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Improving Customer Experience in a Turbulent Supply Chain #ibmimpact


I went to listen to the folks from Cardinal Health talking about their supply chain and their use of BPM, Decision Management and analytics. Cardinal Health delivers products to medical facilities with 60,000 sites delivered to daily, 86% of US hospitals use them and 30,000 employees are involved. Cardinal Health is focused on helping improve cost-effectiveness and quality of healthcare while making it easy for hospitals to focus on patients, not their supply chain. Cardinal Health supports hospitals, labs, pharmacies, surgery centers, physician offices and other healthcare delivery operations. It acts as a supply chain provider linking lots of medical suppliers to lots of healthcare delivery locations while managing brand choices, multiple  channels and back end systems, different customer segments and different fulfillment methods. It’s complicated.

Cardinal Health’s customers worry about drug shortages, backorders and costs among many other things but drug shortages are a central concern. This is a regular and ongoing problem with many drugs (around 7,000 including thousands used in hospitals and surgery) in disruption of one kind or another. This number stays remarkably stable over time and represents one of the key causes of “turbulence ” in the supply chain that Cardinal Health wants to mitigate. Cardinal Health aims to:

  • Deliver the right product to the right place at the right time
  • Speed drugs back to stock
  • Provide accurate information about availability
  • Offer a great ordering experience

Cardinal Health takes a portfolio approach to solving problems in its supply chain, focusing on demand forecasting, supply disruption management, supplier performance management and product allocation. All brought together to deliver a customer focus.

One change, back in 2011, was improving the transparency of availability problems providing information on the shortage, when the shortage occurred and when it is expected to be resolved.

A set of technologies are pulled together to deliver these capabilities:

  • Analytics including R,Hadoop, SAS and Tableau to find out where the problems are
  • Business Rules Management using IBM’s Operational Decision Management to decide how to act on what they discover
  • Business Process Management to manage the workflow and resources involved

Plus there is a focus on continuous improvement or what I would call Decision Analysis.

Decision Management is at the heart of this as they balance business rules (policies, contractual obligations) and predictive analytics (predicting how likely is it that a customer is placing an abnormal order or  how likely predicted supply is to be exceeded by predicted demand) to make better decisions. From an execution perspective, the analytics developed are used to modify allocation and availability rules so that the next order is handled correctly. This is a great approach, one I strongly advocate (see this presentation on why rules are a great platform for analytics).

All the rules, whether derived analytically or based on policies/contracts, are executed in IBM’s Operational Decision Management. Cardinal Health is using ODM with both BPM and its legacy systems. They like the visibility and agility of business rules (what I call design transparency and execution transparency) as well as the ability to turn analytics into rules for execution. ODM has to access data from several different sources as there are purchase history, inventory, product and customer systems involved. ODM is integrated to allow real-time, synchronous decision-making, executing rules to make decisions quickly as part of supply chain  processes. Cardinal Health also wanted to have strong controls over the rules so it invested in a governance process allowing rule authors, reviewers  testers and deployers to interact around rules as they move through various status levels like new, refused, deployed, inactive etc. Different roles have different permissions based on status and proposed status change.

Business benefits included:

  • Consolidation of business rules to a single location, improving access and consistency
  • Use of a business-friendly syntax and vocabulary
  • Visibility of the rules to those on the business side, not just to IT
  • Business people can update the business rules in a timely fashion based on the governance process defined
  • The rules are separated from the application, making it easier to change them, but still executed efficiently
  • Simulation of the rules, and an ability to audit the rules used effectively

Cardinal Health also adopted IBM’s Process Server for several of its critical solutions. The most recent project used a highly iterative methodology that worked well. The BPM platform was used to automate and track human workflow tasks, integrate decisions being executed by ODM and develop process reporting dashboards. In 16 weeks they were able to get a relatively complex solution up and running – 8 two week iterations with a short presentation on the work to date every week and new deployments every couple of cycles.

Supporting this are Communities of Practice for analytics, BPM etc. Cardinal Health invests heavily in these kinds of communities and found them very helpful. Their experience is that a successful community of practice requires a plan, a strategy. While they were focused on rapid delivery in the project they also made sure to invest in human skills for business analysts and other users, building these communities as they progressed. The BPM and ODM Communities of Practice have well defined roles in the planning, building and running of solutions and Cardinal Health also works closely with contractor partnerships and with other local companies using the same technologies.

They wrapped up by re-emphasizing how important it is that they can communicate clearly across their supply chain, respond quickly and allocate fairly. Nice high level view of BPM and Decision Management in combination.


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