A CEO’s Perspective
Richard is Cofounder and Chief
Executive Officer of LifeScience Logistics.
He has more than 15 years of supply chain experience and has held a
variety of operations, marketing and business development roles. Richard most recently held leadership
positions at United Parcel Service and has served in both the U.S. Navy and
U.S. Coast Guard. He holds a Bachelor of
Arts degree from the University of Texas at Arlington and an Masters of
Business Administration from Southern Methodist University.
The 21st century has witnessed an
active change in the working of the supply chain. As such, visibility is
crucial in the healthcare industry where the emphasis on prompt delivery of
treatments, under the right conditions is critical. Additionally, an assurance
of quality is also of utmost importance in a dynamic regulatory environment
The “Darwinian Model” is alive
and well. Significant risks and
opportunities are driving businesses to shed the inefficiencies of the past or
go the way of the dinosaur. This is
especially true in Healthcare. Given the
personal and professional impact of timely, cost efficient and most importantly
effective treatments, today’s global healthcare industry faces enormous
challenges and opportunities.
Effectively trying to manage both ends of that spectrum is forcing
executives out of the boardroom and into the supply chain. Here’s a look at what we’re facing.
Change is constant in the supply chain
Major evolutions in distribution
and manufacturing in the 21st century have changed the dynamics of doing
business in North America and across the globe. Growth in imports has soared in
the last few years fuelled by the Asian domination of the manufacturing sector.
This is especially true in North America where manufacturers have become importers
and distributors with a new focus on efficiency and improved customer service.
Furthermore, with the shift in
power due to margin compression, regulatory pressures and competing demand for
capital in healthcare, many provider networks have taken their supply chains
into their own hands while manufacturers have opted to focus on their core
competencies; research and development, sales/marketing and customer services,
delegating supply chain operations to outsourced experts. These movements in
the landscape are at the heart of the changing economy and more so in
healthcare where the management of a secure supply of healthcare products is
vital for the well being of patients.
The supply chain – a network of resources
The supply chain is no longer a
controlled entity within the four walls of a warehouse. Today, it is a network
of resources, scattered across facilities and entities in different cities and
countries. To be effectively managed, supply chain resources need to be linked.
Suppliers, partners and customers; each performing a role in the supply chain,
and each user and/or automated process are small “hubs” contributing to the
movement of goods, funds as well as information in the supply chain.
The need for visibility
To support today’s business model
in this high-velocity, complex and distributed logistics environment, real-time
visibility has become a key strategic imperative. Visibility to suppliers’
production rates and shipment lead times, in-house inventory, historical data,
and customer sales projections can drive benefits in efficiency, lower
inventories and improve fulfillment rates. Overall, visibility is driven by
companies’ need to:
- Become more proactive and systematic in their supply chain operations
- Track and trace products throughout the supply chain, from cradle to grave
- Proactively alert customers of product availability and status of shipments
- Improve on-time delivery, reduce lead time and lead time variability
- Reduce and/or redirect working capital, as well as fixed and variable costs
These are fundamental
capabilities for the supply chain today, and given the risk and regulatory
oversight, clear visibility is vital in Healthcare!
A look at the healthcare industry
With over $4.5 trillion in
expenditure, the global medical industry is one of the world's largest and
fastest growing industries, comprising various sectors: medical equipment and
supplies, pharmaceutical, healthcare services, biotechnology, and alternative
medicine sectors. Undoubtedly, the management and delivery of these vital goods
throughout the healthcare supply chain are proportionally as complex and
important as its size and velocity.
Overall, the process of
manufacturing and distributing pharmaceutical products is similar to that of
other industries. Companies purchase raw materials for bulk synthesis of active
and inactive ingredients. Dosages are formulated and packaged. Products flow
(from cradle to grave) through manufacturers’ warehouses, wholesale
distributors/3rd Part logistics providers, retail pharmacies, medical
institutions, and finally to the patient.
Some products make their way back to their manufacturers due to recalls
and returns.
Today, the healthcare industry is
characterized by a number of drivers affecting its supply chain, including:
·
Globalization, competition and margin
compression
- Increased regulatory oversight
- The rise in IT budgets at healthcare institutions
- Growth in usage of medication
- Increased cost of drug development, production and distribution
- Major retailers driving packaging and labelling requirements
- Manufacturers’ desire to control the customer and margin away from wholesalers
- New outsourcing models in the “patent to patient” supply chain process
To meet these while improving
cost, reducing inventory and maintaining high fill rates is a significant
challenge to any supply chain. It is an even greater challenge in
pharmaceuticals because of the compliance and regulatory requirements.
Written by Richard Beeny, CEO,
LifeScience Logistics
Source: Hospital & Healthcare Management
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