Data Analytics Transforms Wholesaler’s Business
CIOs rarely focus on supply chains, but the IT experts at HD Smith are key players in the wholesaler’s supply-chain-first effort. Over the past few years, IT has powered that initiative with an ERP solution, migration to the cloud and artificial-intelligence-driven data analytics.
The results have been “transformational,” according to Davíd Guzmán, CIO of the Springfield, Ill.-based company.
“There was an urgent need to bring large-scale efficiencies to our business,” says Guzmán, who joined HD Smith in 2011. “The pharmaceutical supply chain is one of the most unwieldy in the world, with long R&D processes and endless compliance requirements from a host of regulatory agencies.”
In addition, “byzantine pricing” has resulted in more than 600 million price permutations for the distributor’s 100,000 SKUs, thanks to group purchasing, chargebacks, rebates and more.
Though HD Smith is the country’s fifth-largest pharmaceutical wholesaler, it’s dwarfed by McKesson and other giants, which together account for 85 percent of prescription drug distribution. Maintaining just enough inventory to keep its service level high was critical to the company‘s success.
HD Smith had other priorities as well. “Health care costs are insane,” Guzmán observes. “We wanted to reduce those costs and improve patient outcomes.”
The wholesaler also wanted to better serve the independent community drugstores that make up one-third of the nation’s pharmacies. One way to achieve that was to free up resources, both human and computer, to emphasize service. “We wanted to move from being just a product chain to an informed value chain,” he says.
The effort began with a large SAP business solution implementation from July 2010 to September 2013. The company pushed that SAP/ERP data to the cloud and adopted cloud applications, such as Office 365 and SugarCRM. Next up: a data warehouse.
“We had a lot of experience building data warehouses, but we wanted to focus on our customers and use partners to provide the service,” Guzman notes. Most major companies required a big on-premises warehouse, which he viewed as outsourcing rather than a cloud-based solution.
A startup company in Silicon Valley called FusionOps offered what he wanted: a data warehouse in the cloud. FusionOps’ supply chain intelligence platform uses industry-standard models, making it more specific to HD Smith’s needs than a general solution.
The analytics piece of FusionOps is a layer working on top of systems new and old, automatically ingesting SAP data and pulling together data from several sources.
