INTEGRATING PHARMA LOGISTICS

An industry-driven, not-for-profit programme bringing real collaborative working to the pharmaceutical logistics sector

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NETWORK CULTURAL

This relates to the processes, procedures and organisational structure that must be adopted and enacted within each of the integrated network participants.



There are four inter-related environments that must be present and harmonised for comprehensive company and inter-company collaborative working to flourish.

COMPANY FUNCTIONAL

This is the business culture that must operate right across the integrated network. It forms the cultural backdrop to all commercial relationships and activities.



The Universal Principles that Underpin Integration

COMPANY CULTURAL

This is the internal corporate culture within each individual network company. The management and staff must be fully aligned to collaborative principles and working methods.



This refers to the cross-network, inter-company disciplines and systems that must be put in place to effect and manage an integrated network. This environment will be very specific to individual cases.



NETWORK FUNCTIONAL

Modern B2B procurement methods have embraced the formation of integrated supply chains where the parties in the supply chain have a long-term objective to work together to deliver added value to both the immediate client and ultimate customer.


At the heart of such an approach lies an array of principles that govern the nature and substance of the collaborative relationships. Some of these principles are absolutely fundamental to the creation of a integrated network, others are optional or aspirational. But in all cases there needs to be fundamental change in both attitudes and practices at both the individual company level and throughout the integrated network.


These fundamental principles of integration must be adopted in order to create the four inter-related environments necessary for comprehensive company and inter-company collaborative working.


The rationale behind supply chain integration is fairly easy to grasp and the majority of astute business people have little trouble in subscribing to its basic principles.

Deciding to work collaboratively or confrontationally is a simple choice between achieving a goal through peaceful or aggressive means. Most people, including business executives, will instinctively favour the former. However, although a tendency towards mutual reciprocity may be hard-wired into man's psyche, very often, principally due to a lack of trust, greed disposition and short-termism, people will quickly revert to behaviours biased towards self-interest in a misguided attempt to protect their own positions.



Genuine commitment from top management

A truly collaborative environment has been described as one that “involves every employee at every level and department, and is infused in an organization’s culture and reflected in its daily operations”*. Strong executive-level involvement, dedication and persistance are required to create such an environment and overcome the barriers that prevent true collaboration permeating throughout an organisation.  Integration intent shown in the boardroom must be translated into collaborative commitment at all levels throughout the company.


Committed Leadership

Functional management at all levels must be equipped with the necessary skills and communications media to drive and embed collaborative outcomes throughout the organisation. Departmental 'silo' mentalities must be eliminated and collaboration must become an integral part of people's jobs. Managers must be seen as role models and lead by example. They must also be deemed responsible and accountable for driving the collaborative philosophy.  Integration must be embraced at both a strategic and a tactical level.


Trust

In the modern world, people can struggle to develop trust in others and, in any case, there will always be a potential conflict between self-interest and shared responsibility, between perceived risk and reward. This necessitates the starting point for creating an atmosphere of trust being one of conveying the connection between individual advantage and mutual advantage, explaining the benefits of deferred gratification and showing how enlightened self-interest trumps self-interest.

The building of trust results from a continuous learning process and will always develop slowly at first, as individuals start to see the benefits acrue, before picking up momentum. The conditions for trust can be encouraged by demanding consistently high standards of co-operation and communication, by routinely harbouring high expectations of trust, by facilitating staff interactions, by clarifying roles and responsibilities and by eliminating protectionist enclaves and silos. Trust, like confidence is contagious.


Shared Vision

For supply chain integration to be more than just a conceptual distraction there needs to  be a wholesale adoption of collaborative attitudes. A collaborative culture invariably involves the pursuit of 'Common Goals'. Leadership must establish, and maintain, a common vision with an absolute focus on the endpurpose.

This must be based on a clear understanding by all employees of what represents performance and value for both the client and the ultimate end user. All employees must fully understand how their input contributes to the business goals and how a win-win collaborative mind-set will help them meet their individual goals and, at the same time, enable them to make a more meaningful overall contribution.


Shared Learnings

It is essential to nurture an environment of continuous learning and mutual trust where best collaborative practice can be developed, utilised and shared by all.


Total Engagement

It is essential that everyone in the company is proactively involved in the pursuit of cultural shift and in the adoption of a new collaborative mind-set. Staff at all levels must be mandated, trained, educated, developed, empowered, authorised and incentivised to behave in a different way.

To bring sustainable benefits, collaborative working has to become the corporate way of life. It cannot be seen as just another 'two-hours-a-month' coaching session, a motivational slogan on a wall-poster or the exclusive preserve of a 'special team'.  


Consensual decision making

Democratic decision making is a fundamental component of collaborative working. In a truly collaborative environment everyone has a voice and their contributions are welcomed, leading to high levels of worker engagement.


Measurable Internal Goals

Measurable internal goals must be agreed that are challenging yet realistic. and attainable, yet, attainable internal goals must be  and then constantly relate progress by the project to this vision to reinforce the team’ goal.


Effective Communication

Although they are related concepts, collaboration and communication are not the same thing. However  collaboration cannot take place without communication, and effective communications, up, down and across the organisation are absolutely essential for the dissemination of the collaboration message - its premise, its purpose, its importance to the company etc.

