TAdviser Interview: The CEO of Rigla network about technology revolution in pharmaceutical business

Alexander Filippov The IT value in this industry is also high, as well as in any other industry and in human life in general. A task of the company now even not in being ahead and not to lag behind, be in a trend. Our company grows, and with increase in scales of activity manual control by processes becomes either impossible, or inefficient. Here technologies in any areas come to the rescue: document flow, management of the relations with the client, order management, queue, cash desks, etc.

Alexander Filippov If to speak about intra office processes, the effective company should have the high performance of work. And here people and IT are continuous: to receive maximum efficiency of work, we should get rid of handwork as much as possible. The weakest link in any process is a person. The machine is mistaken extremely seldom, and development of IT goes the way replacements of the person on routine sections of work. I think, we will see cars without driver soon, trains without driver, etc. already go.

At the same time employees are one of the main values of the company. They make the decision, create operation algorithms, use these tools. Their work should be not only effective, but also convenient, bring pleasure him. Technologies allow to simplify and improve work.

Alexander Filippov The pharmaceutical industry, perhaps, has no special specifics. At the same time, its feature that it is very social. Medicine can bring to the person benefit, and can do also harm. Therefore in pharmaceutics the contact with the buyer is very important, and goods issue control, control of the prices here more tough, than in some other areas. IT develop according to these features. Technologies allow to provide the personified approach to the client, to make a purchase of the simplest and convenient. The doctor prescribes to the patient medicine, and it should appear for this person in the right place and, is good, at the necessary price. In this direction the industry and we develops.

Ideally for the buyer it is necessary to create such conditions that he when it needs something, did not sit and did not ring round drugstore, and could come to one point, get there the qualified advice and all necessary medicines. And it is good still that he received the message when it finishes medicine, that the drugstore prepared for it new packaging.

Alexander Filippov One of the main sources of the ideas and initiatives of IT projects – management of our company. They as business customers, designate the interests. Experience of other companies which we "spotted" can be a source of ideas also.

My role is first of all in estimating practicality of what wants to implement management. Unfortunately, some things in the field of IT who were implemented in the company are not used in a due measure. And some things were made, but afterwards were not interesting to us. A role of the director – to cut useless initiatives.

Vadim Gorbunov

Vadim Gorbunov Decisions are made approximately in one model, though not each question reaches the CEO because on scale they are different. If, for example, the project budget makes the considerable amount, then it is taken out on the level of the top management. At the same time decision making process on all questions, irrespective of level, approximately identical. The task always should have a customer from business even if the idea proceeds from the employee of IT department. Always is responsible for execution, there are terms, in advance described result and methods of its check.

Alexander Filippov I will add one more important point: in any project there has to be "engine", the person to whom the result is necessary more, than to others.

Vadim Gorbunov Yes, strategy is. We have two large areas of work. One of them - an operational part. It makes a start from the main requirement – everything should work according to SLA which is signed at IT department with business. There is a task to constantly increase labor productivity of my employees and to reduce the price of the cost of services: communications, service of cash desks, computer hardware, etc. For this purpose we, including, adhere to the principle to reserve the works specific to us and giving the maximum effect for business, and everything that is possible, to give to the contractor. Certainly, at due quality and suitable service prices. Support of cash desks and the equipment at us, for example, is transferred to outsourcing.

The second direction – business development, increase in its efficiency and development of competitive advantages. It includes a number of IT projects which we with a certain frequency review. We select from them the most significant for business and within half a year or year we implement technologies. Rigla this year celebrated the 15 anniversary. During this time in the company a quantity of the outdated information systems non-compliant to the requirements of business collected. As served the term, such systems we replace everything. There is a strategic road map of such replacements.

Our task – to find the best option for replacement which can be purchased, integrated into a short time in our landscape and to provide effect on a joint of technologies and people. It is not enough to implement technology, it is important to teach to use correctly people it.

We create the main directions of strategy in five-year perspective. And it concerns both business strategy, and IT strategy as it is the connected things. And further – the period is shorter, the more precisely we should see. Under strategy the card of the purposes, and under the purposes – tasks is built. Every year we review planning the next year, we specify it.

Vadim Gorbunov We have own DPC with the virtualized servers. In it all most intellektoyemky software is set, and all data of outlets almost in real time are collected and processed there. Together with growth of the company and amounts of data we increase also resources of DPC. In spite of the fact that Rigla is quite large company – we have about 2000 drugstores – the scale of DPC to modern measures still quite modest.

In drugstores there are also local systems. For example, ensuring functioning of cash desks. They are quite simply suited: in them the logic considering what goods make the way at what price what expiration date at it, the current actions, cards of loyalty etc. is put. A role of pharmaceutical subsystems – it is unobjectionable to perform the rules of the game determined by the central office and to provide a productive and convenient workplace for the front-line worker.

Alexander Filippov The more at the checkout is opportunities for the buyer, the better. It and an opportunity to pay off from phone, both to receive a discount, and to participate in actions and so on.

Alexander Filippov We now with Sberbank finish replacement of point-of-sale terminals and the software in drugstores. In some points it is already possible to pay goods in such a way. Within one month we expect to extend this technology for all pharmacy chain. There is a dependence not only on our opportunities, but also on opportunities of bank in which our client is serviced. Sberbank has such opportunity.

