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Home » New Healthcare Regulations Drive Quest for Supply Chain Efficiency

New Healthcare Regulations Drive Quest for Supply Chain Efficiency

April 4, 2017
SupplyChainBrain

DSCSA compliance is driving change in processes and equipment to include additional verification points and scans to enable unit-level tracking and serialization. And the impacts go beyond physical flow to include systems and labor implications. As companies reconfigure systems to accommodate the change, they should be looking at what kind of data manufacturers can provide to help with identification of inbound shipments to support requirements.

Larger players in the medical surgical and pharmaceutical market are hitting the throughput capacity limits of conventional automation (conveyance, shuttle, sortation, etc.) technology. They are looking at emerging technologies like robotics, warehouse execution software (WES) and autonomous vehicles to help scale operations to handle higher volumes driven by population growth, market density and consolidation.

The industry will continue to see growth, but not all of it will be organic. In recent years, there has been significant M&A activity, which is likely to continue for the near term. Companies should be thinking about how to build in flexibility and be prepared to rationalize networks as acquisitions and mergers take shape.

Over the next three years, specialty pharma will be the largest growth driver for this industry. By 2018, 26 of the 50 best-selling pharma products in the world will require refrigerated storage and handling.  Multiple temperature zones (ultra-frozen, frozen, refrigerated, ambient, and humidity controlled) are the new reality of inventory management, which will increase cold chain storage, handling and transportation requirements.

And with the rising cost of pharmaceuticals, there comes greater emphasis on security and inventory accuracy throughout the entire supply chain. This industry is already significantly ahead of others in terms of managing inventory. Efficiencies and cost savings in this area could be found in automating cycle counts through the use of drones or autonomous robots scanning aisles and through greater use of RFID technologies.

Even with investments in automation, labor continues to be top-of-mind as the shortage of available workers continues to put pressure on staffing models. Recruiting and retaining workers with the skills and background required to work in a highly regulated environment is proving harder and pushing labor costs higher as impacts from healthcare and minimum wage laws take effect.

The good news is that the key players in this industry have already done the work to ensure they are achieving time-definite deliveries, which has helped to prepare them for what is coming on the horizon. As pharmacies look to reduce on-hand inventory levels to hours instead of days or weeks, deliveries may need to be packaged in ready-to-dispense units and pre-labeled for a specific patient. Thinking through the labeling and verification impacts of these things now could be key to competitive advantage down the road.

The Outlook

Beyond 2020, companies need to think about the changing economic realities of the U.S. healthcare industry. As a larger percentage of drugs fall under the specialty category, medical-surgical distributors will need to become more integrated with pharmaceutical distribution and direct-to-consumer shipments and specialized handling requirements will increase. Companies will have to re-think how they design and scale distribution operations to a level not seen across the distribution landscape in North America.

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KEYWORDS Global Supply Chain Management healthcare High-Tech/Electronics Pharmaceutical/Biotech Regulation & Compliance Supply Chain Analysis & Consulting
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