3PL/Logistics

According to a new UPS survey, the healthcare industry is feeling the pinch as companies try to ensure supply chain security and comply with increasing regulations whilst keeping costs under control

Conducted within the pharma, biotech and medical device industries, the UPS Healthcare Pain in the (Supply) Chain survey reveals that the No1 supply chain concern is "managing costs"

Specifically, 55% of survey respondents at smaller companies reported they were "highly concerned" with managing costs, and fewer than half of those (46%) reported success in addressing this area

Among the leaders at larger companies, 81% said they were "highly concerned" about managing supply chain costs and only 41% reported success in doing so

Product damage, loss and spoilage and meeting customers' changing demands for service ranked second, with 42% of SMEs reporting they were "highly concerned" with these issues

Also a major concern for companies of all sizes, increasing regulations are clearly having a substantial impact on supply chain strategies

More than half (56%) of companies with $1 billion+ revenues reported they were "highly concerned" about increasing regulations, ranking this as their top business concern At the same time, nearly one-third (30%) of the SME respondents ranked increasing regulations as their top business concern

"There are many market factors driving regulatory concerns, including a heightened focus around security and product safety, increasing global border controls and more products requiring special handling coming into the market," said Bill Hook, UPS vice president for global strategy, healthcare logistics "Regulatory pressures will only continue to grow with new industry legislation, making this a critical focus for companies as they design their supply chains to meet evolving needs"

The survey also uncovered healthcare decision makers' views on the top healthcare priorities for the new administration The top two priorities are simplifying regulatory requirements, ranked first by 52% of large companies and 31% of SMEs, and ensuring product safety and security, ranked first by 33% of all companies

Looking toward the future, shifts in supply chain strategies to meet evolving customer needs are apparent 56% of larger companies plan to alter their distribution models to go direct to hospitals, pharmacies or retailers; 52% plan to go direct to consumers (patients or physicians); 30% will go direct to wholesalers, and 48% plan to work with a 3PL in the near future

As for outsourcing, 43% of large companies expect to increase the amount they outsource in the next two to three years, but of the two-thirds of SME respondents who do not currently outsource any supply chain functions, no more than 3% expect to outsource in the next one to two years

Hook noted that the large healthcare companies are increasingly outsourcing a range of supply chain activities, from the distribution of drugs and medical devices to customer service and support functions

"With increased pressures to innovate while cutting costs, many companies are turning to outsourcing as a way to gain efficiencies across the supply chain to better focus on core areas like R&D, marketing and acquisitions," he concluded