Conventional wisdom contends that inventory is bad and that intangible services cannot be stockpiled. In fact, an entire branch of management science experts work tirelessly to wring inventory holding and transfer costs from global supply chains. With a growing portion of the US economy being service based, is it heresy to assert that services should be inventoried?
Sunil Chopra and Martin Lariviere, from Northwestern’s Kellogg School of Management, define service inventory as “the portion of work that has been performed and stored before the customer arrives or places an order”. The strategic application of ‘Service Inventory Principles’ can significantly improve the value of management sciences outputs, and enhance the results of pharmaceutical marketing and sales organizations. In this article, Service Inventory will be defined and characterized, benefits outlined, and future research pathways proposed.
Service Inventory can be characterized by the following:
As a case example of Service Inventory, let’s examine the ‘differential resourcing’ sales model. Over the past 20 years the pharmaceutical sales model was characterized by multiple PCP teams, aligned in mirrored territories. This is a classic ‘push’ delivery model, where sales force sizing and alignments were created centrally, and pushed to the field. This process is costly, requires long lead times, and is inflexible, with brands and local markets compromising to the needs of the portfolio or ‘master brands.’
Differential resourcing moves the push-pull boundary closer to the field. By freezing the alignment configuration and altering the number / type of resources in a given geography, field managers could more rapidly adapt to local conditions. Rather than home office pushing a call plan, local changes ‘pull’ staffing and call planning activities on demand.
In addition, differential resourcing changes the resource requirements for field planning. It reduces the need for territory realignments, but increases the complexity and customization required for optimal call planning. Since a sales territory might be staffed with 1, 2, or 3 sales resources, optimal call plans for each scenario can be developed ahead of time, and put ‘on the shelf’. Importantly, the inventory acts as a ‘buffer’ that enables the use of automated processes and offshore resources to realize economies of scale and low cost delivery.
Finally, with differential resourcing, access policies change, as alignment and call plan refinement move much closer to the field. Through web-based portals, local managers can order and/or access inventoried services (e.g., call plan and quotas based on a given resource package).
Management sciences professionals can apply, these service inventory principles to enhance the value delivered to life sciences business challenges. Service Inventory has demonstrated many benefits, including:
This concept is applicable in following scenarios:
Additional applications could include:
To learn more about improving the ROI of your analytics or to apply Service Inventory principles to your business please contact us at connect@axtria.com
About the Author:
Charlie Thompson is a principal at Axtria with more than 25 years of consulting experience in health care and financial services. Charlie brings in expertise in the development of technology and analytical intellectual property to find, win, keep and grow customers.