Supply Chain Leaders Share How Digital Is Transforming Operations

Author

Robert Reiss, Contributor

December 9, 2015

On-demand manufacturing history just occurred. For the first time, a tool (a ratchet wrench), was made in outer space by additive manufacturing aka 3D printing; the printing of 104 layers of plastic took 4 hours directly after the design was transmitted from earth — proving digital manufacturing advances are not confined to earth. To get a sense of how digital is transforming operations globally, I recently had a conversation with leaders of operations’ backbone –supply chain — about the future, priorities today, and data measurements:

  • Mike Duffy, President Hospital Solutions and Global Supply Chain, Cardinal Health
  • David Bozeman, Senior Vice President, leading manufacturing and supply chain capabilities, Caterpillar
  • Bill Peacock, Chief of Operations, Cleveland Clinic
  • Dave Lubowe, Leader, Digital Operations, IBM Global Business Services
  1. Talk about the future and your company

Dave Bozeman: We know that the macro data is not going to be “if.” We’re going to have 2+ billion more people by 2050 and that’s certainly going to drive everything from commodities to infrastructure demands. Caterpillar sees a great opportunity and we must be ready. Our customers will have to build roads, mine for raw materials, generate energy — and everything in between. When it comes to data, our products will speak to us, and the value comes when we make that data work for our customers. Big data, in real-time, will be huge. Analytics will help us predict the health of the equipment, productivity and future sales. The digital evolution will bring our supply chain, dealers and customers closer together than ever before.

Bill Peacock:  The transformation that’s taking place in the US domestic healthcare market is focused on enhancing the quality of care, improving access, and making care more affordable for patients. We are employing advances in digital as rapidly as possible in all three areas for the benefit of the patient and the provider side of the relationship.   Digital helps us track performance, measure outcomes, and monitor the clock speed of our transactions. Our frontline caregivers are more interested than ever in understanding the total cost of care and the time to deliver.   Digital is giving them the tools to track and monitor the patient, the supplies utilized, and the time to release the patient home.   Tomorrow’s patients will use their mobile devices in new ways to access providers and facilitate decisions on who cares for them, where, and how much they might pay out of pocket.  We’re leaning forward to enable that transformation with robust data analytics to review our performance, enhance transparency, and help patients access our system and make these choices.

Mike Duffy: Healthcare is experiencing multiple dynamic change forces including increased demand due to demographic pressures, a shift from the fee-for-service to fee-for-value reimbursement model and dramatic technology breakthroughs. As a result of the advances in technology, supply chain connectivity and transparency are going to be key levers for successfully managing through the changes. At Cardinal Health, we are focused on leveraging point of use information and moving to a patient-driven supply network to improve the effectiveness of the medical product supply chain. As an example, by designing our process and systems from the bedside, back to the point of manufacture, we aim to create a highly responsive supply network that makes replenishment forecasting obsolete.

Dave Lubowe:  Today, operational boundaries are being redefined by digital disruptors. Leading companies are increasingly transforming operations with analytic approaches like simulation of “what if” scenarios which combine data and the common language of P&L. For example, what if we closed this warehouse? Or assigned this customer to a different distribution center? What would be the impact on service levels, inventory levels, CO2 output, and profit and loss? Before you take a step, you can do the simulation and basically get an automatic business case.  There are a number of companies getting into this now.

  1. What’s a priority you’re thinking about today?

Bill Peacock:  There are still gaps in the health care supply chain.  We want to close them.  The data is there, but the tie between the patient, the caregiver, and their electronic health record should be more seamless.   We’re working with our partners on that today.   When we get there, it will give us greater visibility on the total cost of care.  It will align the data on treatment, supplies used and outcomes, and enable us to provide patients with a clearer picture of the value of their treatment.

Mike Duffy: The traditional healthcare supply chain, like most, operates and thinks in terms of weeks and months. With some of the advancing analytics it’s going to enable us to think in minutes and seconds, and that’s going to be a big culture change for a lot of people.

Dave Lubowe:  Better demand forecasting is like the Holy Grail of supply chain.  Making your supply chain as fast and agile as you can so that you’re somewhat indifferent to the forecasts, but being able to respond to significant changes in demand more effectively, can help you capture market by being ready with inventory when some spike in demand or some other change in demand is occurring.

Dave Bozeman: We have a strong strategy at Caterpillar and we’re rallying around Lean and Engineered Value Chains. Simply put, we have found within our supply chain, if we keep going about our business looking at our individual links — we’ll optimize a link here or there — but in the long-term we will sub-optimize our entire chain. For example, if one of our business units reduces operating cost by five-percent, but that action forces another business unit to potentially increase its cost by 20-percent, we’re jeopardizing the overall effectiveness and profitability of our chain because we’re focused on the individual links of our business.

  1. With the enormous amounts of data, what’s most important to measure?

Mike Duffy:  It’s about availability and confirming the product is there when the nurse or doctor needs it, then it’s about effectively managing and lowering the total cost of product ownership for our customers.

Dave Bozeman: No one wants to wait for a product or service, that’s why it’s important for us to measure 100-percent availability throughout the value chain; and that metric always starts with the customer. By leveraging customer data, we’re able to engineer our value chains and shorten lead times so that our raw materials, piece parts and modular components come together with ease. When we have a true understanding of what our customers expect – whether it is specific features, payload or delivery requirements — we can then engineer a value chain that is Lean, responsive and agile. Delivering what our customers want, when they want it, every time.

Bill Peacock:  We believe the value of our care is directly proportional to the patient’s outcome versus the cost to deliver to care.  We believe it’s important to measure what we did, how we did it, and what devices, drugs, and instruments were used to yield success across the populations we serve.  We’re measuring these things today–service line by service line, procedure by procedure.  We’re putting it up on the wall for our staff to analyze and edit and we’re using the experience to change the way we deliver care.  It’s energizing to be in these discussions.   It builds the type of teamwork we are so proud of at Cleveland Clinic!

Dave Lubowe:  The key issues facing virtually all operational leaders are visibility across the supply chain, optimization to increase capability and decrease cost, and demand variability that is increasingly difficult to predict with only historical shipment data and current orders.  We need to collect data relevant to those issues and find ways to better manage the end to end supply chain, both within and outside the enterprise.

To hear more interviews go to www.ceoshow.com

 

This article was written by Robert Reiss from Forbes and was legally licensed through the NewsCred publisher network.


There is 1 comment

  • Supply Chain Leaders Share How Digital Is Trans... - 12/16/2015 22:56
    […] On-demand manufacturing history just occurred. For the first time, a tool (a ratchet wrench), was made in outer space by additive manufacturing aka 3D printing; the printing of 104 layers of plastic took 4 hours directly after the design was transmitted from earth — proving digital manufacturing advances are not confined to earth. To get a sense of how digital is transforming operations globally, I recently had a conversation with leaders of operations’ backbone –supply chain — about the future, priorities today, and data measurements:  […]

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