Steps to Healthcare Supply Chain Success

How to deliver supply chain excellence in the long run.

A healthcare supply chain can comprise 50-60 percent of a company’s total costs, control 100 percent of all inventory, and usually provides the foundation for all revenue generation. It is the lifeblood of the firm and, as such, must be guided by a robust strategy.

But because of its highly complex, cross-functional, pan-organizational nature, a supply chain strategy represents a wide and varied set of challenges in its scope and development.

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Supply chain best practices transfer well across industries and functionalities.

Elements of a supply chain strategy

Despite the critical role of the supply chain, findings from the 2014 UPS Pain in the (Supply) Chain survey showed that only 36 percent of healthcare logistics executives have adequate supply chain strategies and contingency plans in place.

The reasons range from a lack of time and resources to inability to secure senior executive buy-in to not knowing where to start.

A supply chain strategy is a multi-year set of actions that will create or enhance supply chain capabilities a business will need for long-term growth. Below are several priority areas for a successful supply chain strategy. To download my full white paper on this topic, see “How to Plan for Supply Chain Success in the Healthcare Industry.”

  1. Benchmark against “best in class.” Supply chain best practices transfer well across industries and functionalities. For example, I’ve seen “lean” warehousing concepts work well for both Walgreens and Pfizer. Companies should take an honest look at their supply chain strengths, weaknesses, opportunities and threats — perform a SWOT analysis — and look to outside parties for help in assessing their supply chain against “best-in-class” standards.
  2. Evaluate impacts of megatrends. Recognize and take into account existing and emerging megatrends and their implications. Two top megatrends in healthcare today are changing and increasing regulatory requirements and growing security concerns. For companies doing business in North America, implications of the Drug Supply Chain Security Act are top of mind; yet, in Turkey, track-and-trace regulations are among the strictest in the world. Globally, the top pain point cited by executives in the UPS survey was regulatory compliance.
  3. Embrace technology. For example, there is a growing need for technologies that can provide end-to-end visibility across all parties in the healthcare supply chain. Visibility technologies allow supply chain partners to be leaner and more proactive, lowering inventory and costs while improving customer service through improved tracking alerts, and shorter delivery times.

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There is a growing need for technologies that can provide end-to-end visibility across all parties in the healthcare supply chain.

The key is to let your strategy drive your technology decisions – not the other way around.

  1. Prioritize risk management. From natural disasters to power outages, supply chain disruptions can bring operations to a halt. Without a crisis to motivate action, risk planning often falls to the bottom of the priority list. When planning, take into account every potential risk area. For example, product recalls will require a robust reverse logistics capability with enhanced visibility and a unique device identification and/or serialization strategy.
  2. Evaluate organization, people and metrics. With a new strategy in place, it is important to create a more expansive supply chain organization that encompasses not only logistics, but customer service, risk mitigation, packaging and planning activities.New skill sets will be required. Further, the right supply chain key performance indicators aligned with the right accountabilities will help the organization track performance against goals and identify the effects of imposed changes.
  3. Ensure business buy-in. Everyone from the CEO to the frontlines needs to work toward the common goals that your team has laid out. Without explicit buy-in from the people who affect and are affected by the supply chain strategy, the strategy creation process is pointless.Learn the language of the C-suite and sell supply chain excellence based on how it will enhance the top line, minimize business risk and generate major improvements in cash flow and shareholder value.

Success is within reach


Click to download white paper

Healthcare supply chain executives too often find themselves at the center of the daily storm, striving to balance very demanding operational objectives while satisfying customers, cutting costs and helping grow revenue.

They must deliver results today, while working on capabilities that will make their companies competitive in the future.

They operate in the same maelstrom of competing priorities and limited time as their executive peers — but their scope of activities is broader, and they have less direct control over all the moving parts.

In this demanding environment, strategy development often takes a back seat. But delivering supply chain excellence in the long run cannot be done without a documented, multi-year supply chain strategy — especially in the healthcare industry. 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.

J. Paul Dittmann, Ph.D. is the Executive Director of the Global Supply Chain Institute at the University of Tennessee. Dittmann comes to the University of Tennessee after a 30-year career in industry. He has held positions such as vice president, logistics for North America; vice president global logistics systems; and most recently served as vice president, supply chain strategy, projects, and systems for the Whirlpool Corporation.

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