Executive Briefings

Seven Key Challenges In Healthcare Supply Chains

Healthcare supply chains have all the challenges of supply chains in other industries, but they also have unique issues that add an extra measure of complexity: The strict government regulations that healthcare supply chains must conform to increase the difficulty of balancing speed, visibility and control. Here's a look at some of the problems healthcare companies face in supply chain management.

Seven Key Challenges In Healthcare Supply Chains

Assigning lot and serial numbers

Healthcare companies must use lot numbers, serial numbers or both for every item in the supply chain. This requires cradle-to-grave monitoring, and it increases the difficulty of managing inventories accurately. Shop floor and warehouse personnel must record the lot and serial number of each item whenever they move it. Serial numbers are sometimes inside the product or package, which means the item must have an external label or tag to ensure the serial number is readily accessible. Handwritten labels are inadequate, because of legibility, transposition and duplication issues, so the company needs a way to attach a printed label to every case, package or item. The label must be impervious to conditions in the manufacturing and shipping environment, and it must withstand the rigors of shipping. What’s more, it must be easily readable by both humans and machines to make processing transactions simpler.

Tracking and Tracing

Most healthcare regulatory bodies, such as the Food and Drug Administration, require healthcare companies to trace the items and components used in products to the supplier’s source lot. They must also be able to track the use of products, so they can tell where potentially defective goods have been sent. This requires a high level of accuracy in processing transactions that companies in other industries rarely face. Enterprise resource planning or inventory management systems must incorporate the ability to capture the serial numbers and provide fast, accurate tracking and tracing capabilities in case of a recall or quality issue.

Managing potency, purity and quality

Many ingredients used in healthcare products and supply chains come in multiple potencies or purities, which reflect the concentration of active ingredients. In addition to tracking the item’s lot or serial number, the company must also track the potency to ensure that batches or dosages adhere to specifications. Many supply chain management or inventory management solutions do not include the ability to track these important characteristics, which can make them unsuitable for use in healthcare concerns that must provide assurance that the products met specifications for potency, purity and quality sometimes even years after the fact.

This is especially challenging for global supply chains that source products in emerging markets where regulations governing such characteristics are not so strict. Companies may find they need to perform additional tests on incoming materials to ensure they are pure and unadulterated.

In addition, the need to monitor potency and purity may require frequent and extensive training for inventory and warehouse personnel to ensure they understand the need for careful selection of ingredients with the specified potency. Some companies use color-coded labels to help simplify the inventory management task.

Assigning unique IDs

The FDA requires every device to have a unique device identifier (UDI) that is in both human and machine-readable formats. The intention is to improve patient outcomes by ensuring that materials are properly identified and can be traced to their source and through every hand-off throughout the supply chain. In many cases, devices will have their UDI engraved or etched directly on the product, but other cases may require a label that cannot be easily altered or removed.

Preventing counterfeits

As healthcare supply chains become more global, the issue of counterfeit goods becomes more pressing. Managing counterfeit goods is part of the reason for the implementation of the UDI regulations, but until the law and the process are completely rolled out, healthcare companies must protect themselves and their clients by taking steps to detect counterfeit goods and to prevent them from entering the supply chain. Incorporating supplier performance metrics into the supply chain is one way to help prevent counterfeit goods from infiltrating inventories. Auditing supplier supply chains as they do in the automotive industry can also help prevent counterfeit goods from reaching the market.

Monitoring expirations

Many items used in the healthcare industry have limited shelf lives. Managing inventory is a complex process even without the additional dimension of expirations. Healthcare companies need to ensure they rotate inventory properly, taking expiration dates into account so that they use the goods that expire sooner before those with a longer useful life. Color-coded labels can help with the rotation process in many cases by making it easy to distinguish expiring goods by month. Healthcare companies that work with distributors or third-party warehousing and inventory management companies should ensure that the inventory handlers are trained in proper management of materials with expiration dates.

Achieving global visibility

The global nature of healthcare supply chains makes it more difficult to have close and trusting relationships with every supplier. However, the strict compliance rules that healthcare companies must abide by require it. Companies should consider asking for access to their supplier’s ERP or inventory management systems so they can see order and inventory status firsthand. Unannounced site visits and random inspections of incoming materials can also help ensure that products meet specifications. Supplier portals or collaboration tools can help by improving communication.

