CPDN Case Brief 2
Canadian Pharmaceutical Distribution Network Case Brief
Major Issues
The key issue with the current performance measurement system is its inability to accurately capture the metrics that can provide key insights. Currently, the KPIs used in the CPDN warehouse do not account for the root cause of poor performance or a basis for corrective action. Our past performance levels have been very good but recent complaints from customers and pharmaceutical manufacturers have subjected the system to scrutiny and there is a need to conceptualize a more robust performance management system with a view to maximize customer satisfaction and manage the expectations of key stakeholders.
Analysis
Exhibit 1 depicts calculations done based on last month’s performance. There were 2000 lines backordered that resulted in backordered sales of approximately $910,000. Furthermore, the backorder rate (Exhibit 2) was at 6.67%. This is one of the indicators that are not currently measured and clearly have a major impact on the business. UPS logistics and CPDN lose credibility every time customers order directly from the manufacturers, putting in question the need for an agency such as CPDN. There is also the issue of customer safety in case drugs are not available in life threatening situations at the hospitals. I believe the key areas of concern with a new performance management system are maintaining confidentiality to avoid collusive trade practices, prioritizing and tracking critical KPIs and developing a robust framework for root cause analysis and corrective action.
Recommendations
Exhibit 2 depicts a list of nine KPIs that have been suggested to manage the warehouse operations and improve customer service. These KPI’s have been categorized under efficiency, quality and financial buckets based on their nature. The indicators have also been assigned “owners” to manage the issue of accountability. The main criteria behind choosing these KPIs was to maximize customer satisfaction
Major Issues
The key issue with the current performance measurement system is its inability to accurately capture the metrics that can provide key insights. Currently, the KPIs used in the CPDN warehouse do not account for the root cause of poor performance or a basis for corrective action. Our past performance levels have been very good but recent complaints from customers and pharmaceutical manufacturers have subjected the system to scrutiny and there is a need to conceptualize a more robust performance management system with a view to maximize customer satisfaction and manage the expectations of key stakeholders.
Analysis
Exhibit 1 depicts calculations done based on last month’s performance. There were 2000 lines backordered that resulted in backordered sales of approximately $910,000. Furthermore, the backorder rate (Exhibit 2) was at 6.67%. This is one of the indicators that are not currently measured and clearly have a major impact on the business. UPS logistics and CPDN lose credibility every time customers order directly from the manufacturers, putting in question the need for an agency such as CPDN. There is also the issue of customer safety in case drugs are not available in life threatening situations at the hospitals. I believe the key areas of concern with a new performance management system are maintaining confidentiality to avoid collusive trade practices, prioritizing and tracking critical KPIs and developing a robust framework for root cause analysis and corrective action.
Recommendations
Exhibit 2 depicts a list of nine KPIs that have been suggested to manage the warehouse operations and improve customer service. These KPI’s have been categorized under efficiency, quality and financial buckets based on their nature. The indicators have also been assigned “owners” to manage the issue of accountability. The main criteria behind choosing these KPIs was to maximize customer satisfaction