Todd Jackson: “Break down costs on a holistic basis.”

Nine questions about the topics on the supply chain agenda of a supply chain professional.

By: Helen Armstrong  (Supply Chain Movement)

Boston Scientific is one of the world’s largest medical device companies. Its core business is innovative products for less-invasive treatment of cardiovascular disease, cardiac rhythm management and endoscopic technologies for the treatment of various common medical conditions. It has 15 manufacturing facilities worldwide, has sales in 60 countries and its portfolio comprises more than 13,000 products. Further penetration into emerging markets is making operations even more complex, something Todd Jackson and his team are aiming to simplify.

1. What is the strategy of the company: Operational excellence, Product leadership or customer intimacy?

It’s a combination of all three. Our mission is to improve the quality and value of patient care. We already have a culture of operational excellence. It started out as a programme over 15 years ago and now it is engrained right down to the product builder. We will continue to drive this culture as the business continues to evolve. In many of our business areas we are the global leader or we rank second or third. For example, we have been the world’s leading stent manufacturer for many years already. Nevertheless, we are still working very hard to develop innovative new products that address unmet needs in important markets.

Currently, we our overhauling our product lifecycle management process and aligning our divisional and corporate strategy with these execution processes. We want to improve both the efficiency and effectiveness with which we develop products, as well as the speed to market. We are aiming to pick the right projects, manage those projects more effectively and make sure those projects yield success. It is an improvement programme with executive support that we started to implement over two years ago. We have already realized significant efficiencies within our current pipeline and we are excited about delivering new value to our patients with these new products.

2. What is your responsibility regarding the supply chain?

I am responsible for minimizing our investment in working capital (inventory) while meeting or exceeding our customers’ service level expectations. We leverage our Sales & Operations Planning processes to govern product flow from our supply base through our manufacturing and distribution network which is spread among developing and emerging markets. The key is aligning all of our supply chain team members through common strategies and best practice guidelines so that we manage uncertainty and events in a coordinated way. Also, over the longer term, we are striving to achieve better harmonisation with external agencies and regulatory bodies.
We are finding that growth in the emerging markets is bringing increasing complexity. Therefore we need to agree on and implement supply chain strategies now to best position ourselves to compete over the next 10 years.

3. What are the main business challenges that drive supply chain projects at the moment?

All over the world, the medical device industry is facing transformational cost pressure. Within the supply chain, our primary objective is to optimise how we deliver products into global markets. In most cases we strive to reduce total supply chain management costs, in terms of inventory, distribution, freight and warehousing, while managing the uncertainties and potential risks of natural disasters, political instability and operational volatility. Smart inventory management also has another huge benefit: cash flow. The fewer days of inventory you require to convert components into saleable finished product, the more cash is available to fund growth opportunities.
Another evolving challenge is how we can better serve the economic buyer in the health care environment. Historically buying decisions have been clinically driven but we are seeing a transition towards an economic-clinical, or cost-value, decision-making process. Consequently, we are looking for ways to improve the customer-value equation through our supply chain.
Using proven Lean and Six Sigma approaches, we are extending our operational excellence practices into the customer environment. This includes some internal elements such as packaging, freight, and product design. It also ventures into processes that we share with our customers, such as order management, field inventory and, in some cases, operational efficiencies within the customer environment. In the future we need to better understand each other’s businesses and try to break down costs on a holistic basis. Naturally some relationships are more progressivethan others! As with any transformational process, we will needto prove the concepts with some and then leverage that success to gradually change the culture.

4. Which supply chain challenges keep you awake at night?

Over the last couple of years it has been unpredictable events, such as volcano eruptions, tsunamis, hurricanes, customs strikes etc. These are not systemic but they are very disruptive to the organisation and inject a fair amount of cost. We supply life saving devices that need to reach customers on time, a foundational value of our supply chain that guides our priorities.
Looking ahead over the next three to five years what scares me the most is the complexity of the markets. Today the majority of our sales are in the mature markets of the US and Europe. However, the fastest growth opportunities are in the emerging markets, which also happen to be the most complex and complexity drives costs. For example, each time a local regulation changes, product manufacturers may need to change labelling or the parameters used to govern product flow. These changes often need to be implemented in an environment that is constantly flowing and already heavily regulated.
With such transformational change in the air, we are stepping back to assess: Do we have the right organisational model? The right supply chain network design? The right product portfolio? The right product coding schemes etc?

5. What do you do about these challenges?

We have to find ways to simplify how we serve the emerging markets by improving the agility of our supply chain and/or by influencing regulatory bodies in order to drive harmonisation. Strategically, it is about partnering with local organisations within the countries, listening to the regulatory bodies and making sure you really understand what they are asking for. Together, you work to achieve the desired regulatory intent in a way that is practical to implement. If we can achieve this in a given country and gradually drive convergence around multiple countries, it is a win-win situation for our global supply chain and our customers.
We realise that we cannot solve the challenges in all markets with a single approach. Rather, you have to segment in a way that allows you to leverage critical infrastructure and customise where appropriate. At the moment we are considering postponement strategies whereby we will customise and label product close to the end customer. This will allow us to build global product and leverage the inventory across global markets for as long as possible.
However, excess localized product becomes more difficult to transfer to other markets, increasing the pressure to precisely position inventory across the supply chain.

6. Who do you like to meet for exchange of knowledge?

Certainly our customers – the hospitals and physicians – to understand how our products serve the needs of the patients. As a supply chain professional, I like to meet the supply chain personnel in the hospitals to see how they manage inventory and get it to the OR. We want to know how we can fulfil their needs without adding complexity. GS1, GHX and other harmonisation bodies are helping in this respect.

7. Which book has inspired you the most and why?

The most fundamental book I have read was The Fifth Discipline by Peter Senge. This classic on System Dynamics seeks to understand the behaviour of successive management systems over time in measurable terms. In this way you can learn about cause and effect and focus improvement effort. The supply chain is one big dynamic model because there are many connected management systems, run by independent parties who each have their own goals and objectives. And yet, their collective success is really measured by the ultimate end-user of the product or service. This is what makes the aerospace supply chain different from the healthcare supply chain, even though they share the fundamental challenges of planning, sourcing, making and delivering product. This management discipline has helped me learn when to leverage across industries and when to focus on industry specific requirements.

8. Where do you expect to be professionally in five years?

I would like to continue challenging myself to shape global supply chain strategies across Planning, Sourcing, Manufacturing and Distribution to meet the evolving needs of the healthcare industry. Boston Scientific is on this course so I’m excited about my future here.

9. What do you use for an agenda?

Microsoft Outlook on a PC and a smart phone (iPhone).