Understanding what a customer needs is paramount to developing sound and realistic working proposals. Panalpina outlines how, by focusing on value, it was able to build a long-lasting and successful relationship with one of the world’s largest pharmaceutical companies.
When it comes to managing enterprises, everything is about relationships – and relationships are all about collaboration, and the value that they create. A relationship is measured by the level of collaboration reached and the value created for the enterprise.
There are several key success factors to transforming a value proposition into value creation. First, one should have a comprehensive understanding of the customer’s needs. Second, the value proposition should be effectively implementable within a reasonable time. Third, and more importantly, there must be a strategic alignment between the potential customer strategy and the supplier.
Strategies designed for the complex healthcare industry
In 2007, Panalpina gained one of the largest pharmaceutical companies as a customer, an opportunity that would add value to both companies. This also created momentum to further develop the healthcare vertical market for Panalpina. And so the relationship materialised and value creation became the driver, particularly during implementation, thereby transforming value proposition to value creation.
Having a clear understanding of what the customer required, from the beginning of the relationship to the final award, enabled Panalpina to effectively prepare a business proposition that could be transformed into reality and comply with all the complexity that the healthcare industry presents. Understanding the customer’s needs started with learning about their products, trade lanes, routings and packaging/cold chain through to mapping the strategies of both Panalpina and its client.
Panalpina developed a strategic roadmap that would generate the value the customer expected within the time they wanted it to be realised. This level of relationship and information-sharing could only be accomplished by building trust. Trust is built with results – value creation – managing all product requirements effectively, including the cold chain, helped Panalpina to create that trust.
But just learning about customers was not good enough: Panalpina needed to understand their vision and transcend from being a mere supplier to becoming a strategic partner. A senior manager once said: "You listened". Panalpina learned that understanding customer needs means listening to what they have to say and determining if it could be delivered. It was clear: commit to what can be done efficiently and effectively deliver.
A flexible approach to pharmaceutical supply
The key to a successful implementation involves effective planning and collaboration from both organisations. It also requires a level of expertise related to the healthcare industry such as handling cargo using passive or active cooling solutions that will, as another senior manager put it, "close the gap between sales and operations". The implementation needs to be the realisation of the value proposition. More importantly, ‘value’ creation needs to be part of the implementation.
Panalpina’s approach was systematic and pragmatic. The project plan was driven by the original proposal and by three maturity levels to manage expectations. All implementation deliverables were a reflection of the business proposal that Panalpina originally submitted. The implementation has been a success. There has been close collaboration between the enterprise, and all aspects of the value proposition were implemented within the required scope and time frame. Obviously, flexibility and commitment from both parties played an important role in delivering value.
Consequently, strategy alignment is a critical component for building a strong relationship and, therefore, for value creation. Aligning strategies provided a structured approach to relationship management. One of Panalpina’s strengths is flexibility. Its customer culture is that of a pioneer and is highly dynamic. Having a customer that openly shares its future strategies provides incredible value to Panalpina to effectively and continuously provide suitable solutions, and becoming a strategy enabler for the customer was the most rewarding exercise. Panalpina became a better organisation as a result of this relationship.
Failing to listen to customers creates levels of complexity for relationship management. Nonetheless, there need to be satisfying benefits for both organisations to invest time and money in building relationships.
Value creation for all organisations
Everyone is looking for value creation. It does not matter who is in the driving seat, value needs to be created for all organisations to exist. The key is to focus on the long-term strategies and not linger on tactical aspects that add no value to either party. Understanding what the customer needs is paramount to developing sound and realistic proposals.
Closing the gap between value proposition and value creation starts by not creating it. This can only be done if we know what the customer needs today, tomorrow and the day after.
Take full control of cold-chain management
The Dixie Jet by Panalpina provides a true temperature-controlled environment that is perfect for the reliable, cost-effective and fast transport of sensitive pharmaceutical and medical technology products. In a proactive approach, the company’s healthcare experts showed a medical technology company how it could improve its supply chain.
The primary challenge of companies in the healthcare industry is to maintain compliance, product integrity and security along their supply chain; however, this has led to rising logistical and transport costs.
To combat this problem, Panalpina approached a US company that develops medical technology and services. The firm has operations and manufacturing facilities across the world and sells products for the treatment of cardiac and neurological pain patients in more than 100 countries.
Panalpina analysed the company’s complete supply chain, identified the key challenges and presented a tailored solution.
Multiple challenges
The main challenge was reducing overall transportation costs and making the supply chain leaner and more transparent, while maintaining controlled temperature conditions throughout the transportation of sensitive products.
When Panalpina approached the company, it was shipping freight from Latin America (production) via two different locations in the US (sterilisation and preparations for export) to Europe using commercial carriers. This made the supply chain very complex, visibility was poor, logistics costs were high and flexibility was low.
Tailored solution
Panalpina successfully demonstrated how the supply chain could be greatly improved. Its solution took the complexity out of the supply chain, made it more visible (order forecast) and guaranteed controlled temperature conditions. Panalpina could shorten the supply chain by offering its own controlled ‘cool plane’: the Dixie Jet.
The Dixie Jet was launched in 1990 and is one of the longest existing, single transatlantic cargo connections. Thanks to this unique service between Huntsville, Alabama, and Luxembourg, one air freight leg in the US could be eliminated. With five eastbound flights per week (four westbound) the service offers sufficient capacity, high flexibility, a stable supply chain and 100% visibility: every flight is fully controlled by Panalpina.
True temperature-controlled environment
The Boeing 747-400F planes used for the Dixie Jet provide a true temperature-controlled environment, because the temperature in a designated cargo area of the plane can be controlled and monitored from the cockpit.
Temperature control could therefore be changed from an active to a passive and more cost-effective solution with thermo blankets. These blankets protect the goods by covering the complete unit load device. The temperature is not only monitored onboard the plane, but also throughout the whole transport system, from door to door. This is achieved through an end-to-end, proactive temperature monitoring and control setup based on radio-frequency identification.
Various benefits
The customer benefits from Panalpina’s proactive approach and the implemented solution in the following ways:
- full supply chain visibility
- own-controlled air freight service guaranteeing sufficient capacity and flexibility
- controlled product temperature ruling out temperature excursions and damages
- lean, smooth and stable supply chain
- reduced logistics costs
- reduced total lead time and a shorter order-to-cash cycle
- improved CO2 footprint (estimated reduction of 172t of CO2 per year).