A pan-India scale-up will commence during the second half of the year

ep-tarnea-smartsmile-600

Tarnea, is a technology company based in Bengaluru recently launched a cloud-based digital platform for pharma retail – the Tarnea SmartMile. The company claims that its solution will enable ‘brick-and-mortar’ pharmacies to become digital pharmacies. Suresh Satyamurthy, Co-founder and CEO, Tarnea Technology Solutions, informs more about this solution, the changing dynamics of the Indian pharma industry, role of digitalisation and more

The pharma industry has been very cautious in adopting digital technology, especially in manufacturing and supply chain operations.

20180615ep12

Suresh Satyamurthy

Both the pharma industry and FMCG have striking parallels. Both are selling packaged goods to millions of customers through a complex multi-tiered supply chain and selling through lakhs of retail points. But that is where the similarities end.

Most leading FMCG companies have adopted digital technologies to gain visibility into their downstream supply chain and this goes back to manufacturing also.

For starters, most leading FMCG companies have invested in barcoding their products right from their factories. Like the pharma companies, they too get a lot of their products manufactured on contract from external manufacturers. But the sanctity of the barcode is strictly maintained. Pharma products as you know, seldom carry any barcodes.

The pharma industry is yet to evolve the process or implement the technology solutions for ‘track and trace’. The entire industry is extremely fragmented and there is no visibility or connect between the retailers and the pharma companies.

While a lot of pharma companies have invested in tablet-based solutions for the medical representatives for detailing to doctors, they have no visibility to their own sales stocks, shipment and fulfillment. As a result, the pharma supply chain carries over 210 days of inventory, whereas the FMCG vertical operates with less than half of that. It reflects in a dramatically huge lock in of working capital of over Rs 50,000 crores.

There is a strong business case, and compelling return on investment for investment in digital technologies. All we now need is some concerted action.

How can digital technology aid in enhancing transparency and visibility into pharma supply chain operations and help take better and faster decisions?

The problems with the pharma supply chain in India are particularly acute. There has been frequent news for product recalls and for the wide prevalence of spurious and counterfeit drugs in the market. In addition, there are frequent issues of losses due to expired drugs and the risk of these being sold to unsuspecting consumers. And very significantly, there are daily and frequent shortage of drugs at the retail counters. It is almost impossible to establish the operating conditions under which products have been stored or during transit. The common thread of all these problems is the same — lack of visibility of information across the supply chain.

In my view, there are there steps to solve the problem of visibility and transparency.

Product serialisation

Universally every SKU sold in the market needs to be uniquely serialised. Conceptually this is similar to the registration numbers on vehicles. Each vehicle is uniquely identified.

In the western world barcoding each product is the norm. In India, it is mandatory to barcode pharma products produced for exports. But sadly it is not mandatory to do so for the domestic market. There have been some efforts by individual companies and some retailers to implement barcodes, but these are few and far between. And certainly doesn’t solve the problem of visibility industry-wide.

We live in interesting times of technology evolution. It is worth relooking the technology options beyond barcodes. There are serious alternatives like RFiD and IoT to consider.

Track and trace solutions

Having the products to carry a unique serial number is only a starting point. There is a need to be able to use the unique serial number or identification on the product to be able to track and trace the product wherever it might be. Such a solution will tell us not only where the product is but also how it got there and what operating conditions it was subjected to. And, in case of a recall it gives a clear path for it to be brought back. Such a system will help the pharma companies to improve the availability and quality of the medicines, and an effective handle to deal with spurious and counterfeit drugs.

It is particularly important to provide consumers with an interface to access this information to ascertain the genuineness of the product they buy.

Retail automation

Of the 850,000 retail pharmacies in India, a very small fraction have any automation. Therefore, even if product serialisation and track & trace solutions were to be introduced, it would fail without automation at the retail end of the supply chain.

A small number of retail pharmacies use computers in their shops. This is used as a billing machine. They are typically built on legacy technologies and incompatible with contemporary technologies. Hence, they would fail to benefit from product serialisation and track & trace technologies.

But the good news is the retail automation technology has become simple and affordable. It can be easily implemented in just a few hours.

How can Tarnea bring in a new paradigm in the pharma sector? How will your solutions enhance planning accuracy, efficiency and productivity, inventory levels, and service levels in the pharma industry?

Tarnea mission is quite simply that – “Every retailer will sell like an Amazon and buy like a Walmart”. Presently, Tarnea SmartMile platform has been implemented only for the pharma industry.

It changes the very paradigm of automation at a retailers’ level and connects him with both, his customers and his suppliers in real-time.

It is simple and easy. Anyone can start using to sell using the platform with a 30-minute training.

There are customer engagement tools which pharma retailers can use to drive their own loyalty programmes and run several engagement programmes.

Likewise, the platform allows retailers to connect with and transact with their suppliers in real-time. They can share with each other the stock and delivery status. The settlement and reconciliation of their payments, receivables, tax and accounting is automatic.

Even for some of the very large organisations data management is a complex and vexing problem. But for the users of the Tarnea SmartMile platform, data management is automatic. Any changes to products, product attributes, pack information, barcodes, tax rates, tax categories, drug classification etc. is handled automatically and centrally.

For the first time, retailers are able to use their own data to obtain analytics and business intelligence. The platform provides easy to understand charts and information for retailers to run their business driven by their data.

Inventory management is automatic and driven by a few key rules. Stocks are too high, the system will alert against further stock build up. Too low, it will alert the status. If it hits the re-order level, the system triggers automatic ordering. Anything due to expire, the system will help the retailer to return the stock or liquidate.

Which are the major markets in the country that you plan to tap? How and by when do you plan to scale up to serve pan-India?

At present, we are sharply focussed on the pharma industry. The Tarnea SmartMile platform is currently being used across AP, TS and TN. We are in the process of expanding to Western India. A pan-India scale-up will commence during the second half of the year.

What are your growth strategies, in the short term and the long-term?

Our growth is primarily driven through references from existing customers. That will remain unchanged in the short and mid-term. A lot of these interactions necessarily happen offline, since most pharma retailers are not reachable digitally. Over the longer term, as the digital adoption increases, we hope to reach out to our market directly and digitally.

Why is it the right time to be a digital player servicing the Indian pharma industry?

We are living through three tsunamis and scarcely feel it! These are –

  • Growth and reach of Internet penetration
  • Digital identity for citizens and businesses
  • Success of SMEs who have already adopted new age digitally enabled business models

Let me explain, at the blink of an eye, India has become the country with the second largest Internet population. Sure, usage and speeds are still not at international standards, but the scale is continental! There are over 462 million Internet users in India now. Larger than the US, and Western Europe and only second to China.

A large and growing Internet population is the base on which the government is running its own Digital India initiatives. A digital identity is as fundamental as health, water, sanitation and food.

Thanks to Aadhaar, over 1.1 billion citizens in India already have a digital identity. And thanks to GST, a similar identity is getting established for businesses too. There are already 10 million GST registered entities and still growing. Hence, we have already reached a stage where most citizens and businesses have suddenly leap-frogged to have a digital identity.

In recent years, lakhs of merchants have joined online marketplaces run by E-commerce merchants, they accept e-payments from millions of customers. SMEs running taxi services, bus services, hotel bookings etc. have seen huge adoption and successes.

In my view, the foundation of a digital economy has already been laid. There are already huge transformation underway. Has anyone seen better tailwinds in the past? It is perhaps the best possible time to drive digital transformation across large industries and pharma is right on top.

lakshmipriya.nair@gmail.com