Healthcare supply chains are working better, but there's room for improvement

2015 UPS (Pain) in the Supply Chain survey finds shortcomings in contingency planning

A snapshot view of the 2015 UPS survey, now in its eighth year, shows success in addressing product security and regulatory compliance, but low progress in planning for natural disasters and other business interruptions. Logistics cost control—a perennial concern for healthcare managers—has a mixed outlook, with success in controlling some costs but a desire for further economies.

That’s the quick summary of the survey, which is based on questionnaires and in-depth interviews of supply chain managers of pharma and medical device companies and healthcare-product suppliers around the world. The survey was performed between April and June by TNS on behalf of Big Brown.

Some 55% of respondents said they were successfully addressing product security issues in 2014’s survey; this year, that jumped to 75%. Likewise, 57% were meeting regulatory compliance challenges last year; this year, the figure is 70%. There is some improvement in preventing product damage and spoilage (particularly for temperature-controlled products), with 63% having success now versus 57% in 2014. And while there is a 12-percentage-point rise in respondents’ success in managing logistics, warehousing and transportation costs, the 2015 figure is 50%: half of the industry is where it wants to be; and half is not. Optimizing transportation costs is the No. 1 opportunity area (see figure); consolidating both the supply chains themselves, and the number of providers, follow close behind.

To reduce product spoilage, 74% of respondents say that they are partnering with a higher-quality carrier now; 63% are using faster shipping service levels; and 59% are using temperature-monitoring devices.

A big part of the regulatory compliance issue is the serialization mandates of various countries; interestingly, the respondents ranked the mandates of Brazil as being a bigger source of pain in this year than that of the US (both countries have current deadlines; Brazil’s were to go into force sooner but have been delayed). And the No. 1 regulatory issue is the Good Distribution Practice (GDP) guidelines which went live in Europe in 2013; while 71% of Europe-based respondents say they have GDP agreements in place with their providers, 39% of the total survey base see the GDP rules as a source of pain.

Natural disasters or civil unrest are judged to have affected 6% of global supply chains in the past 3-5 years, according to respondents, which would probably be a higher figure if healthcare product customers were polled. But that’s possibly one reason why only 60% of respondents rank contingency planning as an important goal.

UPS Healthcare Logistics says that it will be publishing in-depth results and analysis in coming months. The snapshot view is available here.