Tag: Research Centers

Boeing Center members had the privilege of touring Express Scripts’ automated prescription fulfillment center and analytics research lab on November 15. The new cutting-edge Technology and Innovation fulfillment center, located in north St. Louis, is one of five such facilities in the country and dispenses up to 110,000 prescriptions each day.

The center is operational 21 hours per day, six days per week, and is almost entirely automated, with the exception of a few humans (around 400 employees in various roles) to make sure that everything runs smoothly. And everything does, indeed, run smoothly.

Photo courtesy of Express Scripts.

Each pallet of prescription-filled bottles contains a radio-frequency identification (RFID) tag that allows the contents to be tracked and sent to the appropriate location. Then, each bottle has its photo taken to ensure precision, and an ultrasound scan measures volume displacement. Before the scripts are shipped out, computer algorithms calculate “porch time,” or distance, traffic, and weather conditions used to determine how much ice and/or gel should be used if the package needs to remain within a certain temperature range.
These quality assurance measures and state-of-the-art technology result in a 99.996% accuracy rate when filling prescriptions bottles, which are distributed to over 70,000 pharmacies all over the United States.

Adjacent to the fulfillment center was the state-of-the-art analytics research lab. Using the data analyzed in the lab, Express Scripts saves its 85 million customers more than $2 billion each year. One way they are able to reduce cost is by negotiating prescription prices with pharmaceutical manufacturers and determining which medications will be included on their formulary, or list of drugs covered under a benefit plan. They also take into account the prescription price index (PPI), which they calculate using data on the number of prescriptions filled per year, as well as the cost paid by benefit plans and consumers. The PPI gives them further insight into price trends of name brand and generic drugs.

The lab also contained a prototype of a vending machine designed to dispense drugs on the spot within a matter of minutes. The machines will use demographic and location information to determine what drugs to stock, and contain a phone that can be used to call a pharmacist. Another innovation in the works is a laser system that etches custom messages on pill bottle caps. These messages range from reminders about renewing prescriptions to invitations to download prescription management mobile apps. The personalized messages are expected to be a welcome update to the age-old “Push Down & Turn to Open” caps.

We are grateful to Express Scripts for inviting us to their campus to see their cutting-edge technology, especially Jan Burkett who organized the event and Susan Lanctot and Kyle Amelung, our tour guides for the evening. Stay tuned to the Boeing Center digital network (@theboeingcenter) for more fresh supply chain content!

During the McDonnell International Scholars Academy symposium session on “Asset Building for Retirement Security,” we were presented with the examples of the Australian and Singaporean social security systems.

Even though both systems are highly praised, I was surprised to realize that the discussion offered a counter-intuitive dynamic. While Australia was optimistic about the shift towards individual accounts and a lower fiscal burden, the presentation regarding the case of Singapore –a highly praised social security system– focused on the problems of lack of transparency and consistency in the public policies of the country across time. It seemed like there existed some consensus that countries should be moving towards the individual account system (in any of its many flavors), given the current situation of higher longevity and decreasing birth rates.

But there is one key aspect of the discussion and the implementation of this new system that was not emphasized enough. That is, the role of expectations. When presenting a system like this to a country, the public usually cares about one particular variable: How large is my pension going to be?

An Individual Account Pension System sets the final pension as a percentage of the salary each individual received before retirement (called pension replacement rates). In particular, the Australian superannuation system is expected to achieve a replacement rate of 65% by 2050. And this is indeed very promising. But what if it doesn’t?

One of the characteristics of this system, contrary to what happens in a government-funded retirement scheme, is that the true replacement rate will only be revealed after 30-40 years of its introduction (once the first young beneficiaries retire). At that moment, if the initial promise is not met and pensions turn out to be too low, this will cause a great deal of social unrest and put pressure on the fiscal budget (the very situation this system is trying to avoid).

Achieving high replacement rates is intimately tied to a formal and efficient labor market. If people stop contributing to their funds for extensive periods of time (either because they are self-employed, unemployed or work in the informal sector), their accrued wealth will be dramatically diminished.

