Executive Briefings

Third-Party Logistics: The ROI of Letting Go

 

The path to greater agility and control may lead outside your company. In fact, many midsized and smaller healthcare companies need to learn to let go of supply chain tasks and operations that are better handled by expert third-party logistics providers (3PLs). By focusing on what you do best, and outsourcing critical but peripheral activities to 3PLs, your business is in a better position to experience cost efficiencies that you can pass on to patients.

Picture this: You manufacture medical devices that are used around the world. You keep an eye on healthcare statistics, trends, and actual demand—and plan manufacturing carefully to manage your inventory. Then, just as you’re ready to ship out your product, new healthcare regulations in the European Union make your device the only compliant one in its class. Demand skyrockets and orders from hospitals surge. Can your supply chain pivot to seize the moment? Quickly? Profitably?

Unexpected jolts like this one—while challenging—can also bring opportunity for companies with agile supply chains. Those less agile, however, must commit unplanned resources trying to keep up. In today’s lean operations, even predictable challenges—like seasonal demand fluctuations, product returns, and microbial control efforts—often test the comfortable limits of an operation.

Investing in what it takes to scale up or down with demand is a tough sell, especially in companies already facing big investments in supply chain connectivity and the Internet of Things. One way to bridge the gap is by incorporating third-party logistics and distribution providers into healthcare supply chain operations. Often, 3PLs provide a faster way to respond to market and customer needs—often with less financial investment and risk.

Considering Flexing vs. Investing

Investing in resources that are needed only seasonally or temporarily pose obvious challenges to utilization rates. However, a fully capable 3PL offers a range of services that can supplement operational ebb and flow and, in effect, share in the financial burden. Services range from lining up healthcare-compliant warehouse space anywhere in the world to overcoming last-mile delivery challenges. More specialized services can also include proactive monitoring and intervention of high-value shipments that can’t be late and even temperature-sensitive storage and product distribution.

UPS Vice President of Healthcare Solutions, Todd Snyder, adds that there is a good chance that a third-party provider fulfills a diabetes pump for someone you know, your annual flu vaccine or even your mail order prescription.

“UPS meets strict regulations so we can operate as dispensary for a number of our healthcare customers.” He adds, “We bring expertise to order fulfillment and logistics which enables our customers to focus on building their core business.”

Weighing Global Growth vs. Global Expansion

Meeting emerging global demand no longer requires investing in infrastructure in foreign lands. For many, it’s possible to leverage a global 3PL’s existing infrastructure to test the water, or to quickly meet the demands of a vital customer.

Skilled 3PLs offer a relatively turnkey way to line up facilities, suppliers and a willing workforce in strategic locations around the globe. They can also help to bridge the gap between language, cultures and trade management. And specialists like UPS have a dedicated, multi-functional team of more than 50,000 healthcare supply chain experts around the global who understand the healthcare industry’s complex and unique needs. Says UPS Vice President of Global Logistics and Distribution, Dan Gagnon, “The line between our healthcare customers’ services end and UPS’s start is not always clear – but that’s by design. Our third-party services are designed to be an extension of our customers’ operations.”

Gagnon explains that not every customer requires a large-scale operation. “We operate over 900 field stocking locations worldwide, which is essentially leased space in existing facilities with UPS inventory management and distribution services. That enables us to help customers more efficiently position and distribute inventory nearer to the point of demand.”

Keeping Pace with Customer Expectations

There is no question that patients, hospitals, clinical trial companies and others are bringing higher service expectations to each purchase. The once simple B2B order-to-shipping dynamic has expanded to include direct-to-patient sales, among other models. And it’s likely their customer service capabilities have not kept pace.

Take returns for example. If a life science company’s post-sales process was set up to handle only products purchased directly from them, what happens to the customer experience if a returned product was drop-shipped by the manufacturer? Who receives the return? Who monitors the chain of custody and ensures the proper financial and inventory adjustments?

A 3PL can offer an interim post-sales solution, or even long-term one. A fully capable 3PL with healthcare expertise can collaborate with a company to improve their processes or can even take them over completely, enabling the reallocation of post sales service resources to the core business. The sophisticated tracking capabilities many offer can also provide insights into returns, damage and defects to help improve product and service quality.

Examining The ROI of Letting Go

Whether a company is manufacturing medical devices, sending life-saving medicine directly to patient’s homes, retailing pharmaceuticals, or anything in between, the name of the game is agility. Without it, few will capitalize on fleeting bursts of demand or meet growing customer expectations.

