Healthcare Executives Say Supply Chain Effectiveness Is Critical to Compete

Product differentiation is important, but failing to nurture supply chain partnerships is a mistake that companies still make.

Nearly 80% of healthcare executives cite an effective supply chain as “extremely important” to a company’s ability to successfully compete over the next 10 years.  According to a recent Frost & Sullivan study that examined the role of the supply chain in achieving a competitive advantage, true supply chain innovation translates into supporting top-line growth, market expansion and customer relationships.

Companies that place all their emphasis on R&D and technology offerings are failing to see the big picture. The supply chain remains one of the most “underappreciated sources of competitive advantage”, and medical device companies need to nurture these partnerships.

The study, “Improving Profitability, Improving Customer Loyalty, Improving Lives”, found that 89% of executives cite the supply chain as extremely important in meeting profitability goals, and 83% held it in the same regard in meeting revenue targets.

Why Focus on the Supply Chain?

Consolidating shipments and centralizing distribution centers are two ways that Stryker eliminated extra steps and responded to cost pressures. The company was able to show hospitals that it could lower transportation costs by shipping once a week instead of 20 times a month. In 2012 Stryker opened a central distribution center, which brought shipments across divisions into one place, reducing freight costs.

Respondents to the study, which was commissioned by FedEx, answered “extremely important” in connecting the significance of the supply chain in the follow areas:

  • 61% : Role of supply chain cost reduction strategies in responding to reimbursement and cost pressures faced by customers
  • 39%: Impact of consolidation of U.S. hospitals and healthcare providers on supply chain (44% said it was somewhat important)
  • 74%: Success of supply chain in selecting the best vendors.
  • More than 80% of executives placed high importance on vendors to provide  innovative solutions, ensure reliability and product protection, act as problem solvers, and help manage costs.

Leveraging the supply chain is one of the best ways a company can define a positive customer experience, according to the study. Companies are investing in advanced technologies that protect product integrity and offer real-time visibility and temperature monitoring while shipments are in transit. Many companies are also looking for providers that can offer a one-stop-shop in transportation, warehousing, temperature control, monitoring, and intervention, with a network that supports the medical device regulatory environment.

A full version of the report is available on FedEx Healthcare’s website

In an upcoming feature, Medical Device Summit, will explore Logistics & Production and Process Controls, and the technologies that are helping device manufacturers address these challenges.

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