While admittedly Australia shows low unemployment rates and little difference between male and female rates, this is not the case in many countries, especially in the developing world. Hence, transparency about the inherent risks of this type of pension system, as well as acknowledging that the government will probably have to step up to provide minimum pensions is key. This will anchor expectations and provide a more accurate cost-benefit analysis, which will reduce the likelihood that moving towards this system will turn out to create a future liability.

Photo by Mary Butkus/WUSTL Photos

Guest Blogger: Rodrigo Moser, McDonnell Scholar and Olin PhD student in Finance.

The McDonnell International Scholars Academy provides the network with which Washington University in St. Louis incubates new ideas and mentors future leaders. Through our partnerships, we lead groundbreaking research projects and prepare our Scholars to be effective leaders in a global community.

Read more from the McDonnell Scholars

The Boeing Center for Supply Chain Innovation presents…an interview with Professor Panos Kouvelis, Emerson Distinguished Professor of Operations and Manufacturing Management and Director of The Boeing Center for Supply Chain Innovation at Washington University in St. Louis, about the Global Supply Chain Benchmark Study, a collaborative research initiative of faculty at leading business schools including Olin. Below is an excerpt of the report; for the complete report, go here → http://bit.ly/GSCBS2016

BACKGROUND

“For the past 25 years manufacturing offshoring to low-cost locations like China has been the dominant strategy for many western manufacturing companies. This has led to a significant reduction of manufacturing jobs in developed economies. Recently, many manufacturers have reported they plan to bring back at least a part of their global production volume to developed countries. General Electric, for example, announced in 2012 they would relocate manufacturing and R&D of their household appliances business, which had previously been offshored to China and Mexico, to Louisville, KY in the USA.1 Similarly, Plantronics, a U.S. based manufacturer of headphones, shifted production volume back from China to Mexico.2 At the same time companies from perceived low-cost countries have reported investments in manufacturing capacity in developed economies. For instance, the Chinese company Lenovo recently brought back the production of personal computers to North America.

While there seems to be an emerging trend to reshore production, traditional offshoring to developing economies continues to be a viable phenomenon. For example, General Motors recently announced a USD 12bn investment in new plants in China.4 These examples offer just a glimpse of the magnitude of manufacturing location decisions companies are currently making in a wave of restructuring of their global supply chains.”

EXECUTIVE SUMMARY

“Despite the growing attention in the business press to reports of companies relocating manufacturing to western countries, there is very little empirical research on the scale of such decisions, their drivers and their impact. Hence, in this study we investigate current trends in production sourcing. Based on a survey of 74 leading manufacturing companies predominantly from North America, Europe and Japan we shed some light on (1) what production sourcing decisions are currently being made, (2) what drives these decisions and (3) what results do they lead to.

Our research suggests that there is a significant wave of restructuring of global supply chains in progress. Companies de- and increase production volume all over the globe as shown in the overview presented in Exhibit 1. However, we did not observe a dominant strategy for sourcing production volume. Companies make different decisions for a variety of reasons. While China continues to be the most attractive country for manufacturing, many companies reported following (also) other strategies. Moreover, we see that decision making has evolved from simple cost comparisons to more complex trade-offs between a magnitude of factors that are deemed important, i.e., across quality, market access and risk. Based on these and other reported drivers we see a shift of production not only to China but also to Eastern Europe and the ASEAN countries which are being used as nearshore sources of production for Western European and Chinese markets respectively.

For North America we see evidence for a return of manufacturing. It is not a strong trend but in our sample more companies report shifting production volume to North America rather than offshoring to other countries. This pattern is not consistent with the much cited reshoring trend predicted by many business and political commentators. The movement we observed is not driven by the reshoring of American firms but rather by European and Asian firms offshoring who account for 60% of the production volume increase in North America. While this is good news for manufacturing in North America, the indicators for the future of manufacturing in Western Europe appear to be less bright. Indeed, Western Europe is one of only two regions for which our sample reports a net decrease of production volume. Companies reported offshoring for a variety of reasons including shifting to either less costly locations or to places closer to market demand.

Despite the decline in production volume in certain regions, there is no evidence for a further decline in manufacturing jobs. In fact our sample reports that for China, Western and Eastern Europe their sourcing decisions hardly impacted employment. Moreover, it was only for North America and Japan that growth of manufacturing employment is observed.