Partnering with a third-party logistics provider like UPS is one way for companies to respond faster and provide a better customer experience, often with less financial risk and less capital expenditure. It may mean releasing more control than operators are typically comfortable with, yet the upside may make it well worth letting go.

Picture this: You manufacture medical devices that are used around the world. You keep an eye on healthcare statistics, trends, and actual demand—and plan manufacturing carefully to manage your inventory. Then, just as you’re ready to ship out your product, new healthcare regulations in the European Union make your device the only compliant one in its class. Demand skyrockets and orders from hospitals surge. Can your supply chain pivot to seize the moment? Quickly? Profitably?

Unexpected jolts like this one—while challenging—can also bring opportunity for companies with agile supply chains. Those less agile, however, must commit unplanned resources trying to keep up. In today’s lean operations, even predictable challenges—like seasonal demand fluctuations, product returns, and microbial control efforts—often test the comfortable limits of an operation.

Investing in what it takes to scale up or down with demand is a tough sell, especially in companies already facing big investments in supply chain connectivity and the Internet of Things. One way to bridge the gap is by incorporating third-party logistics and distribution providers into healthcare supply chain operations. Often, 3PLs provide a faster way to respond to market and customer needs—often with less financial investment and risk.

Considering Flexing vs. Investing

Investing in resources that are needed only seasonally or temporarily pose obvious challenges to utilization rates. However, a fully capable 3PL offers a range of services that can supplement operational ebb and flow and, in effect, share in the financial burden. Services range from lining up healthcare-compliant warehouse space anywhere in the world to overcoming last-mile delivery challenges. More specialized services can also include proactive monitoring and intervention of high-value shipments that can’t be late and even temperature-sensitive storage and product distribution.

UPS Vice President of Healthcare Solutions, Todd Snyder, adds that there is a good chance that a third-party provider fulfills a diabetes pump for someone you know, your annual flu vaccine or even your mail order prescription.

“UPS meets strict regulations so we can operate as dispensary for a number of our healthcare customers.” He adds, “We bring expertise to order fulfillment and logistics which enables our customers to focus on building their core business.”

Weighing Global Growth vs. Global Expansion

Meeting emerging global demand no longer requires investing in infrastructure in foreign lands. For many, it’s possible to leverage a global 3PL’s existing infrastructure to test the water, or to quickly meet the demands of a vital customer.

Skilled 3PLs offer a relatively turnkey way to line up facilities, suppliers and a willing workforce in strategic locations around the globe. They can also help to bridge the gap between language, cultures and trade management. And specialists like UPS have a dedicated, multi-functional team of more than 50,000 healthcare supply chain experts around the global who understand the healthcare industry’s complex and unique needs. Says UPS Vice President of Global Logistics and Distribution, Dan Gagnon, “The line between our healthcare customers’ services end and UPS’s start is not always clear – but that’s by design. Our third-party services are designed to be an extension of our customers’ operations.”

Gagnon explains that not every customer requires a large-scale operation. “We operate over 900 field stocking locations worldwide, which is essentially leased space in existing facilities with UPS inventory management and distribution services. That enables us to help customers more efficiently position and distribute inventory nearer to the point of demand.”

Keeping Pace with Customer Expectations

There is no question that patients, hospitals, clinical trial companies and others are bringing higher service expectations to each purchase. The once simple B2B order-to-shipping dynamic has expanded to include direct-to-patient sales, among other models. And it’s likely their customer service capabilities have not kept pace.

Take returns for example. If a life science company’s post-sales process was set up to handle only products purchased directly from them, what happens to the customer experience if a returned product was drop-shipped by the manufacturer? Who receives the return? Who monitors the chain of custody and ensures the proper financial and inventory adjustments?

A 3PL can offer an interim post-sales solution, or even long-term one. A fully capable 3PL with healthcare expertise can collaborate with a company to improve their processes or can even take them over completely, enabling the reallocation of post sales service resources to the core business. The sophisticated tracking capabilities many offer can also provide insights into returns, damage and defects to help improve product and service quality.

Examining The ROI of Letting Go

Whether a company is manufacturing medical devices, sending life-saving medicine directly to patient’s homes, retailing pharmaceuticals, or anything in between, the name of the game is agility. Without it, few will capitalize on fleeting bursts of demand or meet growing customer expectations.

Partnering with a third-party logistics provider like UPS is one way for companies to respond faster and provide a better customer experience, often with less financial risk and less capital expenditure. It may mean releasing more control than operators are typically comfortable with, yet the upside may make it well worth letting go.

Learn how UPS healthcare logistics can help make your healthcare supply chain more agile and cost efficient.