Logistics Quarterly Magazine - Volume 16, Issue 1, 2010

A Conversation with Cameron Joyce, President, Accuristix

LQ: IT Costs (software and consultants) are expensive. What methods do you use to minimize upgrade costs?

Cameron Joyce: Our client interface encompasses business intelligence, EDI integration, order management and supply chain visibility tools in one integrated package. We have in-house programmers who upgrade and enhance our applications on an incremental, continuous basis, not as version releases, which would traditionally encompass many major changes. Since our applications are continually being advanced with these small incremental changes, our training, communication and change management are done on those minor changes. The advantage to our clients is that they never have to adapt to a major software version release with its accompanying delays and costs.

In addition, as incremental program enhancements are developed and promoted, a communication is sent out to all clients with a description of the functionality and instructions for its use. Clients can access our library of enhancements and use any of them that support their business at no additional costs to them. Software as a Service (SaaS) and hosted solutions has also become a viable alternative for many applications, and can be a very cost-effective way of utilizing software and hardware without the capital investment, maintenance and upgrade costs as the applications are enhanced.

This option will likely gain more traction over time as the tools for integration between in-house and subscription applications improve.

LQ: How do you measure the success of managing continuous software improvement upgrades this way?

Cameron Joyce: The success of our software upgrade strategy is measured by looking at the total number of enhancements promoted, the success of the enhancements as far as them doing what we say they’re going to do and finally, the number of clients that access the enhancements and use them for their own business management.

We also measure the overall activity on our client access portal to gauge the adoption of our functionality in meeting their needs.>

LQ: Can you highlight a few Key Performance Indicators (KPIs) you may apply that are additional value-added?

Cameron Joyce: We provide our manufacturer clients all the standard operational performance metrics - order accuracy at line and unit level, shipping and receiving timeliness and inventory accuracy. As we expand services across the value chain, we’ve added additional Customer Service and AR KPI’s as well, including call answer and response metrics, time to resolution, invoice timeliness and accuracy and DSO. Utilizing data from our Customer Relationship Management (CRM) software, we’re also collaborating with our clients to create customized KPI’s for analysis of specific consignees, carriers, product lines or any other slice of the supply chain. These traditional and expanded KPI’s lead to the ability to track the ultimate metric in supply chain, which is the “perfect order” KPI, enabling us as a logistics provider to assume full responsibility and accountability for meeting the objective of the right order, complete, damage free, at the right time and place with the right information.

LQ: What have been the most significant changes you have seen in the pharmaceutical/healthcare supply chain over the last five years, and how have you adapted to meet those challenges?

Cameron Joyce: There are three major categories of change. First is on the regulatory side, second, there have been some changes specific to pharmaceutical and healthcare supply chains, and third, there are changes and emerging trends that go beyond the traditional supply chain.

On the regulatory side, at the national level; Health Canada has made significant changes to product handling requirements, especially as it relates to temperature control and cold chain management. Health Canada’s Guideline 0069 is now being enforced to ensure that all drug products are being stored and distributed in accordance with the conditions that are printed on the manufacturer’s product labels. As a result of these requirements, we evaluated our temperature controlled service offerings and enhanced our cold chain capabilities, not just in the storage and handling of products internally, but getting involved in conducting extensive studies in validating packaging, qualifying our temperature control partners and implementing Quality Agreements with our carriers to ensure they have validated equipment and processes for handling both ambient and cold chain products on behalf of our manufacturers. In regards to pharmaceutical and healthcare supply chain changes, there’s been greater attention to expiry date and lot tracking. In the past, “first-in, first-out” was the norm.

Now requirements have evolved to “first-expiry, first-out.” To add to the complexity, many retailers and pharmacies can have different dating requirements by manufacturer and even by product. This requires a much higher level of system support with complex algorithms to pick exactly the right expiry date and right lot number per shipment. We’ve focused on being ready for these industry changes to ensure we’re positioned to proactively meet our clients’ needs.

In regards to emerging trends within the supply chain, we’re monitoring interest in proposed drug pedigree tracking, which will be imposed on manufacturers in the future to help prevent counterfeiting, theft, diversion, re-labeling and other product tampering. Florida and California will shortly mandate tracking of a product from manufacturer through to end use. Many other governments will be watching their results with interest. System enhancements will need to be developed and implemented to capture and report all of that information. To date, it’s been a challenge for the manufacturers and distributors to meet those requirements, so the implementation timing keeps being pushed further out; however it is progressing and will become a reality in some version in the future.

