Cost tops healthcare supply chain woes

Global- Cost is still the number one supply chain headache in the pharmaceutical, medical and surgical device and biotech industries. Industry players estimated  product expirations, returns and recalls cost them hundreds of thousands to millions of dollars each year, according to a recent survey.

UPS has released the results on a survey identifying specific concerns in the healthcare supply chain. The survey, "Pain in the (Supply) Chain" targeted supply chain decision makers in the pharmaceutical, medical and surgical device and biotech industries.

The survey found that 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.

About 25% of participants selected managing supply chain costs as the issue they have been most successful at addressing. 74% of participants from companies making in excess of US$1 billion annually, estimated that costs related to product expirations, returns and recalls cost them hundreds of thousands to millions of dollars every year, said the survey.

Bill Hook, UPS's vice president for healthcare logistics said. "Managing supply chain costs will only become more critical as healthcare supply chains continue to expand and evolve; It is a balancing act for companies to take advantage of new opportunities amidst market pressures, an increasingly complex regulatory environment and elongated supply chains," he said.

The survey also concluded that 90% of participants anticipate changes to be made in their distribution channels within the next two year. This is significantly higher than participants who work in companies earning US$1 billion and higher in revenues, as only 46% reported they are planning to change their distribution channel strategy.

UPS said, despite concerns about managing supply chain costs, an emerging worry is the increase in supply chain spending. Over the next 18 months, 60% expect supply chain spending as a percentage of total sales to increase by 23%. Among the companies with US$1 billion or higher revenues, 42% expect increases in their supply chain spending during the same time frame.