UPS healthcare survey reveals how to manage costs


Logistics and distribution partnerships prove to be a way to mitigate risk and boost competitiveness.

The healthcare industry continues to face increased risk, evermore complex regulation and pressure to control costs, according to the 7th Annual UPS "Pain in the (Supply) Chain" survey.

“Companies that embrace new technologies and transformative supply chain strategies to mitigate risks will be more likely to capitalize on new growth opportunities in the healthcare marketplace of tomorrow."

Despite these challenges, the survey identifies several untapped growth opportunities:

  • New distribution channels and models to meet customer demand, such as e-commerce and home healthcare. One in five companies globally sees the shift to home healthcare as a key trend driving supply chain changes – and 30 percent say their products will support the home heathcare channel in the next seven to 10 years.
  • Collaborative partnerships to address regulatory compliance and reduce supply chain costs. Today one in five healthcare companies outsources 75 percent or more of its supply chain budget.
  • Global market expansion holds great promise, according to the survey results. Some 78 percent of companies plan to expand globally during the next three to five years.

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

Technology matters

As in prior surveys, investing in new technologies is a top strategy for boosting efficiency and competitiveness. More than 80 percent of senior-level decision-makers surveyed plan on new technology investments over the next three to five years.

The top five investments:

  • 81 percent plan to invest in more robust order-management systems
  • 66 percent in serialization or track-and-trace technologies
  • 62 percent in online ordering
  • 53 percent in cold chain/temperature sensitive technologies
  • 50 percent in security technologies for high-value shipments

Top pain points

For the third year in a row, regulatory compliance risk is the top supply chain pain point, cited by 60 percent of healthcare executives surveyed. Product protection ranked second, with 46 percent of execs citing product security as a top challenge and 40 percent saying product damage and spoilage is a top concern.

Concern about managing supply chain costs, while still top of mind among decision-makers, has actually decreased during the past four years. In 2011 it topped the list, with 64 percent of execs calling it a top concern. In 2013 the cost issue fell to 51 percent, and in 2014 to 44 percent – behind regulatory compliance and product protection.

The downtrend may be attributable to more effective leveraging of partnerships. For example, among logistics executives surveyed:

  • 78 percent view logistics and distribution partnerships as a key strategy to manage supply chain costs, and 65 percent use such partnerships to access global markets successfully
  • 61 percent rely on collaboration with strategic partners to successfully open new distribution or go-to-market channels; 23 percent use mergers and acquisitions
  • 59 percent cite working with a 3PL (third-party logistics provider) as a top strategy to boost efficiency and competitiveness

“More change is coming in the healthcare supply chain,” says 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 prioritizing product protection and customer service.”

Download the 7th Annual UPS "Pain in the (Supply) Chain" survey.


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