Providing Integrated Fulfillment Software Solutions for the Healthcare Industry

Cynthia is a sales representative for a large pharmaceutical firm. She visits her customer accounts daily to review their needs and to discuss new products and related information. Cynthia is equipped with a laptop and a cellular phone, which is all she needs to submit real-time orders to corporate headquarters. During or after her meeting with her customer, Cynthia will connect to her local Internet service provider to access her company's Web site where she will enter her user-ID and password, submit her customer's orders, review customer-specific pricing and promotions, review real-time inventory availability, allocate inventory on-line, with 100% confidence that her orders will be fulfilled.

Behind the scenes, Cynthia's orders will flow through a computerized system that will manage all of the fulfillment cycle including order processing activities, warehouse picking / packing / shipping with the guaranteed accuracy of radio frequency and bar coding technologies, freight rating and optimized shipping, invoicing and accounts receivable, reverse logistics and shipment tracking. Cynthia's no longer needs to call customer service for assistance. All of the answers that she needs are a click away through her Web browser powered by industry-leading fulfillment software.

Introduction
The healthcare industry supply chain is undergoing significant changes in its competitive and regulatory landscape. According to industry expert, Adam J. Fein, Ph.D., President of Pembroke Consulting , fundamental shifts in the market are the result of four megatrends taking place in the health care industry's distribution channels:

  1. Consolidation
  2. Inventory and information
  3. Internet selling
  4. The commoditization of logistics and physical delivery
As healthcare industry manufacturers, distributors and dispensers gear up to face off in the new economy, information systems will dominate the corporate agenda and become the key to successfully managing complex supply chain requirements.

Visionary healthcare companies are re-inventing their supply chain value proposition by providing customers with more than traditional logistics services. The Internet revolution is well underway and industry leaders are rapidly exploring this technology to increase competitive advantage.

Healthcare Information System Requirements in the New Economy
The healthcare marketplace is comprised of three sub-markets: (1) Manufacturers; (2) Wholesale Distributors; and (3) Dispensers. Although the dynamics of these three sub-markets vary significantly, all three sub-markets are striving to simultaneously decrease costs, improve profitability, and grow market share. In an effort to increase profitability and gain market share, healthcare companies are aggressively developing and implementing changes to their business processes to gain efficiency and to offer value-added services to their customers.

Three of the main efficiency-oriented strategies that healthcare companies are focussing on to generate cost savings and improve their value proposition include:

  1. Order Management
  2. Warehouse and Transportation Management (i.e. Logistics)
  3. Information Sharing
Efficiency Strategies - Order Management
Strategies that improve the efficiency of the Order Management process include:
  1. Internet-based business-to-business selling and customer self-service.
  2. Techniques to improve contract pricing and sales promotion administration.
  3. Information sharing strategies that include the use of electronic data capture, and electronic data interchange between trading partners.
  4. Techniques to automate product sourcing and payment settlement directly from sales order processing.
  5. Efficient order fulfillment and reverse logistics (i.e. returns) processing.
To improve efficiency, healthcare organizations are conducting an in-depth analysis of their supply chain processes so that they can define best practice operations for their business. The goal is to shift company efforts from performing labor-intensive processes to developing new ideas and applying new technologies.

To support best-practice initiatives, leading healthcare companies should be leveraging their software applications to power their e-commerce, business, and logistics applications.

You need an application that provides an open, integrated suite of Internet-based business and logistics applications that manage the complete order fulfillment cycle from order capture and processing, through to world-class warehousing and transportation operations. Combined with leading edge inventory management and financial accounting applications, this application suite can power all aspects or components of healthcare companies' supply chain activities.

Very few software solutions for order management are a classic example of robust and proven applications that are flexible by design. A good solution is built to support multi-channel sales orders, while it also provides support for traditional phone/fax sales order entry; high volume EDI order processing, orders placed via the Internet, credit card orders, cash and carry orders, will call orders, etc.

