Customer operations can mean different things to different organizations. What functions are included/excluded really shapes the discussion. This business case discusses customer operations from a perspective not normally seen in pharma but more commonly seen in the retail. The case study looks at an end to end process called order to cash (OTC) is on the upper end of the customer continuum based on the extensive number of customer transaction involved in the OTC process.
The case involves a full scale supply chain re-engineering project that was done to optimize the drug supply chain focusing on the customer, reducing cost, and improving key business processes. In this project structure, embedded within the drug supply chain process is the order fulfillment process (also known as the order to cash process).
The goal was to develop a superior OTC process that provided a competitive advantage by being flexible and responsive at effectively and efficiently satisfying customer needs. It also needed to be aligned with current and future customer/market requirements.
Failing to prepare is preparing to fail.
There were two major events that drove the need and design of a new OTC process. The first event was an SAP implementation and the second was a corporate supply chain re-engineering project. SAP is a process focused transactional system and can be a substantial investment for many companies depending on the level of implementation. In order to fully leverage the investment, it required business processes to be assessed and aligned with the system functionality.
The alignment is easier said than done and requires an artful execution to balance defining the new ways in the most optimal way. Like many cases, an overall process optimization can result in sub-optimization of other business processes.
The inherent definition of OTC has complication that stymies many organizations. The OTC process in the purest sense includes customer service, issue resolution/deduction management, distribution, collections and returns. The fact that these areas typically reside in different functional areas like Sales & Marketing, Finance, and Technical Operations, further complicates the organizational and business process designs.
Another related event occurring was a new corporate call center was being implemented concurrently. The customer service aspects needed to be closely coordinated with the new OTC implementation for obvious reasons like the external customer contact triage and potential overlapping working processes
Plan of Action
A project of this magnitude and potential cross functional impact required a well-represented customer team be assembled of the key stakeholders in the OTC process. To facilitate the idea generation and help the internal organization think less functionally and more process an external benchmarking project was done. This identified best practices both in and outside the pharmaceutical industry.
In addition to this, the project had three re-engineering projects done in parallel with the larger initiative. The three projects targeted Credit & Receivables, Returns and the Customer Service/Cash Application Interface. The approach to all three projects was similar in that all the business processes were mapped and reviewed with the internal teams to calibrate a baseline.
The baseline helped define incremental improvements that were implemented immediately and formed the basis for the organizational redesign. A side benefit that validated the concepts was that significant savings were realized in interim changes (ranged from $2MM to $20MM) that were a result of these projects. It was the ideal proof of concept.
All the information was aggregated into comprehensive OTC organizational design that defined the structure, roles, responsibilities and organizational KPI and operational dashboard. The new integrated organization was designed and implemented.
The implementation consisted of decommissioning the previous Customer Service area while ramping up the new OTC organization. The organizational design was based on cross-functional pods consisting of a Revenue Team Leader, Revenue Analyst, Issue resolution analyst and a Collector doing activities like order processing, returns processing, issue resolution/deduction management, collections, and distribution functions.
Though it sounds functional, all pod team members were cross trained and able to do many of each other’s activities. A lesson learned in cross-functional potential is that the system capabilities are ahead of the personnel capabilities, and these rate limiting factors are essential feedback to adjust the level of cross-functional execution.
There were other roles such as Special Projects Team Leader and a Returns Process Owner that were critical to the operations and needed to be kept separate but highly integrated.
All work processes, roles/responsibilities and metrics were designed and implemented and consolidated into one organization. It was a difficult decision to decide where they consolidation organization should reside – Sales & Marketing, Technical Operations or Finance.
Tremendous efficiencies were realized both upstream, within and downstream of the OTC processes. Customers were ecstatic over the new organizations ability to provide a single contact for the majority of their business transactions.
The organizational capabilities became integral to launches, recalls/withdrawals, inventory management & crisis management. The OTC organization became a pivotal link between Sales & Marketing and Technical Operations. In addition, numerous supply chain efficiencies were realized and integrated into the Sales and Operations Planning and Government Pricing business processes.
Altometrixs Case Studies
With over 20 years of diverse experience in the pharmaceutical and biotech industries, Altometrixs has helped many companies from strategic planning to contracting to critical process improvements. Check out this representational set of case studies to see how Stephen and his team have impacted small and large companies alike, and hear what people are saying:
- Case Study #1: Business Planning
- Case Study #2: Specialty Pharmacy
- Case Study #4: Forecast and Sales & Operations Planning (S&OP)
The above set of example give you a rough idea of the type of situations where Altometrixs may be able to assist you. With each individual client, our team applies its time-tested methodologies to quickly, cost-effectively and comprehensively upgrade your team and processes towards a high-performing, industry-leading operation.
We encourage you to schedule a complimentary consultation with Altometrixs — to explore possible outcomes and financial improvements that can successfully drive your business.