CIOIN

A few years ago, a Canadian pharmaceutical company found that it was in constant crisis mode, and its way out of the chaos lay in getting everyone to communicate. The company, Ratiopharm Canada, was having a hard time being flexible enough to meet changes in demand. For example, the supply chain unit might not know for as long as four months that there had been a slowdown in production because of a manufacturing snafu. Ratiopharm found the answer was to get everyone to communicate. The generic drug manufacturer made that happen by using social collaboration tools.
"When the entire operation is stressed, it reverts to crisis mode," says Antonio Martins, who was vice president of supply chain in 2005 when he first introduced social collaboration tools at Ratiopharm. "We were in constant crisis mode. When the stress is lifted, suddenly things can be more orderly. The entire operation becomes much more efficient."
Martins, who today is VP of supply chain at Teva Canada, which bought Ratiopharm in 2010, says the problem stemmed from a lack of communication in the supply chain.

So how do you bridge such a chasm of communication? Martins turned to Web 2.0 technology and social collaboration tools, starting with Microsoft's SharePoint, then switching to tools from Strategy-Nets and later Moxie Software, which is what the company uses today.
Martins says collaboration tools fixed the communication problems employees were having, and the improvement in communication fixed Ratiopharm's supply chain problem. Addressing those issues ultimately fixed the company's service problems and enabled the company to survive during rocky times in the pharmaceutical industry.

Martins also notes that he worked on the backbone of the supply chain, tweaking processes and systems. However, the collaboration changes were the key that enabled the company to be flexible and handle ordering and market surprises.
"If you look at a supply chain, you want it to go smoothly," says Martins. "No problems. No delays. No snags. But that never happens. Any time there was a problem to stop the supply chain,  any time there was a surprise, it took a long time for that information to get out."
Martins recalls that back around 2005, Ratiopharm was having trouble because it took so long to find out that there had been a snafu somewhere along the supply chain. For instance, if unsightly black specks from a foreign substance suddenly appeared in the ingredients used to make a batch of tablets, the manufacturing process would have to be stopped and the tainted tablets would have to be removed.
"That batch that's sitting in barrels—we're waiting for them and we don't know something is wrong," he says. "We have to detect what's going on as soon as possible.We didn't want the situation to go through a hierarchy because that takes too long for bosses to talk to bosses."
At that point, the company had started using SharePoint, so he got his employees to use the software's message board. "Individuals would post the problem and other individuals would solve the problem," he explains. "We went from it taking two to four months to find out there was a problem, to a few hours or a couple of days."

Before Ratiopharm started using collaboration software, the company's service level, which refers to the percentage of orders that are fulfilled on time, was around 82 percent to 85 percent. Calling that level "terrible," Martins says the company shoots for a service level of 98 percent.
"When you're talking about medication, it can be very serious," he added. "We raised service levels in the first six months to around 95 percent. It was extremely important."
Dan Olds, an analyst at Gabriel Consulting Group, says Martins turned to enterprise 2.0 technology in a smart way.
"He used the right tool—collaboration—to get the right parties talking," Olds says. "He wasn't just using social technology to use something new and fun. The lesson is that collaboration in business is a tool that helps bring about solutions to big problems."
He says Web 2.0 tools can be highly useful in the enterprise, but companies should have a specific goal or a specific problem to solve before they deploy them.

"It's important to keep in mind that these are tools and that need to be implemented in a way that makes them useful and not just time-wasters," Olds says. "You have to have a good idea of what you want the end result to be before you just willy-nilly put something in place."
Martins and Ratiopharm did have a specific goal in mind when it decided to start using collaboration software, and the technology continued to be useful when the pharmaceutical industry was hit with Canadian regulatory changes in 2006. The changes, which varied by province, adjusted prices and imposed limits on the discounts manufacturers could offer, leading to fluctuations in sales. Ratiopharm and other drug makers were hit hard by those changes. And to deal with the tougher times, Martins once again turned to social software.
Sharepoint had worked well, but Ratiopharm wanted more social tools, so in 2007 Martins moved to Strategy-Nets software and extended the collaboration program beyond the supply chain to include customer service, sales and marketing.
From Strategy-nets, Ratiopharm moved to Moxie Software, which includes tools for real-time conversations, blogs, wikis and document-sharing. "That's how we came out of the hole," says 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."
And it worked. Once people in different departments were connected, they could make better market predictions and "react before business flash-floods hit," says Martins.

The expanded use of collaboration software, and the move to richer and more varied tools, helped the company achieve a service level of 98 percent for three years in a row. Moreover, Ratiopharm was able to manufacture its products three times faster, improving its ability to meet demand."I don't think we would have died, but we would have shrunk," says Martins, "We were able to grow and save our position in the market, despite the market."
"If you have an operation where people can respond to changes very fast, it's an enormous weapon," he adds.
While the pharmaceutical market continued to fluctuate, Ratiopharm and its supply chain stayed strong and flexible.
"I had the fastest supply chain in the industry," Martins says.
That more-agile supply chain and corporate stability helped to catch the eye of Teva Canada, a major supplier of generic pharmaceuticals in Canada. In 2010, Teva bought Ratiopharm and its supply chain, acquiring its expertise in collaboration as part of the package.
Prior to that acquisition, Teva had struggled during the period of upheaval in the pharma industry. Teva's service level was below 90 percent and its manufacturing time was around 80 days, according to Martins.

Now the company's service level is between 90-95 percent. Martins says he hopes it will be over 95 percent by the end of the summer. Moreover, Teva's manufacturing cycle time has improved from 80 days to 35-40 days, and the expectation is that it will drop to 25 days.