When a healthcare provider was wrongly accused of breaching boundaries
We uncovered the truth inside their data
Life Sciences & Health Care Case Study
Supply Chain Analytics: Supply Chain Optimization (L&D)
Our client, a Fortune 500 company is one of the largest providers of health care products and services. Recognized for its quality of customer service and competitive prices, the company’s business groups serve more than 700,000 customers worldwide. The company operates through a centralized and automated distribution network, providing customers in more than 200 countries with a comprehensive selection of stock.
In 2009, our client was accused by one of their main manufacturers/vendors of supplying goods into mainland China, when they did not hold the rights to distribute these goods within China. The vendor presented our client with an ultimatum – find out how and where these products were entering the Chinese market, or we will cancel all trades with you. Overnight, a team of Deloitte experts was assembled to get some answers.
The team, including data analytic experts, got to work analyzing and interpreting information from various sources throughout the company in an attempt to find out how these products were distributed into the Chinese market.
Our client, a life sciences and health care provider, faced challenges from some overseas markets when introducing their goods. Within the Hong Kong market, there are strict controls to monitor the distribution of goods.
In 2009 it was discovered that goods were making it into mainland China, an area where our client had no distribution rights.
While products into mainland China needed correct certification or licences, it was discovered that the products found within China had no supporting documents and our client was accused of wrongful product distribution.
The manufacturer of these products reported what was happening to our client and stated that if this prohibited practice did not stop they would be pulled as distributors. This was a major blow as 80 percent of our client’s business came from this vendor.
The client needed to see distribution chains into and out of Hong Kong, find out who was selling what, and in which areas products were being sold to try and distinguish how the products were getting into mainland China. There was a very short turnaround time on this project, and a Deloitte team was assembled to complete the project within a two-week timeframe.
How we helped
There were 12 particular products we needed to focus on. These products had already been found within the mainland. We also established if there were other products not yet discovered.
To begin with, we collected all financial, account, sales, and distribution data from the company in order to understand the level of sales and the distribution pipeline into various countries. We focused on the Hong Kong and China markets looking at who sells to who, what sales were made by each sales person, and who the customers were outside Hong Kong. This information pinpointed any mainland customers, and from that we began to develop a process map of what that type of sale looked like.
Our analysis gave insight into the types of products being distributed in this area. We could trace the distribution and sale of products and test various hypotheses regarding the movement of goods into mainland China.
This project was not just a case of running standard tests or looking at one source of information. In any of the data analytics we carried out, there were numerous sources of data and a large number of hypotheses tested. This was needed in order to map and understand the distribution network.
Through our analysis, we discovered that there were some clients coming over to Hong Kong, purchasing the product and bringing it back to their offices in mainland China.
These products were small and therefore easily bought and transported privately.
We were able to prove that through no overt action of our client, their product was being sold in mainland China. Although the product was infiltrating that market, our client was not the distributor. The vendor accepted this and continued to use our client as the main provider of their products through a number of countries.