How Social Software Boosted Our Supply Chain ROI
Social software helped TEVA Pharmaceuticals shrink its manufacturing cycle time by 40% between January and April -- when the company's Oracle ERP apps couldn’t keep up with unpredictable market conditions.
Enterprise 2.0, a UBM TechWeb event in Boston, TEVA Canada VP of supply chain Tony Martins gave a short presentation as part of a keynote with Tom Kelly, CEO of Moxie Software, and a longer one Wednesday afternoon. The social software implementation is, so far, a regional implementation at TEVA Canada, a division of the Israeli manufacturer of generic drugs that also serves the U.S. market.
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TEVA already had structured applications in place built around Oracle's enterprise resource planning (ERP) and supply chain software, but they worked best at executing predictable processes, Martins said. Unfortunately, TEVA's business had become unpredictable because of everything from shifting consumer demand and changing regulation to recent drug shortages that have been causing chaos in the market, he said.
TEVA is in the business of buying raw materials from companies as far away as India and Canada, mixing those materials according to a precise recipe, encapsulating them in pills, packaging them, and selling them through distributors. Things can go wrong at any stage of that process. Dealing with exceptions manually was acceptable when they amounted to maybe 10% of the business, but they were becoming more frequent, Martins said. "We found ourselves living in the world of 'not supposed to happen' where more than half the time managers, supervisors, and key resources were handling surprises--things that were off script."
Whenever a business process didn't fit neatly into an ERP application form, the resulting problem would have to be addressed manually, Martins said. Operations managers might not even find out right away that something had gone wrong, and while the message worked its way up the chain of command, precious time was lost.
Martins took his answer to this problem from the book Wikinomics, which introduced the concept of "spontaneous association," or the ability of people to come together quickly to solve a specific problem.
Once TEVA introduced Moxie's Employee Spaces, Martins said, convincing employees to share their work issues more widely was challenging at first. Also, not all employees were used to the social style of interaction, and even some of those who had Facebook accounts for their personal lives were puzzled about how to apply the same techniques to getting work done. But they learned to do it once they saw it produced results.
"Invariably, the person who has the problem is not the person who can solve it," Martins said. Just by giving people a way of posting unexpected issues and allowing others to reply with suggested answers, he found problems were resolved much more quickly.
In addition to applying social software internally, Martins has created joint social communities with some key suppliers of raw materials. In one case, this resulted in a 15% reduction in lead time, while in another, where the social integration went deeper, the supplier cut lead time by 60%, Martins said. He also has plans to implement social communities for TEVA customers.
Sameer Patel, a partner in the consulting firm Sovos Group who facilitated Martins' presentation, said he was excited about the session. "I've been trying for over a year now to find a good supply chain case study," he said, believing it to be an area that's ripe for a social shake up.
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