Internet-based Order Management solutions significantly improve customer service levels and business efficiency because:

  1. Customers, or outside sales representatives, can place their own orders via an Internet browser rather then calling a customer service line. The Internet order processing application is tightly integrated to the back office execution systems to enable real-time Web visibility of product information, inventory availability, customer-specific pricing, order and shipment status tracking, invoicing, freight charge and tax calculations.
  2. Orders placed through the Internet, EDI or traditional phone/fax are seamlessly processed with little or no human involvement or time delays because all required information is derived from integrated business applications.
  3. On-line integrated credit control ensures that submitted orders respect credit limits. Real-time messaging and workflow provide the ability for credit exceptions to be instantly routed by e-mail to the appropriate individual(s) based on user-defined workflow rules.
  4. Orders are allocated against pure real-time inventory availability information. The use of warehouse management software applications, powered by radio frequency and bar coding technologies , ensures that inventory statistics are not only expressed in real-time, but that they are 99.99% accurate.
  5. Special orders for non-stock products are processed with automated procedures to source, sell and ship products directly to the end customer with minimal and flawless effort.
  6. Back orders for out of stock products may be handled with numerous customer-centric options including product substitutions, allocation against future inventory availability, and sourcing from alternate distribution facilities in the network.
  7. Complex business-to-business price management is supported through contract pricing structures, promotions and incentives, discounts, upcharges, billbacks, and free goods. Price and product data administration is facilitated through mass price maintenance and electronic data importation capabilities.
  8. Customer-centric value-added services are supported to streamline kitting and assembly operations for make-to-stock or make-to-order products.
  9. Product sales restrictions by customer to support restrictions that arise when a customer is not licensed to access a particular class of products such as regulated by the DEA and/or FDA.
  10. Invoices can be generated in hard or soft copy format, at customer-specific times and frequencies, with customer-specific information and format for electronic transmission via e-mail or EDI.
  11. Integrated reverse logistics functions exist to support returns authorization and approval, crediting and physical goods handling.
  12. Order entry and processing costs are typically reduced by between $8 to $50 per order. This savings is the result of accurate real-time inventory information at time of order capture; elimination of research and manual procedures, on-line procedural workflow for credit management and other exceptions, and the customer's ability to conduct self service functions over the Web.
Building a company that provides world-class sales and customer service functions with Internet speed, begins with a solid order management foundation that manages each customer's requirements based on their unique profile.

Efficiency Strategies - Warehouse Management, Transportation and Logistics
For most healthcare companies, the greatest efficiencies to be gained exist in the area of physical distribution and logistics functions. Since most healthcare organizations have focussed on areas such as product development, sales and marketing, little attention has traditionally been spent on optimizing back office activities - where the rubber meets the road.

The notion that physical distribution is a necessary cost center is no longer valid. Visionary healthcare organizations realize that major cost savings and customer service improvements are quickly and easily derived by focusing efforts on optimizing the warehouse and transportation functions. Historically, companies seeking software applications to optimize logistics functions were forced to acquire best-of-breed software solutions that involved costly interface efforts. Today, the demand is for integrated solutions that deliver the features and functionality of world-class warehousing and transportation applications, without the time consuming and expensive process of interfacing bolt-on software solutions.

An Integrated Warehouse Management solution significantly improves customer service levels and business efficiency because:

  1. Distribution operations are managed with flawless accuracy through the use of bar coding and radio frequency technologies. The elimination of manual paper-based data entry processes combined with the bar code scanning confirmation of all warehouse transactions effectively ensures customers are served with unprecedented precision.
  2. All warehouse work is computer-directed and operators use RF handheld scanning devices to confirm the accuracy of the transaction. Operators need not rely on memory or other manual paper-driven processes to find goods. The system tracks all inventory in real-time so that all searching is eliminated.
  3. Sales orders may be pooled and consolidated to streamline order picking activities and the total cost of outbound transportation. Since order picking is the most time consuming task in any distribution operation, over 11 different system-directed methodologies are supported to optimize the order picking, packing and checking functions.
  4. Integrated EDI technologies support inbound and outbound Advance Shipment Notification processing, container tracking, cross-docking, and streamlined information exchange with trading partners.
  5. Detailed lot tracking and FEFO (first expiration date first out) inventory rotation ensure that customers receive inventory based on shelf-life requirements.
  6. Ability to quarantine products that are on hold for quality assurance inspection. Quarantined products can be stored in designated areas or they can be mixed in with non-quarantine products in the warehouse. Entire lots of a product or serial numbers within a lot can be placed on hold. All material handling rules can be defined by product and by hold code to insure that products on hold are handled differently then products that are available for sale.
  7. Products with strict regulatory control requirements can be restricted to a security cage where only specified material handlers (e.g. pharmacists) are allowed to access the products for some or all warehouse tasks.
  8. On-line audit trails track detailed transaction history for a user defined number of years and enable cradle-to-grave lot number tracking for recall and regulatory purposes.
  9. Warehouse operations costs are typically reduced by 10 - 30% resulting from improved labor efficiency, reduced reliance on paper documents and key punching, inventory rotation, reductions in inventory losses and improved space utilization.
An Integrated Transportation Management significantly improves business efficiency because:
  1. The management and optimization of carrier selection freight rating is automated through centralized shipping software that eliminates the need to rely on carrier-specific software applications. The net impact is that the healthcare organization is independent of the small parcel carrier and the LTL carrier thereby enabling a far more powerful negotiation position when establishing freight rate structure with the carrier companies.
  2. Freight rate table structures are seamlessly updated via the Internet eliminating the time spent maintaining freight related data and information needed for the "free" shipping systems provided by the carrier.
  3. Freight charges are minimized through advanced statistical techniques that are designed to minimize shipping costs to a customer location by evaluating numerous alternatives and options that the "free" carrier shipping systems do not consider.
  4. Private fleet operations can be managed through scheduled route / stop assignment, driver trip sheets and even palm-pilot capture of proof of delivery.
  5. The lowest freight rate to ship outbound sales orders can even be generated at the time of order processing so that a Web customer or regular phone customer will have freight charges up front, even before the order is submitted.
  6. Transportation operations costs are typically reduced by 10-25% resulting from optimized freight rating, carrier independence and ability to negotiate lower rates, improved shipping efficiency and elimination of manual processes.
Efficiency Strategies - Knowledge Management
In the past decade, we have witnessed history unfold as the Internet has transitioned the world of disparate nations to a global village. As hundreds of millions of people from all age groups went on-line for the first time, the Internet revolution quickly established itself as the most rapidly adopted method of communication ever known to mankind. The ability for first-time computer users to interact with the Internet quickly, easily and intuitively, was made possible through the standardization and navigation principles of the Web browser. It became obvious that the Web browser was the most effective way to enable users to interact with its business and logistics applications.