Equally, an effective communications programme will be two-way, capturing reactions, ideas and feedback from staff. Communicating the vision internally by creating and maintaining the culture and environment in which people can contribute to the greater good while, at the same time, achieving their potential.


Full Staff Participation

Comprehension of partnering principles and dedication to integrated working throughout the company.


* Kip Kelly / Alan Schaefer: Creating a Collaborative Organizational Culture; UNC Kenan-Flagler Business School 2014

Collaborative Principles and Practices that apply to COMPANY Cultural and Functional Environments

Collaborative Principles and Practices that apply to NETWORK Cultural and Functional Environments


Network Governance

An integrated pharma-logistics network needs strategic leadership that is strong and decisive, equitable and risk-attentive, convincing and inspirational. It will be led by a Network Principal that is 100% team-spirited with the management expertise to extract the best from others and achieve communal goals.


Shared Vision

The entire network must be fundamentally driven by a common agenda, unity of purpose and shared, measurable, success metrics. All partipants must be aligned with market demand and trading conditions and focused on mutual goals that have been derived from the needs of the ultimate consumer.


Mutual Trust

A shared vision is a means of promoting the mutual trust which is a sine qua non of any true collaborative Network. "Trust between partners in inter-organisational arrangements is based on mutual understanding and confidence that all partners are working towards collective action"* Placing faith in the organisations around you can sometimes be very difficult but without high levels of mutual trust within a Network, it is safe to say that true collaboration becomes impossible. More than any single factor, it is the level of trust, confidence and commitment between the various parties that dictates whether collaboration will succeed or not.


Early Partner Involvement

The early involvement of suppliers and high level of mutual commitment has its roots in the automotive industry where its potential to mitigate risk, accelerate innovation, improve quality, boost efficiency and performance, resolve problems and control costs has long been recognised. Similarly, the involvement as early as possible of all key members of the pharma-logistics process will bring similar information-sharing and other benefits and ensure no party has to implement decisions which they have had no part in discussing and developing.


Long-term Relationships

The Network Principal and all the Network members must be prepared to commit to long-term relationships. With the right partners and the necessary Network controls, incentives and competitive framework in place,  by working with people who have developed a culture of trust and inclusivity while understanding the need to continually question, challenge and improve.


Shared Learnings

It is essential to nurture an environment of continuous learning where best collaborative practices can be developed, utilised and shared by all.


Radical Transparency

There is a need to create a climate of open communications and data-sharing within the Network ; one where all salient logistics information is available to all parties. Such transparency also needs to be extended to other areas such as pricing and costs with 'open book accounting' being a commendable objective. Such openness does not come easily to a sector with deep protectionist instincts and a history of commercial privacy and, sometimes, blurred accountability.


Network Confidentiality

All shared data and content must be kept within the Network community and be easily accessible to all members subject to the necessary Proprietary information, IP rights


Consensual Decision Making

As collaboration will involve taken relatively narrow perspectives and making them broad, you will need to help the group reach a consensus and then take action collectively on the decisions they make

Democratic decision making is a fundamental component of collaborative working. In a truly collaborative enviironment everyone has a voice and their contributions are welcomed, leading to high levels of engagement.


Long-Term Continuous Improvement

An environment of continuous learning and improvement must be nurtured where best practice can be utilised, developed and shared by all parties.


Network Partner Selection

Network partners must be selected on, inter alia, their collaborative propensity, their commitment to quality, innovation, value, risk management, whole-life solutions, sustainability and continuous improvement.


Network Participation

Fractional partnering, at best, will be significantly sub-optimal. At worst it will serve to perpetuate and reinforce the divisive nature of the industry. A comprehension of, and dedication to, integrated working must be visible throughout the network.


Network Strategy

A clearly defined network strategy that sets out unambiguously the aims, objectives and long-term goals. Define and work towards clear, measurable, benefits for all parties.


Performance Measurement

Agreed, measurable and realistic performance indicators as the basis for continuous learning  and improvement. Regularly undertake performance evaluation to understand how performance has changed in time and how it compares with industry norms. Adopt client-focused Key Performance Indicators. Measure and review throughout the project to indicate progress towards success, and use as the yardstick for continuous improvement activity. Include measures and reviews of behaviours as well as hard processes.


Modern Commercial Arrangements

Reward system based on target cost or target price with shared pain/gain incentivisation. Adopt commercial arrangements that underpin all the above principles: collaborative forms of contract, risk management and risk sharing, incentivisation such as open book cost management, target cost with pain-gain share etc.


Network Communications

Formal and informal communications and transparency between all parties.


Network Dispute Resolution

No blame: See mistakes as learning opportunities. Focus on fix, not fault. Take responsibility for own actions.


Common Network Processes and Tools

Replace company and endeavour-based methods and procedures with industry-based boundary-free processes. Adopting processes and tools which support the development of the collaborative culture and deliver the benefits, such as information collaboration platforms, open book costing, lean and waste elimination, and project bank accounts.


All-party Partnering Agreement

A cross-part agreement that defines the network, its relationships and its management.

* McNamara M , Starting to untangle the web of coopration, coordination and collaboration, IJPA 2012

The successful ingredients of a collaborative relationship



Kim Newman, Partnering and Partnering Forms of Contract 2010