Vadim Gorbunov From the last projects where input of systems was carried out to commercial operation, it is possible to cite as an example automation of replenishment of a trade inventory of drugstores. The range of goods in Rigla pharmacy chain includes several thousands of positions, and existence of goods in due time and in the necessary quantity is extremely important for us. And here it is important to observe balance of two factors: situations when the goods ended, should be as little as possible, but at the same time and the surplus of goods should not be. The "manual" order in our drugstores several years – a rare phenomenon (about 5%), under individual demand. Before the self-written system working on difficult algorithms and yielding satisfactory result was used.

A new system based on the product Symphony from Inherent Simplicity company which we implemented allowed to improve this result significantly. A system calculates the need for goods taking into account the speed of its implementation, quality of deliveries, the purposes which we set. Important difference of this system is her adaptivity to the current situations, the speed of reaction to changes. With its help we reduced our trade inventory by 25% and at the same time improved the level of service.

One more example of implementation of new software - a management system for budgets and financial statements based on the software Microsoft Navision and IBM TM1. It works for us the second year. Implemented it together with Navicon company. We invested in this project and gained positive effect in several directions at once. The solution allowed us to increase the speed and quality of planning of budgeting, speed of formation of financial statements, to improve quality of analytical cuts. Besides, we laid off number of employees who are engaged in it. One more important point – information began to be in a unified environment – more available and clear. It was very pleasant to see how line managers begin to use opportunities of the analytical reporting independently.

Vadim Gorbunov Here it is about financial managers. We cut their number almost by half, and it is not a limit. There are opportunities for further optimization.

Vadim Gorbunov One more important system which we put into commercial operation, - the system of assessment and component analysis of revenue and a configuration of new outlets. It allows to define optimal points for opening of new drugstores, considering presence of competitors in the surrounding territory, the number of the population and by what contingent it is provided, the lease cost, a situation with traffic intersections and other factors.

We made this system the first in a pharmroznitsa, it is our own development. So far it is used not in full, but we already made the decision on its scaling on the company, provided training of our regional structures. In the nearest future we will transfer all network to a system.

Of course, no system will make for us the decision where it is better to open new drugstores. But it can collect from all possible sources at most of information necessary for decision-making. After that specific information on future point is collected by the person on a certain algorithm, and then all collected information is analyzed. Results are: the forecast, outputs about strong and weaknesses of outlet and their assessment in terms of money. These results are considered by management at making decision on opening. An important point – possibilities of machine learning are involved in a system.

Alexander Filippov For me this project once again showed what can implement any imagination of the manager of IT. In the near future we plan significant expansion, opening about 500 new drugstores a year. And at such number of opening a new system allows to reduce quantity of errors and to have less than the closed outlets in the future. It is essential economic effect.

Alexander Filippov What will be for clients of methods to purchase goods more or to receive service, it is better for those. It should have a choice. Not all opportunities are still sold in the market. Here is where to develop. All new sales channels should be provided in Rigla.

Vadim Gorbunov The main share of sales at us goes now through what it is possible to call the classical channel. A share of Internet sales so far rather modest, but on the near future we have serious plans for their development. At the same time our current infrastructure allows to do it, we do not need to create for sales on the Internet additional warehouses. In the pharmaceutical sphere in this area there are some legislative restrictions, but now in the government there is a work on this subject, and we expect changes which will simplify all this. Then we expect the multiple growth of Internet sales in Rigla.

Vadim Gorbunov At such growth rates as at our company grows in general and the IT budget, generally at the expense of CAPEX. Here costs for software development and implementation of the new systems, for updating of the server hardware enter. OPEX, on the contrary, is reduced from year to year.

Alexander Filippov First of all, it is the technologies simplifying communication with the consumer. At some stage, perhaps, these communications will happen even without druggist. Now the population very much is drawn towards self-treatment, and often the druggist executes a role of the consultant. The electronic system of accounting of recipes will be sometime organized, and from the doctor the recipe will go at once to that point where it is necessary for the consumer, under this recipe from other point the necessary goods will move forward at once. The client will need only to take away it. And if he received accurate instructions for use of medicine from the doctor, then consultation in drugstore is not necessary to it. Thus, the druggist can be excluded from this chain.

It is clear, that all similar processes should change at the level of the legislation, but we speak about the future. Communications, time of communication with the client will become is shorter.

One more perspective direction of the future is a telemedicine where the pharmaceutics and drugstore should find the place. I think, Big Data technologies which doctors will be able to apply to more exact diagnosis will be used, and the same technologies will be able to be broadcast also on the pharmaceutical market.

Vadim Gorbunov Here it is possible to remember also insurance medicine which is developed in many countries. In Russia it is going to develop it too. And in medicinal insurance of drugstore will be able to take the place.

Vadim Gorbunov We study experience of the foreign pharmaceutical companies. For example, projects on robotization of drugstores. We have an experience of use of robots in own drugstores, but so far we are not going to put it on a flow. The matter is that the cost of work of personnel in drugstores is yet not so high to gain essential economic effect of replacement of a part of their functions with robots.

Alexander Filippov On the one hand, others experience should be studied, but with another – the companies are often very closed in respect of issue of project information. They can report on what they made, but they do not tell nuances and secrets of the project. Two identical solutions cannot be therefore, anyway, it will be of implementation for the company the first own experience at the level. Repeat in accuracy others experiment will not turn out.

Alexander Filippov In my opinion, in the market of pharmaceutical retail in terms of technologies big prospects are offered. For increase in business performance of Rigl implements all the best that is in the IT market, and will continue to move in the same direction.