What is logistics and supply management’s key goal? It entails efficiently organizing, planning, and coordinating product movements from point of origin (producer) to point of consumption (in healthcare, the consumer is the patient). By aligning and assessing supply chain goals with a patient-first strategy, healthcare providers and medical-product manufacturers can save money while still providing the best possible care to their patients.
Supply chain management
A supply chain pharmaceutical warehousing is a web of interconnected stakeholders and businesses that work together to provide a product, such as medical supplies, from the manufacturer to the end user. The purpose of supply management is to connect all of these networks and construct a cost-effective end-to-end strategy that increases shipment speed while lowering costs without lowering the product’s value or quality (patient).
The creation of comprehensive systems that map out and organize the complex movement of items by delivering dependable, safe, and timely shipment is referred to as logistics. It is at the heart of every supply chain, focusing on new ways to streamline the flow of information and products from suppliers to healthcare clients, as well as the manufacturing and distribution processes. It merely wants to make its material handling systems more efficient.
In other words, a supply chain encompasses all parts of the product life cycle, whereas logistics is a supply chain component that deals with efficient product movement. A healthcare organization’s supply chain is efficiently managed to produce the maximum value when it wishes to build an end-to-end method for providing medical items. When an organization’s supply chain is optimized and transparent, it allows stakeholders and partners to collaborate more effectively. This productive collaboration leads to better innovation and efficacy in their logistics solutions, as well as laying the framework for tackling any supply chain difficulty.
Healthcare Reform and the Transition to Value-Based Care
Many healthcare institutions, pharmaceutical companies, and health insurers are attempting to incorporate value-based healthcare as a way to enhance patient health and cut costs.
The goal of value-based healthcare solutions is to change the focus from quantity to quality of care. It can be described as a compensation-for-outcomes-based healthcare paradigm. Medical practitioners under a typical amount of care or fee-for-service system are compensated on a pay-per-use basis. To assure compensation in value-based healthcare, patients’ overall health and wellness are critical.
Value-based care provides a proactive approach to disease treatment rather than a reactive strategy. Many healthcare providers currently use value-based care features in their health plans, and it is a major focus of efforts to cut health-care costs. The rise of chronic disease and an aging population are forcing both emerging and developed countries to adopt more efficient healthcare delivery systems.
Supply Chain Management Improvements as a Savings Opportunity
Patients are healthcare customers, and their ultimate objective is better health at a lower cost. When a patient is injured and arrives to the emergency room, he or she isn’t concerned with the healthcare provider’s preferred equipment or how they can influence their treatment or healthcare expenditures. They simply want to improve, heal, and feel better. In many aspects, healthcare items differ from other products, making the healthcare supply chain distinct from that of consumer goods. Because healthcare is highly regulated and patients’ expectations are constantly changing, their supply chain management system and logistics procedures must adapt fast to remain successful and cost-effective.
Managing a healthcare supply chain is typically one of the higher expenditures incurred by hospitals and other healthcare organizations. Reduced healthcare supply chain expenses, increased productivity, and improved supply chain visibility are all top concerns for healthcare executives. One of the areas in healthcare where improvements in the supply chain can save the most money is the supply chain. Rather of focusing solely on product prices, the supply chain team also considers hidden and distribution expenses.
In addition, one of the most significant influences on supply chain costs is the healthcare professionals and practitioners themselves. Individual preferences for the instruments and medical devices used by healthcare professionals, surgeons, and physicians are common. It’s not the most cost-effective choice to base your distribution center and inventory management selections on the preferences of healthcare practitioners. Despite this, many businesses let it affect their warehouse management and purchasing decisions. Excess product waste, poor supply utilization, and increased (invisible) expenses might result from failing to update physicians’ preferences and a lack of standardization.
Another crucial component that can assist enhance logistics procedures and lower costs is data collecting and analysis. Understanding how much it costs to deliver medical care has become crucial. One of the most useful assets for collecting actionable data is the healthcare supply chain. The solutions required for precise data capture and analysis throughout the supply chain can provide improved insights into product requirements, allowing inventories to be stabilized, waste to be reduced, and costs to be reduced. By enhancing patient outcomes, an automated logistics system and supply chain can enable a higher level of patient care.