We believe the analyses and insights presented in this research not only inform but also call for action. Executives should look at their supply chains critically by challenging their current footprint and production sourcing choices. We explicitly encourage benchmarking against the companies in our sample within their industry and across industries. Insights into market expectations and the forces driving the reported production sourcing and technology decisions should stimulate a discussion about future strategic actions.

For policy makers – especially in Western (European) countries – this research provides information concerning the perceived attractiveness of regions worldwide. Reading the report will provide policy makers with data about the trends in industry and the factors that have led companies to shift production into or away from particular regions and can thus inform the debate on how manufacturing policy can boost competitiveness, attract and retain manufacturing jobs.”

For the complete report, go here → http://bit.ly/GSCBS2016

If you want to know where the stock market is going, follow the short sellers. That’s the advice from Olin researchers based on their research into the patterns of short sellers and market cycles. The new index they have devised currently predicts that 12 months from now, US stock prices will be higher. Marketwatch columnist Mark Hulbert talks to Olin assistant professor of finance, Matthew Ringgenberg about the short seller index:

The index that he and his co-authors came up with measures the extent to which any given month’s short-selling volume is above or below trend. It’s this index that they found to have a superior track record forecasting the stock market’s returns over the subsequent 12 months.

The index is based on research by Matthew Ringgenberg and Guofu Zhou, professors at Olin Business School and David Rapach, St. Louis University, Cook School of Business. Professor Ringgenberg discusses the research and index in video, click below to watch.

Link to Marketwatch column.

The Boeing Center was pleased to host Marcia Howes, Vice President, Chief Supply Chain Executive at BJC HealthCare, for the final BCTIM Operational Excellence seminar of the semester.  Her presentation, titled “Navigating the Healthcare Supply Chain,” focused on the challenges of inventory management in the healthcare industry.

As evidence of their supply chain innovation initiatives, BJC was recently named the 2015 national healthcare provider Supply Chainnovator award winner by Gartner, Inc., a leading global research and advisory company. For more information on this impressive achievement, click here.

More about Marcia

Marcia has been with BJC since January 2015 and has been a Supply Chain professional for over 25 years.  She has broad-based experience in Supply Chain Operations, including past assignments as Executive Director, Supply Chain & Operations Improvement for Amgen, Inc., and Director, Supply Chain and Quality Processes for Honeywell’s Specialty Mate­rials.  She has developed and implemented Sales, Operations and Inventory Planning processes; led on-going service, inventory and cost optimization programs; and led multiple acquisition due diligence activities and integration planning.

For more content on supply chain innovation, check out our LinkedIn group.

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His first official day on the job is several months away, but the Chancellor and Provost were eager to introduce new dean designate Mark Taylor to faculty and staff during his visit to campus this week. Taylor, who is currently dean at Warwick Business School was welcomed at a reception in the Frick Forum on June 6.

In brief remarks at the gathering, Taylor said WashU’s collegiate Gothic architecture made him feel a bit at home with its references to the great halls of his alma mater, Oxford University. He acknowledged Dean Gupta’s achievement of establishing a strong “platform upon which we can build.”

Taylor takes office Dec. 1, 2016. Kurt T. Dirks, senior associate dean and the Bank of America Professor of Managerial Leadership at Olin, will serve as interim dean from July 1 through November. Related post.

In addition to being one of the most cited researchers in the areas of economics and finance, Taylor’s career has included positions at Citibank, the International Monetary Fund, and BlackRock. In addition to his academic honors and numerous degrees in social sciences, he holds a Master’s degree in English literature with a focus on Shakespeare.

Taylor said he welcomes the opportunity and challenge to lead Olin. As he prepares to take the helm of the business school and steer it successfully into its second century, he cited these lines from the bard to conclude his remarks:

There is a tide in the affairs of men,
Which, taken at the flood, leads on to fortune;
Omitted, all the voyage of their life
Is bound in shallows and in miseries
On such a full sea are we now afloat,
And we must take the current when it serves
Or lose our ventures.
Julius Caesar, Act 4, Scene 3

Reception welcoming new dean Mark Taylor:

Click on thumbnail to expand image. Photos by Sid Hastings, WUSTL Photo Services.