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Supply chain issues build for healthcare

Sept. 19, 2008
Serving an increasingly global market is becoming more difficult for healthcare providers due to supply chain issues, according to a new survey commissioned by United Parcel Service

Serving an increasingly global market is becoming more difficult for healthcare providers due to supply chain issues, according to a new survey commissioned by United Parcel Service. The survey, conducted for UPS by Harris Interactive, found global market access is a major focus area for healthcare companies seeking to take advantage of lower-cost sourcing opportunities and penetrate fast growing, emerging consumer markets.

“Capitalizing on new global market opportunities amidst an increasingly competitive industry landscape requires changes in supply chain and business strategies,” said Bill Hook, vp-healthcare logistics at UPS. “That’s why it’s crucial that companies have the supply chain flexibility to respond to changing market conditions in order to capture new market share and navigate the many complexities associated with global market access.”

When asked about supply-chain specific concerns, healthcare companies ranked managing and containing supply chain costs as their number one concern, according to the survey, with 60% of respondents reporting they were “very concerned” or “extremely concerned” about the potential impact of supply chain costs on their business.

The vast majority of survey respondents also planned to make changes to their supply chain models in the near future, including: expanding their distribution channels; outsourcing more supply chain functions; working with third-party logistics companies, and increasing their supply chain spending.

Some 90% of respondents expect to make changes to their distribution channels in the next one to two years; two in five of all industry experts and more than half of the pharmaceutical industry (55%) respondents expect to change their distribution channels to work with third-party logistics providers. A majority – 61% of respondents – plan to implement a direct-to-consumer channel strategy in the next one to two years and 55% are planning to initiate a direct-to-wholesaler strategy. Interestingly, 37% expect to expand to both direct-to-consumer and direct-to-wholesaler, noted Hook.

Despite concerns about managing supply chain costs, another trend is an increase in supply chain spending, the UPS survey found. In the next 18 months, 60% expect supply chain spending as a percentage of total sales to increase by 23%. Among the companies with $1 billion and higher revenues, 42% expect increases in their supply chain spending over the same time period.

“Managing supply chain costs will only become more critical as healthcare supply chains continue to expand and evolve,” Hook said. “It’s a balancing act for companies to take advantage of new opportunities amidst market pressures, an increasingly complex regulatory environment and elongated supply chains.”

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About the Author

Sean Kilcarr | Editor in Chief

Sean previously reported and commented on trends affecting the many different strata of the trucking industry. Also be sure to visit Sean's blog Trucks at Work where he offers analysis on a variety of different topics inside the trucking industry.

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