Investing in Healthcare Logistics Has Its Advantages
Companies may boost the value they provide by lowering the time and money spent on product transit from one location to another by investing in new and more effective logistics solutions. A robust logistical foundation can support dependable, fast, and safe delivery of medical items at a fair cost for those looking to improve their health system processes.
Shipping, warehousing, and order processing are just a few of the duties that daily logistics operations normally entail. If worldwide logistics are involved, this could include air freight, air cargo, or ocean freight. This could also entail forming alliances with trucking businesses that specialize in transporting medical supplies. Additionally, logisticians gather and analyze data in order to provide summaries to their supply chain solutions partners. This is done to make products more visible as they move through the supply chain cycle.
To improve customer service, all parties involved must establish open communication lines and coordinate live tracking updates to increase transparency and confidence between logistics partners. Because products are potentially life-saving devices, timing is essential in the healthcare system. As a result, your supply chain must run as efficiently as possible to ensure that supplies arrive on time at your healthcare business (without incurring additional costs).
Steps to Navigate Healthcare Logistics Effectively
Healthcare logistics innovation can help you evolve your supply chain by providing transportation (to and from the doctor) and delivering medications. Some of the most difficult difficulties in healthcare logistics are shipping, device cleaning and maintenance, storage and inventory management, and waste management. Building an alternative logistics solution might be difficult when dealing with inconvenient manual procedures (that must be performed by healthcare physicians), rising labor expenses, and a lack of effective storage space.
Let’s take a look at a few major solutions to the logistics issues that healthcare businesses are now dealing with.
1. Product delivery within 24 hours
A one-size-fits-all mentality pervades many medical device and pharmaceutical industries. Relying only on overnight shipping expenses can pile up over time, especially as worldwide expectations for speedier delivery rise. Healthcare companies are incurring increased costs in order to accommodate the pharmaceutical logistics need for overnight shipping. Furthermore, because demand, unit value, service expectations, and profitability vary per product, reliance on a single supply chain process with disparate features leads to inefficiencies (short supply for some products and high inventories for others).
This issue can be handled by utilizing a decentralized warehouse network that enables for more cost-effective and speedier medical product distribution (even in urgent situations). Healthcare firms can separate their product base based on client requirements and product characteristics to design a more efficient transportation strategy with a lean supply chain. They may also fulfill requests with fewer and more frequent shipments thanks to a decentralized warehousing infrastructure.
2. Inadequate automation
Increasing expenses throughout the supply chain is a result of highly manual operations and a lack of insight. Because they rely on manual data management and entry, organizations are missing out on the benefits of data-based decision making, which also means increased labor expenses and a larger chance of mistakes. Data standardization, encompassing data procedures, transfer, and capabilities, is lacking in the healthcare industry.
Healthcare providers can minimize expenses associated with data gathering, ordering, and other operations by automating their manual activities. Purchase orders, invoicing, and requisitions can all be automated, allowing them to better manage their data and boost data visibility. By forming a cooperation with a 3PL (third-party logistics) firm, they can quickly automate these operations because 3PLs already have the necessary technology.
3. Excess stockpiles or inventory shortfalls
Due to the volatility of the medical product industry, inventory shortages (as well as excesses) occur. Manufacturing cycles for healthcare producers must be aligned with patient demand patterns, and manufacturing frequency must be managed accordingly. Slow-moving products and extended lead times might result in less visibility, which can make it difficult to meet demand for specific items.
Medical manufacturers, on the other hand, will be able to see what products are on hand and what needs to be ordered using supply chain technology. Gaining supply chain visibility and minimizing unnecessary expenses associated with erroneous inventory counts become easier as the healthcare supply chain becomes more transparent. Organizations will be able to prevent excess product stocking using this technology, which can be given by 3PLs, thanks to the capacity to track and monitor product inventories via greater visibility.
Technologies that can assist in the improvement of healthcare logistics
Today’s technology is advancing at an exponential rate, which means that new solutions to common problems in healthcare logistics are developing faster and more frequently. Healthcare firms can use technologies like:
• Product-tracking software
You may increase data capture accuracy while automating the process by using Auto-ID and Data Collection (AIDC) technology. It will also allow you to keep track of which patients utilize particular products, allowing you to avoid stocking up on products with short expiration dates that aren’t needed.
• Tools for optimizing logistics
Healthcare businesses have begun to use artificial intelligence and machine learning by adopting various AI-supported logistical solutions, as healthcare is projected to become more personalized and go outside the boundaries of medical centers. UPS and Amazon are among the pioneers in the creation of these systems, which are aimed to assist drivers in finding the best routes or getting clinicians, patients, and items to the right places at the right time.
• Platforms for smart logistics
Healthcare firms can employ real-time pricing services and freight bookings to reduce labor and material expenses (in procurement) and increase efficiency. Smart logistics systems connect shippers and carriers, reducing the wasteful and time-consuming process of locating and reserving new freight capacity for everyone involved.
Healthcare firms may take use of their partner’s smart logistics technologies by choosing the proper 3PL provider.
• IoT and AI
Because of its potential to use Big Data to predict healthcare patients’ future requirements, AI is being integrated into a variety of technologies. AI-based applications are used in logistics to maintain product availability by predicting shortages and backorders. In addition, IoT solutions help healthcare logistics by enabling for faster and more accurate data collection, analysis, and visualization.
How Can Third-Party Logistics (3PLs) Aid Healthcare Logistics?
More and more healthcare providers are opting to work with healthcare-specific third-party logistics companies. The following are some of the benefits of partnering with a 3PL:
1. Smart logistics technologies are available
Third-party logistics companies already have the technology needed to streamline supply chains, and you have access to it as a partner. Transportation management systems (TMS), freight audit and payment solutions, route and consolidation optimization tools, data analysis, real-time order tracking, and other tech features contribute to a more automated and simplified supply chain management.
2. Warehousing that is not centralized
Having a half-full warehouse is an unsustainable option because you’ll have to pay to maintain the entire infrastructure, including the bits that aren’t being used. You can employ third-party logistics businesses’ warehouse infrastructure or they can assist you in storing products in a shared facility. In either case, this solution will assist you in reducing unnecessary expenses and maintaining cost control.
3. Logistics expertise that is specialized
Hiring a 3PL that specializes in healthcare logistics can be extremely advantageous in improving your logistics process if you are unfamiliar with best practices and trends in healthcare logistics. Third-party logistics providers already know what you need and have a network of carriers and other partners in place, which can help you run your business more efficiently.
4. The advantages of working with a reputable carrier network
A 3PL is likely already in contact with thousands of carriers with whom it has strong ties. You may be certain that your items are secure and sound in their hands because you have such a diverse network of reliable professionals at your disposal.
Finally, a 3PL will relieve your health practitioners of many every day and time-consuming activities, allowing them to focus on the most important work – aiding patients. Your healthcare professionals will no longer be required to conduct chores such as order monitoring, driver and facility communication, performance reporting, and different administrative tasks. At the same time, you will reap the benefits of improved supply chain management.
Healthcare systems around the world are running out of resources at a time when demand for high-quality care is increasing. Governments and healthcare organizations are under increasing pressure to save costs while preserving service quality. Health spending in the United States is predicted to rise by $3.5 trillion between 2010 and 2040, according to the OECD and the World Economic Forum. The government’s response to this trend entails enforcing healthcare reforms and acknowledging the need for increased private-sector partnership.
One of the important solutions to this rising challenge that is shaking up the healthcare business is to form the correct alliances with 3PL providers and trading partners. Each entity involved in the supply chain cycle should play a specific role and contribute to the creation of a frictionless logistics system. Despite ongoing changes in product transportation capabilities, aptness, and volumes, third-party logistics providers across the United States are cooperating with healthcare institutions to ensure they can satisfy their patients’ demands. 3PLs are showing their worth to the healthcare business by saving time and money, giving 24/7 access, and responding quickly to shipment mistakes and delays. Because they help to foster a culture of continuous improvement, lean end-to-end logistics solutions frequently empower people and boost productivity.
To summarize, the benefits of 3PL involvement in the healthcare industry are obvious, and they are long-term and widespread. In order to reduce wasteful supply chain expenditures, healthcare organizations must increase their flexibility, reactivity, scalability, resourcefulness, cost-effectiveness, and trust.