Finally, another emerging trend, is one to outsource more than strictly the warehousing/distribution functions. Clients are seeking logistics solutions which include full order-to-cash and true value chain activities. That means traditional service offerings have to be expanded and what used to be value-added services are becoming core expectations. In order to offer full service today in a healthcare pharmaceutical supply chain, capabilities need to include customer service order desk, fully integrated EDI, transportation management, invoicing, credit and collections services, co-packing, regulatory, QA and other specialty services. Biotech companies coming to Canada are a good example of clients requiring unique specialty services to support their businesses.

They are very different from typical pharmaceutical manufacturers as they often have only one or two products, usually of higher value, requiring much more specialized storage, picking and transportation. They frequently require clinical trial support, controlled distribution models and other special services for the importation, legal expertise, administration and setup of their business. Their logistics provider of choice must be able to execute all these services.

LQ: Are you developing a footprint on the other side of the border?

Cameron Joyce: We have some presence in the U.S., and we’re in the process of expanding that business. We’re looking at providing North American solutions at this point and eventually global services. Many of our current clients are looking to expand their business from Canada into the US, Europe and even Asia. They are looking to us, as their logistics provider, to mirror our services for them in other countries.

LQ: When you’re working with your clients you’re often dealing with them at the most senior level. Is that the case?

Cameron Joyce: The decision to outsource is almost always a strategic decision. It may happen when a company who is currently doing manufacturing and distribution from their own facilities decides to expand manufacturing capacity locally or outsource globally. Such a decision can orphan the distribution part of the operation. At that point, senior management has to make a decision whether they want to continue to support distribution on its own or outsource it. Outsourcing decisions can also be driven by a need to increase cash flow, move assets off balance sheets, avoid investment in distribution assets and infrastructure or to turn fixed costs into variable expenses. It can also happen when a company decides to re-focus on its core competencies of R&D, sales and marketing versus distribution. All the above strategies are shaped at a senior level, and that’s where we need to be when the decision to outsource is about to be made.

LQ: As your firm has recently changed its name, please give us an overview of your company in terms of its evolution, and differentiators.

Cameron Joyce: In terms of history, parts of the company were founded in 1994 and 1996. The two core businesses came from the healthcare business of Associated Logistics Solutions, and a division of McKesson Canada named McKesson Outsource Logistics. In 2004, we merged those two businesses to become McKesson Logistics Solutions, which was a joint venture between Associated Logistics and McKesson Canada. In October, 2009, Associated Logistics bought out the partnership interest of McKesson Canada and it became 100 percent owned by Associated Logistics. Since the “McKesson” brand belonged to McKesson Corporation, one of the largest drug wholesalers in North America, we were required to change the name. We announced our new name and identity on March 1, 2010. Now, we have officially changed the name to Accuristix, with the tagline, “Advancing Healthcare Logistics”. We currently have distribution centres in the Greater Toronto Area, Calgary, Vancouver and Los Angeles.

One of the key differentiators of our business has always been our advanced information technology. We offer our clients some very unique supply chain visibility, event management and reporting tools, on demand, in real time. We’ve been able to do this because a large portion of our IT capability is proprietary and we have a significant IT development team in-house. Customized solutions are another key differentiator - while we endorse structure, standardization and effective QA and change control protocols, we are also as adaptable and flexible as possible.

We typically look for a way of wrapping a solution around our client’s business, rather than trying to adapt their business to how we do things. Of primary importance, we’ve assembled a great team of talented, dedicated and innovative people from pharma, retail, transportation, logistics and other diverse backgrounds, all of whom love what they do, have fun doing it, and put customer satisfaction first in everything they do.

LQ: What is your vision for Accuristix for the future?

Cameron Joyce: We’ll continue to hone our expertise, play toour strengths and be the preferred outsourcing option in the healthcare logistics niche. Keeping our resources focused on the specific needs of this industry and on the cusp of change, ensuring we have the best team to meet their needs, and continuing to invest in and develop our differentiators and unique service offerings will take us there.