Healthcare supply chains face a multitude of challenges, but there are solutions to each issue. With diligence, careful training of suppliers, strict inventory procedures for material handlers, and careful adherence to regulatory guidelines, the issues should be manageable.

Source: Chicago Tag and Label

Assigning lot and serial numbers

Healthcare companies must use lot numbers, serial numbers or both for every item in the supply chain. This requires cradle-to-grave monitoring, and it increases the difficulty of managing inventories accurately. Shop floor and warehouse personnel must record the lot and serial number of each item whenever they move it. Serial numbers are sometimes inside the product or package, which means the item must have an external label or tag to ensure the serial number is readily accessible. Handwritten labels are inadequate, because of legibility, transposition and duplication issues, so the company needs a way to attach a printed label to every case, package or item. The label must be impervious to conditions in the manufacturing and shipping environment, and it must withstand the rigors of shipping. What’s more, it must be easily readable by both humans and machines to make processing transactions simpler.

Tracking and Tracing

Most healthcare regulatory bodies, such as the Food and Drug Administration, require healthcare companies to trace the items and components used in products to the supplier’s source lot. They must also be able to track the use of products, so they can tell where potentially defective goods have been sent. This requires a high level of accuracy in processing transactions that companies in other industries rarely face. Enterprise resource planning or inventory management systems must incorporate the ability to capture the serial numbers and provide fast, accurate tracking and tracing capabilities in case of a recall or quality issue.

Managing potency, purity and quality

Many ingredients used in healthcare products and supply chains come in multiple potencies or purities, which reflect the concentration of active ingredients. In addition to tracking the item’s lot or serial number, the company must also track the potency to ensure that batches or dosages adhere to specifications. Many supply chain management or inventory management solutions do not include the ability to track these important characteristics, which can make them unsuitable for use in healthcare concerns that must provide assurance that the products met specifications for potency, purity and quality sometimes even years after the fact.

This is especially challenging for global supply chains that source products in emerging markets where regulations governing such characteristics are not so strict. Companies may find they need to perform additional tests on incoming materials to ensure they are pure and unadulterated.

In addition, the need to monitor potency and purity may require frequent and extensive training for inventory and warehouse personnel to ensure they understand the need for careful selection of ingredients with the specified potency. Some companies use color-coded labels to help simplify the inventory management task.

Assigning unique IDs

The FDA requires every device to have a unique device identifier (UDI) that is in both human and machine-readable formats. The intention is to improve patient outcomes by ensuring that materials are properly identified and can be traced to their source and through every hand-off throughout the supply chain. In many cases, devices will have their UDI engraved or etched directly on the product, but other cases may require a label that cannot be easily altered or removed.

Preventing counterfeits

As healthcare supply chains become more global, the issue of counterfeit goods becomes more pressing. Managing counterfeit goods is part of the reason for the implementation of the UDI regulations, but until the law and the process are completely rolled out, healthcare companies must protect themselves and their clients by taking steps to detect counterfeit goods and to prevent them from entering the supply chain. Incorporating supplier performance metrics into the supply chain is one way to help prevent counterfeit goods from infiltrating inventories. Auditing supplier supply chains as they do in the automotive industry can also help prevent counterfeit goods from reaching the market.

Monitoring expirations

Many items used in the healthcare industry have limited shelf lives. Managing inventory is a complex process even without the additional dimension of expirations. Healthcare companies need to ensure they rotate inventory properly, taking expiration dates into account so that they use the goods that expire sooner before those with a longer useful life. Color-coded labels can help with the rotation process in many cases by making it easy to distinguish expiring goods by month. Healthcare companies that work with distributors or third-party warehousing and inventory management companies should ensure that the inventory handlers are trained in proper management of materials with expiration dates.

Achieving global visibility

The global nature of healthcare supply chains makes it more difficult to have close and trusting relationships with every supplier. However, the strict compliance rules that healthcare companies must abide by require it. Companies should consider asking for access to their supplier’s ERP or inventory management systems so they can see order and inventory status firsthand. Unannounced site visits and random inspections of incoming materials can also help ensure that products meet specifications. Supplier portals or collaboration tools can help by improving communication.

Healthcare supply chains face a multitude of challenges, but there are solutions to each issue. With diligence, careful training of suppliers, strict inventory procedures for material handlers, and careful adherence to regulatory guidelines, the issues should be manageable.

Source: Chicago Tag and Label

Seven Key Challenges In Healthcare Supply Chains