Managing a Borderless Supply Chain

Overcoming regulatory issues to create a world-class supply chain.

HCSClogoThe global growth of the middle class is creating new markets for healthcare companies. Approximately 57 percent of demand for healthcare products is outside of North America, making international trade particularly important for pharmaceutical and medical device manufacturers.

However, less than one percent of U.S. healthcare companies export, with executives citing two reasons: securing regulatory approval for their product portfolios in new countries, and effectively managing a global supply chain.

While it is a key challenge for pharmaceutical and medical device companies to secure regulatory approval for their products in new countries, many healthcare-focused businesspeople successfully draw on experiences from approval processes in their home markets to understand and navigate the compliance systems overseas.

However, effectively managing a global supply chain frequently justifies their trepidation because this area is not a core competency for many healthcare manufacturers. Here are some steps to address the issue and manage a more efficient, world-class supply chain.

Part I: Start With a Vision

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Less than one percent of U.S. healthcare companies export.

First off, a primary focus is to develop a clear and consistent understanding of the export market situation, key business requirements, growth objectives, and strategic vision.

Identify key company stakeholders and make certain everyone understands these components. The stakeholders include the company’s senior management, key subject matter experts and a logistics partner. Once this core group agrees on the organization’s strategic vision, align the supply chain growth strategy against it.

By diagramming the current supply chain and assessing it against needed international capabilities, the group will likely uncover areas for improvement.

After these gaps are revealed, the team should identify logistics changes that potentially will improve business performance and meet objectives.

These objectives will range from reducing supply chain expenses, such as inventory, transportation and warehousing, to effectively ensuring regulatory compliance.

Part II – Implement Best Practices
Best practices for the healthcare industry to improve top-line growth include:

  • Active Management of Suppliers. Importing quality components and products requires an active focus on risk management. Using a logistics provider’s systems and tools will help you assess risk and manage foreign suppliers to ensure business continuity.

For example, a logistics company can determine whether a potential supplier or customer is on governmental “denied-party” lists, which preclude their shipments. Once suppliers are approved, your company will need a system for labeling and documentation.

For healthcare products, where a typographical error can hold up a shipment, accurate labeling, documentation and reporting are vital. Accurately applying the global standard Harmonized Commodity Description and Coding System, an experienced logistics partner also can help determine the most accurate tariff fees in any country.

  • Regulatory Compliance. Effective supply chain management means complying with both the origin and destination country’s regulations when a product crosses borders. A U.S. Census Bureau study found errors in approximately 37% of data records from paper customs entry forms, exposing companies to supply chain disruption and possible government penalties. This challenge is magnified for regulated healthcare products. A logistics partner with strong regulatory experience can verify that export licenses from suppliers are in compliance and all labeling is correct.
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    Don’t focus just on the movement of physical goods; facilitate the flow of information.

  • Information Flow is Essential. Don’t focus just on the movement of physical goods; facilitate the flow of information. The effective flow of information requires tight integration and data-sharing by all parties in the supply chain — suppliers, logistics partners, the company and its customers. The benefits of information management are profound, ranging from improved agility in allocating inventory, faster reaction to changing market conditions and improved cash flow through integrated billing and invoicing.
  • Product Integrity. It is estimated that by 2016, eight of the top 10 pharmaceuticals sold globally will require temperature-controlled management, and 26 of the top 50. In addition, the rapid growth in temperature-sensitive products within medical device portfolios will continue. Add the complications inherent in cross-border operations, and the complexity of product protection grows exponentially.

Implementing these best practices and methodologies give pharmaceutical and medical device companies a new set of tactics to penetrate additional markets.

And the supply chain management fundamentals outlined above can lead to significant business growth and margin performance, resulting in new revenues in developing economies with high growth potential. goldbrown2

Robin Hooker, Director of Healthcare Marketing at UPS, recently joined HealthCare Consumerism Radio to discuss how the shift toward patient-centric care is affecting all participants in the health care system. Today, patients are choosing more direct-to-home deliveries; walk-in clinics, such as CVS Minute Clinic and MedPost Urgent Care, are on the rise; the middle class and aging populations in emerging markets are growing. Learn more by listening above.


Scott Szwast is UPS Marketing Director for the South Atlantic District

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