Cardinal Health have expanded Celonis Process Intelligence from a single use case in Order Management to the entire enterprise, maximizing returns on their digital transformation investments. Here’s how they did it.
Context: Transforming complex digital processes at scale
Cardinal Health provides a crucial link between the clinical and operational sides of the healthcare ecosystem. Their service portfolio includes everything from getting medical products like exam gloves and gowns to hospitals (including 90% of US hospitals), to running nuclear pharmacies that transport radioactive medicines to patients in a matter of hours (more than 130 of these), to serving over four million people directly in their homes, with products ranging from respiratory aids to skincare.
To support these gargantuan efforts and keep productivity high among more than 46,500 employees, the $205B company relies heavily on many complex and multi-faceted digital processes spanning everything from order management to inventory planning, across more than 30 countries worldwide. Unsurprisingly, keeping these processes optimized, at scale, has been no easy feat.
Challenges: Rolling out a new operating model while keeping the business on side
The drawbacks of Cardinal Health’s pre-existing operating model — and its associated processes — came to the surface a few years ago in the form of inefficiencies, redundant work streams across teams, and a fragmented value-management discipline.
One of the biggest reasons for this was that the business had grown rapidly in recent years due to multiple acquisitions and, as a result, had become an unaligned aggregate of many disparate businesses operating in silos. “People who worked in supply chain, inventory, medical and pharma or even some of our sub businesses likely weren’t collaborating”, recalls Mike Cvengros, VP of Data Solutions, during his Celosphere session, Streamlining Cardinal Health to drive rapid value with Celonis.
And siloed functions weren’t the only barriers standing in the way of process improvement: there was also a high degree of resistance to change within the business. While kicking off early conversations about process mining, Cvengros and his team quickly learned that by exposing many of the business’ long-standing processes, they also risked exposing the people responsible for designing and managing them. In tandem, many departments had become quite attached to the process-management tools already in use, and weren’t particularly keen to break away from them.
Solution: A people-first approach to transformation
Cvengros and his team kicked off Cardinal Health’s process-optimization journey with a Celonis Order-Management pilot for orders shipped but not invoiced. A low-hanging fruit, but one with the potential to deliver significant financial impact, as the medical manufacturing side of the business was losing a lot of money shipping vast quantities of goods to customers at the onboarding stages, only to later discover that no invoices had been sent, nor money collected. Encouraged by the early results of this pilot, the team aimed to make a much bigger, much broader impact to secure the trust of the wider business.
So, the following year, the team expanded Celonis to Procurement and Accounts Payable. The value generated was substantial enough that the wider business couldn’t help but take notice, and subsequently give Cvengros and his team their buy-in for further expansions.
“Celonis shows data and processes in a way that easily allows for root-cause analysis. The depth and detail that Celonis adds and the out-of-the-box functionality far surpasses anything else we have used in the past.”
Sr. Consultant, Strategic Planning & Execution, Cardinal Health
One of the greatest levers for change at Cardinal Health was the creation of their process mining CoE, which initially included around 15 people partnering across medical, pharmaceutical, and corporate functions. Breaking tradition, rather than sitting within GBS, the CoE was established within a separate Digital Solutions organization that exclusively owned all of Cardinal Health’s data management capabilities from master data operations to data quality and governance — plus, of course, process mining.
Also key to success for Cardinal Health has been the creation of a Digital Partner role — where every process initiative gets assigned to a dedicated partner, responsible for embedding Celonis within the relevant teams, attending staff meetings to ensure alignment, and taking charge of any new challenges as and when they emerge. Today, Cardinal Health’s Digital Partners are aligning Celonis technology with the strategies taking shape at the highest levels of the organization. For example, using the data generated by the team’s Celonis implementations, they’ve been able to make a granular five-year cost-saving commitment to investors, and have helped Cardinal Health’s business segments to more comprehensively define their yearly priorities.
As a result of these people-centric initiatives, executive sponsorship in process mining is now high — a crucial lever for long-term success according to Cvengros, who believes the sponsorship of Cardinal Health’s C-Suite in particular was pivotal in fueling further growth and expansion of Celonis technology across the business: “They saw the long-term vision. Not everyone will have C-level alignment, but getting whatever alignment and sponsorship you can is crucial. Especially for moving Celonis into new areas. “
“The capabilities of Celonis are incredible. I think more people need to be aware of it as I feel it provides answers to questions people may be working on at a small scale.”
Advisor, Supply Chain Product Management, Cardinal Health
Specifically, Cvengros and his team are not just framing value up front with each new initiative, but also tracking value realized on a monthly basis as soon as any new implementation is in place. Cvengros says, “Nowadays we’re pretty on point with how we frame — it’s aligned to what we actually achieve. Our business leaders want to know it’s in the bank and falling through to the bottom line, which it is.”
Now halfway through their third Celonis-dedicated year, the team have generated over two-and-a-half times their original value target, and have seen a 60% increase in user adoption — reflecting a much more positive sentiment towards process mining on the frontline.
Vision: Further expansion and end-to-end process ownership
Since making these changes, the team have expanded Celonis process intelligence into many other areas across both medical and pharmaceutical use cases, and continue to see significant returns.
The next, and possibly most important step in the Celonis journey according to Cvengros will be to establish end-to-end process ownership. For example — their Order-to-Cash process currently relies on multiple leaders who each own separate parts of the process. The goal for the coming months would be to establish one leader for Order-to-Cash, as well as for other initiatives, who can look at the big picture and address it holistically.
Finally, the team is working on a long-term strategy for establishing Celonis deeper within the organization, and have more than ten processes scoped for the next financial year.
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