Today, there is a shift to move to the distribution software marketplace with Internet-based business applications. Simply put, users will interact with software applications through the use of a standard Internet browser such as Microsoft Internet Explorer. Lower cost, ease of training and ease of system administration are some of the basic benefits to having business applications available with a browser user interface. However, the real business benefit of the Web browser user interface is far more profound in that it serves as the main conduit to information sharing and collaboration and ultimately, knowledge management.

With the Internet revolution upon us, a new playing field has been established where competitive battles will be won on the basis of a company's ability to conduct information sharing. For healthcare companies to be successful, world-class supply chain management must be coupled with information sharing up and down the supply chain. In the near future, the demands for information from trading partners and customers alike will force many healthcare organizations to be more "open" with information that historically resided within the four walls of their business operation.

Web Work Place significantly improves business effectiveness because:

  1. Healthcare companies using browser-based business applications can securely and selectively provide their trading partners and customers with access to their back office computer systems. External users equipped with a Web browser and an Internet connection can access permission-based business functions and data records. Some business examples follow:
    • A customer can enter their own request for return materials authorization.
    • A customer can place their own orders, track order status, shipment status, pro-bill numbers, invoice history, etc..
    • A customer can access their status on promotional incentive programs so that they quickly identify their position with respect to the incentive target.
    • A supplier can access product movement history and future product demand statistics for improved marketing collaboration and production planning.
    • A third party logistics provider can provide real-time inventory visibility to its clients.
    • An outside sales representative can access real-time inventory availability statistics, place orders for customers, access sales commission information, etc..
    • A corporate financial executive can access up-to-the-minute financial information regardless of where he or she may be in the world.
  2. Browser-based applications allow users to send any type of current or historical information to other users, suppliers or customers via e-mail, through a corporate intranet or extranet, or via a Web site. This unprecedented level of information sharing will forge stronger business relationships between trading partners and in turn will lock out the competition.
  3. Browser-based applications can be deployed on inexpensive Net computers that eliminate the need for costly "fat client" desktop PCs. The impact is lower overall computer hardware system costs and significantly lower on-going system administration costs.
TECSYS in the Healthcare Industry
This white paper provides an overview of how TECSYS is providing e-business and logistics software applications to help healthcare companies optimize their customer service levels and minimize operating costs.

TECSYS is the emerging leader in the distribution software marketplace with over 300 customers across a wide variety of industry sectors. Since 1983, TECSYS has been delivering business and logistics software solutions to manufacturers, distributors and dispensers in the healthcare industry across North America. TECSYS delivers world-class applications that include: Web Order Fulfillment, Sales Order Management, Purchasing and Forecasting, Value-Added Services, Inventory Management, Financial Accounting, Warehouse Management, Transportation Management and a full suite of Business Intelligence and Knowledge Management modules.

With corporate headquarters in Montreal, Canada, TECSYS has sales and professional services offices throughout the United States to service and support its US operations that account for 95% of its revenue.

Tecsys Inc.