SHD Logistics is part of the Informa Markets Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

UPS: “untapped opportunities” in healthcare industry

UPS: “untapped opportunities” in healthcare industry

An environment of increasing risks, complex regulations and continuing cost pressures is impeding healthcare executives from moving quickly to seize untapped industry opportunities, according to the 7th annual UPS “Pain in the (Supply) Chain” survey.

Globally, healthcare executives are planning for strategic partnerships and technology investment to mitigate risks and capitalise on growth opportunities.

The most significant factors contributing to uncertainty in the healthcare supply chain are more stringent regulations and increased product protection challenges.

For the third consecutive year, regulatory compliance is the top supply chain pain point, cited by 60% of respondents. Further, 78% cite regulatory compliance and increasing regulations as a top trend driving business and supply chain changes.

Product protection also is increasingly challenging in a highly global marketplace, with 46% citing product security as a top challenge and 40% citing product damage and spoilage as a top concern.

Economic factors are also at play, with 49% of those surveyed still feeling an impact from the economic downturn six years later. The highest%age of respondents to express this are located in the US, where 60% of healthcare logistics decision makers cite economic concerns. In this global economic environment, cost management remains top-of-mind, with 44% citing it as a top supply chain concern.

Despite operating in a risk-inherent environment, only 26% of healthcare executives cite contingency planning as a top supply chain concern. Meanwhile, 34% of those surveyed in Asia and 22% in Latin America say that more than one-quarter of their companies’ supply chains were impacted by unplanned events in the past three to five years.

Specific challenges to addressing business continuity include events being too unlikely or infrequent (61%), back-up infrastructure being too expensive to deploy (46%) and little to no prioritisation being given to this area (42%) versus other more urgent matters.

“Companies that embrace new technologies and transformative supply chain strategies to mitigate risks will be more likely to capitalise on new growth opportunities in the healthcare marketplace of tomorrow,” said John Menna, UPS vice president, global healthcare strategy.

Successful strategies for risk mitigation and increasing competitiveness

Of those companies that are successful in mitigating risk and increasing competitiveness, the majority are leveraging partnerships along with ongoing technology investments. Of logistics decision makers surveyed worldwide:

  • 78% cite logistics and distribution partnerships as a top strategy to manage supply chain costs
  • 65% use logistics and distribution partnerships to successfully access global markets
  • 61% use collaboration, including vested logistics and distribution partnerships, to successfully embrace new distribution and go-to-market channels, while 23% use mergers and acquisitions to do so
  • 59% are working with a 3PL as a top strategy to increase efficiencies and improve competitiveness

Again this year, investing in new technologies is a top strategy to increase efficiencies and competitiveness for the next five years. Globally, over the next three to five years, 80% of respondents say they will invest in new technologies.

Untapped opportunities in the healthcare supply chain

Despite progress in addressing industry challenges, opportunities remain. One of these areas is in leveraging new distribution channels and models to meet changing customer demands as e-commerce, urbanisation and home healthcare grow.

Over the past two years, 70% or more of those surveyed both years have indicated that they plan to increase their usage of new distribution channels, yet over this same time period their channel mix remains nearly identical.

This demonstrates that while the intention to take advantage of untapped opportunities is apparent, actual change is slow. Among the reasons for the slow shift, 68% say they are still building their direct channel strategies.

The rise of home healthcare is taking off with growth surges expected over the next decade. Globally, 21% of survey respondents cite the shift to home healthcare as a key trend driving business and supply chain changes. Respondents report that 30% of products will support the home healthcare channel in the next seven to 10 years.

Another area with untapped potential is collaborative partnerships. In 2011, 62% of decision makers surveyed cited working with or increased reliance on a third party logistics provider as a top strategy for the next few years, with 60% citing it as a successful strategy over the past 18 months.

According to this year’s findings, 59% cite it as a strategy over the past 18 months and also over the next few years, indicating that while the healthcare industry recognises the importance of implementing these strategies to increase competitiveness, companies are slow to act.

Global market expansion is another area in which healthcare companies are heavily investing that continues to hold new opportunities. Over the past 18 months, 65% have tapped into new global markets to expand their customer base in order to drive new revenue growth.

Looking ahead, 78% will expand to new global markets over the next three to five years. These responses closely mirror 2011 survey data, when 81% of executives reported they plan to expand to new global markets over the next few years.

“More change is coming in the healthcare supply chain,” said Dirk Van Peteghem, UPS vice president, healthcare logistics. “At UPS, we work to stay ahead of evolving industry trends and develop innovative solutions for our customers based on our extensive expertise, infrastructure and best-in-class technology.

"Our unique solutions-driven approach gives companies a new level of agility to advance business goals while enabling regulatory compliance and prioritising product protection and customer service.”

To download an executive summary of the UPS Pain in the (Supply) Chain survey, please follow the link below this story.

Hide comments
account-default-image

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish