UPS Releases Results of Survey on Healthcare Supply Chains
ATLANTA – In the midst of much change in the healthcare industry, UPS (NYSE:UPS) has launched a survey to identify growing pains in the healthcare supply chain.
Targeting top supply chain decision makers in the pharmaceutical, medical and surgical device and biotech industries, UPS’s 2008 “Pain in the (Supply) Chain” survey reveals that regulatory compliance and industry competition top the list of healthcare company concerns.
The survey, conducted for UPS by Harris Interactive, also found “global market access” emerging as the area companies need the most help addressing. Global market access is a major focus area for healthcare companies seeking to take advantage of lower-cost sourcing opportunities and penetrate fast growing, emerging consumer markets.
“Capitalizing on new global market opportunities amidst an increasingly competitive industry landscape requires changes in supply chain and business strategies,” said Bill Hook, UPS’s vice president for healthcare logistics. “It’s crucial that companies have the supply chain flexibility to respond to changing market conditions in order to capture new market share and navigate the many complexities associated with global market access.”
Evolving compliance legislation also is a concern for healthcare companies in an increasingly global marketplace in which companies must navigate various regulatory compliance laws across new territories. Regulatory concerns ranked as the No. 1 business issue for larger companies in a correlated online survey targeting companies with $1 billion+ revenues. Nearly 92 percent of these companies cited regulatory compliance as a top concern.
Cost Pressures Cause Pain in the Chain
When asked about supply-chain specific concerns, companies ranked managing and containing supply chain costs as the number one concern. Sixty percent of companies reported they were “very concerned” or “extremely concerned” about the potential impact of supply chain costs on their business.
Twenty five percent selected managing supply chain costs as the issue they have been most successful at addressing. Among the companies with $1 billion+ revenues, 74% of respondents estimated that costs related to product expirations, returns and recalls cost them hundreds of thousands to millions of dollars every year.
“Managing supply chain costs will only become more critical as healthcare supply chains continue to expand and evolve,” said Hook. “It’s a balancing act for companies to take advantage of new opportunities amidst market pressures, an increasingly complex regulatory environment and elongated supply chains.”
Future Trends Point to New Business Directions
The vast majority of survey respondents planned to make changes to their supply chain models in the near future. Among the immediate changes companies planned to make are: expanding their distribution channels; outsourcing more supply chain functions; working with third-party logistics companies, and increasing their supply chain spending.
Ninety percent of respondents expect to make changes to their distribution channels in the next one to two years; two in five of all industry experts and more than half of the pharma industry (55%) expect to change their distribution channels to work with third-party logistics providers. A majority, 61% of respondents, plan to implement a direct-to-consumer channel strategy in the next one to two years and 55% are planning to initiate a direct-to-wholesaler strategy. Interestingly, 37% expect to expand to both direct-to-consumer and direct-to-wholesaler.
When asked the same question of companies with $1 billion and higher revenues, 46% reported they are planning to change their distribution channel/ go-to-market strategy. Nearly half (46%) of these larger companies also plan to increase the amount they outsource in the next one to two years. The same percentage planned to work with third-party logistics providers in the near future.
Despite concerns about managing supply chain costs, another trend is an increase in supply chain spending. In the next 18 months, 60 percent expect supply chain spending as a percentage of total sales to increase by 23 percent. Among the companies with $1 billion and higher revenues, 42 percent expect increases in their supply chain spending over the same time period.
The survey was a two-part study. The first phase included a blind, in-depth phone survey conducted by Harris Interactive of more than 300 primarily small-to-mid-market companies in the pharmaceutical, medical device and biotech industries. The second phase conducted online targeted large healthcare companies from the same sectors with annual revenues of $1 billion and higher. Qualified respondents were supply chain decision makers.
UPS (NYSE: UPS) is the world’s largest package delivery company and a global leader in supply chain and freight services. UPS is a leading global trade expert equipped with a broad portfolio of solutions, including comprehensive logistics, compliance and temperature-sensitive transportation services for the healthcare industry. Headquartered in Atlanta, Ga., UPS serves more than 200 countries and territories worldwide. The company can be found on the Web at UPS.com. To get UPS news direct, visit pressroom.ups.com/RSS.
This news content was configured by WebWire editorial staff. Linking is permitted.
News Release Distribution and Press Release Distribution Services Provided by WebWire.