “off-shore” services in an effort to speed development, reduce costs, while hoping to maintain a high level of quality. Today, the process of discovering and testing new drugs is following a similar path and India has a leading role.

There is a tremendous amount of excitement about markets such as India, Central and Eastern Europe and more recently, China. But like any new and exciting trend, we need to buffer that excitement with an understanding of reality. There are tremendous benefits being realized by companies now conducting studies in India, but those companies have also developed an understanding of the cultural intricacies, workforce talent pool, site and study conduct challenges and an improving yet dynamic regulatory environment. Understanding these realities and how to work in them is critical to future success.

India – A Preferred Destination: Why the Industry is Acting on India

As is widely known today, sponsors operating in mature drug development markets including the US and Western Europe are facing difficult challenges in moving their compounds efficiently through the pipeline, whether it be a shortage of beds for Phase I units, delays in contracting and budgeting, or patient recruitment challenges, the costs and timelines associated with bringing new compounds from the bench to bedside is greater than ever before. These issues have forced the industry out of its comfort zone resulting in a rapid globalization process over the last 10 years. Likewise, regions and countries around the world have adapted to and benefited from this globalization.

In very recent years, India has adapted its laws and regulatory guidelines to allow global biopharmaceutical companies access and confidence in conducting clinical trials there. Strong national resources and advantages in medical education and practice, patient populations and the prevalence of 1st and 3rd world diseases have made India not only an open destination, but also an attractive destination. In fact, the well known consulting firm AT Kearney ranked the attractiveness of markets across the world using the US market as the benchmark. India ranks second only to China on that scale and other than population size ranks very closely to or better than China in a number of key categories, including – perhaps most importantly to many companies – the regulatory environment and timelines.

Overall India advantages becoming known:

* Well-credentialed, acclaimed physician base

* Growing market for patent-protected therapies

* Faster, cost-effective studies

* Marketing & Supply Chain infrastructure

* Large treatment-naïve patient population

For additional information on this exciting market, please click one of the links below:

* Clinical Trial and Site Management Services

* Regulatory Guidelines

Our bakery had a policy of introducing one new type of pastry each month.  Everyone loved the idea and we would see a large number of people each time the new pastry was introduced.  Unfortunately, our pastry chef did not have any idea what do introduce and often people would hate the new pastry.

The idea of a new pastry was a sound one as it generated a great deal of publicity for us but more often than not, it was a poor choice.  A business management consultant I knew offered me some advice on new product development.  He explained that you had to do some research to find out what your customers liked or thought they wanted.  He offered to do a survey of our customers for a month to see what he could find out.

I looked online and found a free business plan that I could use and I began to study up on everything to do with product development including marketing and promotions.  After the survey was completed, to our surprise, most of our customers weren’t looking for exotic pastries, but just wanted more flavors of many of the products we already carried.

The next month, we introduced a new and improved éclair and offered six new fillings.  We couldn’t keep the éclairs on the shelves to save our lives.  Business was up by almost ten percent in the first two weeks of offering more flavors.  The following week, I invited the local paper to be present when we unveiled our newest pastry.  This time we had a new version of a old favorite except that it had a spicy coffee flavoring.

Research had shown that most of the customers loved coffee flavors and this time was no exception.  We got a lot of free media coverage and today we are doing almost 30% more business consulting firm than we were at this time last year.

We are told that the constant increase in computer processing power (one version of Moore’s Law states that computing power/dollar doubles every 2 years) is changing the way the world, and supply chains, operate. This article looks at some of the ways the Internet and other computer enabled technologies have created ‘best practices’.

The question for you is whether or not you are keeping up!

1. Forecasting and Demand Management

Many companies need to forecast customer demand because their lead-time to supply is longer than their customers will typically wait for products. The most common method is to forecast at some aggregate level (product family or geography) and then figure out what to send to each store or regional warehouse by essentially making another forecast; such as demand this year will be in the same proportions as last year. This is done because it is, ‘impossible’, to generate and review a forecast for potentially millions of item/location combinations.

Best practice is to let a machine make a statistical forecast for each item in each location and then aggregate this demand for management review and adjustment (by product family or geography). The forecast adjustment can be applied automatically to each item / location in the proportions based on the original forecasts. This practice can be enhanced by so called ‘tournament’ forecasting where the computer program tries out a whole range of possible forecast models and picks the best model on the basis of the lowest, unbiased forecast error. The tournament is re-run every time the underlying demand data is updated (typically weekly or monthly).

If you are not using item/location tournament forecasting, you are not keeping up.

2. Inventory Optimization

A very common method of managing inventories is to apply a policy or rule, typically based on some segmentation analysis (e.g. ABC), to hold a certain number of weeks of historical average demand – for example, 4 weeks of cycle stock and 2 weeks of safety stock. Unfortunately, rules-based approaches tend to be ‘one size fits’ all. This means, by definition, that the rule will deliver the right amount of inventory for some items, too much inventory for other items and too little inventory to meet service levels for other items. As a result, we get inventory imbalances that result it excessive inventory costs, impeded cash flow and poor and/or inconsistent service levels all at the same time. In addition, rules-based approaches are only sensitive to changes in demand. So what, you ask? Well, this means they’re relatively static and not linked to other important factors, such as service level and forecast accuracy. For example, if you want to increase your service levels, you have to estimate (i.e. best guess) what change in your inventory rules will deliver this. If you invest in a forecasting system and improve your forecast accuracy, a ‘weeks supply’ approach won’t reward you with reduced safety stocks. Here again, you have to figure out what the impact is and change the rule yourself. This gets particularly difficult when you have a significant number of items and stocking locations. Fancy doing this for 10,000 products every week!

But there is a solution.

Best Practice is to have a service level goal for demand satisfaction off the shelf and then calculate the necessary inventory parameters (i.e. order quantities and safety stocks), taking into account all the relevant variables:

Now, if we increase our service levels, our inventory parameters for all items adjust automatically because there is a direct link – and our customers are happy because we’re servicing them consistently to target. If we improve our forecast accuracy, our investment in safety stock will be adjusted accordingly, and we’re rewarded with better inventory turns and case flow. The result is the right mix of inventory for each and every time in every location, and the benefits are achieving ‘best in class’ inventory turn rates and customer service levels at the same time. Read the rest of this entry »