CSCMP's Supply Chain Quarterly
December 19, 2018
Forward Thinking

Survey shows progress in curing some of health care's supply chain pain

Three-fourths of all respondents to a UPS survey say they are successfully handling product security.

The health care and life sciences industry has not always been on the cutting edge of supply chain best practices and strategy. But with health care costs skyrocketing and government regulations increasing, a significant amount of attention has been focused on changing that reality.

For the past eight years, UPS has been surveying companies in the health care and life sciences industry about supply chain issues for its annual "Pain in the Chain" survey. Based on this year's results, the U.S.-based logistics service provider believes that the sector has made significant progress in a couple of key areas.

UPS conducted interviews with 421 health care logistics executives in 16 countries; 75 percent of those respondents report they are successfully addressing product security issues, a significant increase from the 55 percent who said the same in 2014. UPS believes that companies are seeing these positive results due to the adoption of technology-based solutions, such as bar coding and serialization, as well as better cooperation with law enforcement agencies.

Additionally, 70 percent of respondents in 2015 report that they are successfully complying with regulations such as the European Union Good Distribution Practice and the U.S. Drug Supply Chain Security Act. That's also a big improvement, up from 57 percent in 2014. Some of that success can be attributed to companies forming stronger partnerships with shipping companies and using faster shipping services, according to UPS. Such efforts can help prevent product damage and spoilage.

Yet significant challenges still remain. Half of all health-care logistics decision makers say they are still struggling to manage supply chain costs in the face of rapid business growth, fluctuations in fuel and raw materials costs, increasing regulations, and new market expansion. They do see opportunities for driving out costs through efforts such as optimizing transportation costs, gaining better inventory visibility, reducing the number of transportation providers they use, investing in information technology, and consolidating existing product supply chains.

For those respondents who said they had successfully controlled costs, the reasons were varied: 57 percent attributed that success partly to their partnerships with logistics and distribution service providers, 55 percent said they were helped by leveraging supply chain optimization analysis, and 51 percent said that information technology investments had made a difference.

Another area that needs further attention is contingency planning. Supply chains have been significantly affected by unplanned events and disasters in the past few years, yet only 60 percent of respondents said they believe contingency planning is important.

Click here to read a detailed summary of the report's findings.

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