The Data Entrepreneurs story — Part 3: The problem is out there
“Problems are nothing but wake-up calls for creativity”
Gerhard Gschwandtner — Founder and CEO of Selling Power, Inc.
Previously on: The Data Entrepreneurs story
The inception of our entrepreneurial venture. Problems identification pursuit and teamwork decision making for focusing on Drug Inventory Management. Details about this story in Part 1.
Having Drug Inventory Management as a focal point, the plan was to conduct an initial research to better understand it. Our first steps towards problem validation. Details about this story in Part 2.
Today on: The Data Entrepreneurs story
The outline of today’s post:
1. Performed actions for problem validation.
2. Outline of our results
3. Challenges and future actions
1. Performed actions for problem validation
The key takeout from our second presentation can be frankly summarised to the following famous quote:
“Get out of the building”
Steve Blank, Entrepreneur
Our initial interview with a hospital pharmacist and the research we conducted in the sector where strong indicators that our assumptions about the drug inventory management in hospital pharmacies appear to be true. After all, where there is smoke, there is fire. Right…???
Well, in this case, this is not how it works! One of the most fundamental rules about Entrepreneurship that we have been taught in JADS is that it is a journey where its participants have to systematically and cumulatively validate their assumptions. Especially at the first stage of a startup, Problem/Solution fit (Maurya, 2012), we had not only to validate the existence of the problem, but also to determine whether this problem is worth solving. In other words, we had to find out:
- Whether our potential customers want this problem to be solved
- If they are willing to pay for a solution to this problem
- If the implementation of a solution is feasible
To address all those questions, we decided that we need to get as much feedback as possible from people employed in the examined sector through any channel possible. As a result, we:
- Interviewed more hospital pharmacists
- Made a blog post in one of the most popular online forum when it comes to reliability social news aggregation platform
- Tried to reach professionals employed in hospitals directly.
- Tried to reach professionals employed in hospitals indirectly by introductions from our lecturers, from our friends and from the replies we received on a LinkedIn post
- Carried on we the research on the problem and its aspects even deeper
The results are demonstrated in the following section.
2. Outline of our results
Within a span of 8 business days, we interviewed 5 hospital pharmacists and an ex-logistics assistant for a specific department (Operations Room) in a hospital, received valuable information and insights from hospital pharmacists through our blog post, learned more about the hospital pharmacists European community and at the end we came up with some really interesting numbers. The results are listed below:
Result 1: The existence of under-stocking or overstocking is verified adequately.
All of the interviewed professionals in hospitals confirmed that they:
- Either experience under-stocking and as a consequence the emergency order placed includes a higher price than usual
- Either experience overstocking, which results in a systematic drug destruction due to passed expiration dates. This also implies bad budget management since the funds could have been invested for other purposes.
Result 2: The existing solutions used for inventory management are inefficient and prone to human errors.
All of the professionals and professionals who gave us feedback through our blog post and interviews confirmed the inefficiency and the insufficiency of the currently used software in hospital pharmacies. Drug scanning is a definite pain which results in many human errors during procurement. In addition, forecasting is either not existent at all either inadequate and not flawless.
Result 3: Drug shortage is a global issue and the hospital pharmacists community is very well aware of it.
Making use of information from The 2018 European Association of Hospital Pharmacists (EAHP) survey about the drug shortage, we came up with a couple of really insightful discoveries.
The first one is about the annual cost of drug shortage in the US. The fact that makes this discovery really interesting is not only the $360 million, but the additional 8.6 million extra labour hours needed annually to address the issue. The second discovery reveals how often the European countries experience drug shortage. 38% of the responses experiences shortages weekly and 35% daily. Specifically, the drug shortage in the Netherlands is by 70% a daily issue.
Result 4: Countries have developed legislation in order to control drug shortage and ensure supply.
Drug shortage is an issue which originates from the drug manufacturers and has an impact on drug inventory management in hospitals. Countries within the EU have enacted new regulations which oblige drug manufacturers to announce future drug shortages publicly. In the Netherlands, this is done via the Royal Dutch Society of Pharmacy website. Despite the public availability, hospital pharmacists have to manually check the website for shortage updates since this information is not incorporated in the software they use in the hospital pharmacy.
In conclusion, given the aforementioned results we are confident that the identified problem of Drug Inventory Management has been validated successfully. Furthermore, our results provide answers to the mandatory questions for the first stage of a startup mentioned in Section 2. More specifically:
- Result 1 addresses the question whether this problem is worth solving
- Result 2 & Result 3 address the question about the willingness to pay
- Result 4 & and existing inventory data in hospitals address the feasibility of our potential solution.
3. Challenges and future actions
Despite the substantial progress there are still some challenges and mandatory validation steps to be executed in order to finalise our value proposition and complete the first stage of a startup. Given the indisputable drug shortage problem, our team has identified that a solution can be provided for either the inventory management between the hospitals and the drug manufacturers either within the hospitals between the drug pharmacy and the point of use departments. We have to single out which solution would be more valuable to the hospitals.
There is only way to discover this and it is not other than going to a hospital in the Netherlands, monitor the process of drug procurement and get some final insights from hospital pharmacists. This is also the most challenging part so far because we are waiting for replies from our contacts. We are optimistic and we believe that in our next edition we will pass this obstacle successfully. Stay Tuned!
References
Maurya, A. (2012). Running lean: iterate from plan A to a plan that works. “ O’Reilly Media, Inc.”.
About Us
Hi! This post is a collaboration between Nemania Borovits, Yosef Winatmoko and Hameez Ariz. We are MSc students of the Jheronimus Academy of Data Science (JADS) in the Netherlands, currently taking Data Entrepreneurship in Action III course. In the following weeks, we will post updates on our entrepreneurial journey by publishing weekly journals like this. Hopefully, you might get inspired and learn from both our mistakes and successes.
