José Alberto Peña
Director General
Grupo Marzam
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View from the Top

Pushing Efficiencies For 360° Logistics

Thu, 09/07/2017 - 13:49

Q: Grupo Marzam deals with high volumes of medicines. What management systems are in place for this?

A: That is one of our key strengths as an organization. There is continuous opportunity to improve but we are a company that has been in the market for 83 years so experience has gradually made us increasingly effective and efficient. We have 10 distribution sectors in the country, nearly 3,000 employees and 500 vehicles. That allows us to cover almost 95 percent of the country. We also have a strong focus on technology because that is how we can drive more efficiencies. We are a large-volume company in a low-margin industry, so we need to be as efficient as possible.

Q: What state-of-the-art technology is implemented throughout the company’s operations?

A: Four of our distribution centers are automated, which drives efficiency throughout the organization. Grupo Marzam differentiates itself from its competitors in that all our salespeople work off apps on smartphones. All our technology is developed internally. While pharmaceutical companies usually have limited numbers of people in the IT department, Grupo Marzam’s is over 100 strong. This demonstrates how important technology is to us and that we keep it top of mind in everything that we do. We also have a strong focus on e-commerce. We are trying to see how we can interact continuously with our customers from a 360° perspective.

Q: How has Grupo Marzam’s adapted its operations to e-commerce over the past year?

A: Our app was not fully in use 12 months ago, but today 100 percent of our sales reps use it. It is also being used by about 500 reps in the pharmaceutical industry, who use it to collect orders that come directly to us. We have undergone a massive reorganization, changing 95 percent of our executives and ensuring that we bring in the right people for the position. This is setting us apart, thinking of where we are now and where we anticipate going in the future. We will be bringing new technology to an area of the industry I believe has been static for decades.

Q: From where are you recruiting your talent? To what extent do you have to go to other sectors or abroad?

A: We have not gone abroad. Our HR director comes from outside the distribution and logistics market but has experience in many industries. Wherever possible, we would like to provide opportunities internally. I want to be in a situation where all future opportunities are filled through promotions. We are looking for the right people, not necessarily thinking about the right person for the position today but looking at this with a three to fiveyear perspective, bringing in those that will be able to complement our strategy going forward.

Q: To what extent do you have relationships with Mexican universities?

A: We do not have any at this moment but that is an area we are looking to develop. I want to bring in high-potential talent who could be our future leaders, bring them into our growth strategy areas to drive new models and then take them from the conceptual phase to implementation. We have planned for 2017 to bring in three high-potential MBA graduates who are ready to land in a position knowing they may not be quite ready but that we want to develop them. We are beginning to reach out to universities so we can develop this program.

Q: What are the most important skills that you will be looking for?

A: We will certainly be more focused on the commercial side. We will be looking for people with learning agility, flexibility and able to coordinate groups. I want this company to be different to others and I see it evolving into different areas, such as specialized segments, focusing more on customized models. This does not mean we are walking away from what we do today, it will be complementary. I am looking at many sectors, such as private hospitals and insurance. At the moment only 4 percent of Mexico’s population has private medical insurance. This is an opportunity.

Q: What drove the 2 percent growth Grupo Marzam enjoyed over the past year?

A: There are many factors involved. When Marzam was purchased 12 months ago, there were financial difficulties. We have been ensuring that, from a business perspective, we are driving as much efficiency and profit as possible to ensure we are paying our customers. We have gone from having a 65 percent fill rate 12 months ago, to a 97 percent fill rate at the end of 2016. That was driven mainly through pure product availability. We are probably unique in the interaction we have with the healthcare sector in general. There is much more confidence in what Marzam is today than there was one year ago. A massive change in the way we operate puts us in a much stronger position.

Q: How do you ensure that your trucks can reach their destination through times of unrest?

A: We have implemented more technology in that area. Our distribution network has GPS, trucks are tracked and they have other security aspects. Our vehicles are monitored centrally by a control center and we coordinate them with the corresponding authorities to ensure there is a rapid response from the police.

Q: What are the greatest challenges Grupo Marzam faces as a distributor?

A: One of the greatest challenges we face is Mexico’s size because it is an expansive country. We must ensure we provide an effective, efficient and continuous service. Security is a hot topic that requires care. We are a low-margin industry, so all additional costs immediately impact our profitability. We need to be prudent about how we manage additional expenses, which, ideally, we should not have. The health industry in Mexico is also a complex and fragmented industry that requires different skillsets. Having had experience with many markets around the world, I truly believe that Mexico is one of, if not, the most complex healthcare market.

Q: How has the global economic environment impacted you? How do you foresee its future impact?

A: 2017 will be a challenge from an exchange-rate perspective. For us, another key component is gasoline, which has a direct impact on our expenses. The exchange rate will have an impact on the industry as a whole because 90 percent of material used to produce medicines is imported. Before, perhaps businesses did not focus as much on driving efficiency in all areas but it is about the details now. For example, we have almost 500 vehicles and we have decided that whenever we change a vehicle, it should be diesel at the very minimum. We want to move to hybrid or electric in the future. We are already evaluating if this is economically viable on a four-year horizon, which is the life a vehicle for us. This drives us to think differently now. It is not necessarily bad but we were not ready for a 20 percent increase in gas prices.

Q: What are you short-term plans for Mexico?

A: For us, short term means three to five years. We want to become a holistic, logistics provider in the healthcare segment and we will not be moving away from that. Marzam was very much a pharmaceutical distributor but today we are in branded, patented and generic pharmaceuticals and we have moved into wound care, medical devices, medical equipment and specialized medicine. All these segments are growing.

From a customer perspective, we were focused on pharmacies. However, our focus expands now to private hospitals and clinics, healthcare insurance and the government sector, which is much more holistic. Our most important strength is the infrastructure we have. Why not get involved with a broader range of products and segments if we are already going past these places and our infrastructure can cope with it? We are also open to creating partnerships and alliances. I am a strong believer in alliances and complementing our infrastructure and expertise.