UPS' Pain in the Supply Chain Results

September 23, 2014
Pharmaceutical Technology Editors

Regulations, product protection, and cost management are top concerns of supply chain decision makers.

Regulatory compliance and product protection are the leading pain points for supply chain decision makers in the healthcare industry, according to the seventh annual Pain in the (Supply) Chain survey released by transportation and logistics service provider UPS.

The survey results—from phone interviews with 536 senior-level supply chain decision makers in the healthcare industry from the United States, Canada, Western Europe, Asia, and Latin America—-revealed insight into the top supply chain concerns and how strategic partnerships and technology investment can mitigate risks and allow healthcare companies to capitalize on growth opportunities.

The survey was conducted by TNS on behalf of UPS to understand healthcare clients top-of-mind issues to help provide better solutions for the future and share information with peers, explained Melanie Alavi, Global Healthcare Strategy Director at UPS.

For the third consecutive year, regulatory compliance was the top supply chain pain point, cited by 60% of respondents. Almost half of the respondents (46%) identified product security as a top challenge; 44% indicated that managing supply chain costs were a top concern; and 40% cited product damage and spoilage as a pressing issue.

Access to global markets or new customer bases (28%), visibility (27%), contingency planning (26%), visibility (27%), and changing distribution and go-to market channels (21%) were other leading concerns.

Pain points detailed
The respondents said regulatory changes, legislative uncertainty, and a lack of clarity in regulations were factors contributing to compliance levels that were less effective than desired.

Growing sophistication of counterfeiting (48%), poor supply-chain visibility and too many supply-chain handoffs (40%), and inadequate enforcement (35%) were cited as challenges to product security.

The percentage of respondent reporting concerns over cost management has declined from 64% in 2011 to 44% in 2014. Logistics and distribution partnerships, (78%), IT investment (66%), and outsourced transportation management (62%) were ranked as strategies to cope with cost pressures.

Top product spoilage concerns were adverse weather/temperature environment (69%), carrier service delays/damage (69%), customs/brokerage delays (46%), and an increase in the number of temperature-sensitive product shipments (44%).

Only one-quarter of the healthcare executives surveyed cite contingency planning as a top supply chain concern. However, 34% of those surveyed in Asia and 22% in Latin America say that more than one-quarter of their companies’ supply chains were impacted by unplanned events in the past three to five years. Specific challenges to addressing business continuity include events being too unlikely or infrequent (61%), back-up infrastructure being too expensive to deploy (46%) and little to no prioritization being given to this area (42%) versus other more urgent matters.

Robin Hooker, director of healthcare sector marketing, UPS emphasized the importance of assessing risk. "The Chinese character that represents the word crisis, when you separate the two Chinese characters they break down to the words risk and opportunity," he said.

Strategies to address challenges
The respondents reported successful strategies to address regulatory compliance: 57% hired regulatory consultants, 54% built partnerships with local native distribution firms, and 38% worked with multinational distribution firms.

To manage supply chain costs, 78% reported the use of logistics and distribution partnerships, and 62% reported that they outsourced transportation management.

Investing in new technologies is a top strategy to increase efficiencies and competitiveness, the respondents report. Globally, over the next three to five years, 81% of respondents say they will invest in order management systems; 66% said they will invest in serialization and/or track and trace technologies; 53% report plans to add cold chain technologies; and half of the respondents reported planned investments in security technologies for high-value shipments.

Source: UPS