Healthcare Logistic Management: The Current Challenges Faced

Can you imagine a healthcare system with a supply chain that doesn’t work? Unthinkable, right? But, believe it or not, healthcare is an industry that has been usually working with suppliers at the edge of compliance, mainly because of high costs and inefficiencies.

These difficulties happen “due in large part to declining reimbursements for services. As a result, they are seeking opportunities to reduce costs without diminishing the quality of patient care”Supply Chain Quarterly explains.

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But in the last couple of years, things seem to be changing for better.

“The way healthcare organizations source supplies and connect with manufacturers and service providers is undergoing a comprehensive transformation –Inbound Logistics stands- one that is essential to meet emerging patient demands, address healthcare legislation, support an overall focus on improving patient care, and reduce healthcare costs.”

According to Inbound Logistics, the Gartner’s 2016 Healthcare Provider Supply Chain Outlook shows what are the major concerns of the healthcare industry leaders:

  • Align objectives with strategic goals and integrate delivery network.
  • Priorize standardization.
  • Reduce pharmaceutical costs.

On the other hand, the UPS 2015 annual healthcare survey, conducted by global market researcher TNS, shows that logistic decision makers are seeing success in:

Product security: Bar-coding, serialization, and cooperation with law enforcement have contributed to improved this key issue in healthcare logistic management.

Logistic and distribution partnerships: Healthcare companies are using this strategy to meet regulations, avoid product damage, and to reduce cost management. “New regulations can be difficult to navigate, but healthcare companies are adapting well to change, with success in addressing regulatory compliance showing a 13% point increase from 2014.”

Challenging points

The UPS survey also established as key findings the following challenges for this industry:

Product damage and spoilage: “Remains a concern as products become more complex and in-transit monitoring and intervention options are underutilized.”

Cost management: “Healthcare logistics decision makers report rapid business growth, fluctuations in fuel and raw materials costs, increasing regulations, and new market expansion as the biggest challenges to managing supply chain costs.”

Contingency planning: “Unplanned events have impacted healthcare supply chains in the last 3-5 years.”

About logistic cost management, which is one of the most commonly mentioned factor of concern, the UPS survey says that logistic decision makers identify the following challenges:

  • 56% Rapid business growth.
  • 55% Fluctuating fuel cost.
  • 49% Fluctuating raw material costs.
  • 47% Increasing regulatory requirements.
  • 45% New market expansion.
  • 42% Investment in technology.
  • 38% Aging of IT systems.
  • 38% Lack of visibility in systems to improve cost management.

What do logistic operators say about this survey? Which Warehouse platform stands that:

“Most of these results were unsurprising, yet this is the first year that security concerns ranked higher than cost management, or managed to rank second only to compliance issues. The analysis show that concern over costs is still high, but that most healthcare logistics professionals are becoming less pessimistic over time.”

“Some analysts feel that the top three concerns should be looked at more holistically –Which Warehouse adds-. The real question is ‘how can a company maintain compliance levels while maintaining product security and accessing new markets, all the while maintaining a profit margin?’ Expressed that way, the fact that there is increased optimism at all seems a good sign indeed.”

Which of these challenges show in a better way your local healthcare market reality? We invite you to share your opinion.

Francisca HowardWritten by Francisca Howard

Francisca is a commercial engineer by University Adolfo Ibañez. She worked 10 years in the retail industry and the last few months she has been working as a business developer for Drivin, a SaaS solution that allows to distribution companies to reduce its transport costs as well as increase the service quality of their final clients.

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