Healthcare is under tremendous pressure to improve service, material handling, inventory management, and cost savings. Healthcare companies must look for ways to decrease costs while maintaining high quality patient care and clinical operations. This is a large part of declining reimbursements.
Medical devices are the main targets of cost-cutting measures. Many healthcare providers have asked device manufacturers to lower their prices. These demands must be met by medical device and product manufacturers. Some supply chain solutions can be used to help healthcare companies meet these needs. The key to reducing healthcare costs and maintaining high quality care is working with 3PLs (third-party logistics companies).
The Healthcare Industry: Meeting the New Requirements
Lowering logistics costs is just one of the many benefits of working with the right supply chain partner. For example, healthcare companies with temperature-sensitive shipping requirements can leverage the logistics provider’s existing infrastructure, advanced technology, and streamlined processes.
By eliminating waste and inefficiencies in their supply chains, medical manufacturers and organizations can reduce costs. They will need to make several operational and cultural changes in order to achieve that.
They will first need to streamline their supply chain by reducing the number of touchpoints in order to reduce product handling. They will also need to improve transparency to track the product’s movement from the manufacturer to the patient. While this requires investments in product-tracking technology, the long-term result is a reduction in transportation costs. Healthcare organizations will have to allocate more resources in order to comply with growing regulatory requirements.
Healthcare supply chains are unique and more complicated than ever. It is crucial to be knowledgeable in healthcare logistics in order to stay ahead of the critical regulatory changes that can make it difficult to comply. These changes are rapid and many 3PL companies have seen an increase in regulatory inspections of medical warehouses and pharmaceutical supply over the past five years.
When we refer to cultural changes, we mean aligning healthcare logistics companies cultures to meet new healthcare challenges. Let’s start with flexibility. The supply chain must have the ability to adapt to new healthcare needs, such as the move from hospitals to cheaper locations (e.g. patients’ homes).
Data is essential to make better decisions in the supply chain. Advanced tools and innovations are needed to identify clear demand signals that optimize inventory levels. To create more efficient transportation and warehouse management strategies, partners in a supply chain must work together. The healthcare supply chain must be agile and adaptable to handle constant changes in regulatory compliance, product complexity, and points of care.
How Logistics Companies Can Serve the Healthcare Industry Better
Although it can be difficult to implement, the combination of best practices and a coherent logistics strategy is crucial to success in today’s healthcare industry. These are just a few ways that a logistics provider can help improve the quality and safety of healthcare.
Using 3PL’s and multi-tenant warehouses to improve efficiency
Inefficiency and waste have plagued the warehousing process for medical devices. Every manufacturer constructs its own warehouses and supply chains infrastructure, which often have more capacity than they need. Warehouses can be 60% to 70% full at any one time, and their infrastructure needs to be maintained at 100%. One manufacturer may have two warehouses within a few miles of each other, while another manufacturer may have several warehouses in the same area. All may have half-full warehouses. These approaches are not sustainable due to rising costs.
Third-party logistics providers can offer their own warehousing solutions or help consolidate an organization’s warehousing (combining inventory from several manufacturers in a shared or multi-tenant healthcare facility). This will reduce redundant costs, which is crucial in healthcare logistics. It is economical to store products in a shared facility and share the regulatory costs.
Healthcare organizations can access the technology they need to automate and streamline their supply chains by hiring a 3PL company. Your 3PL will be able to share its technology with multiple customers and can manage maintenance costs upfront. This will allow you to pass the benefits along to your customers. A 3PL can offer a variety of benefits, including real-time order tracking and data analysis, route and consolidation optimization tools as well as freight auditing and payment solutions and transportation management system (TMS).
Because patients’ lives and health depend on certain products, it is important to have excess inventory. Healthcare providers are often required to fill at high rates. 3PLs are able to help achieve maximum inventory availability by providing full visibility and tracking products at all points of the supply chain.
Consolidating freight between manufacturers
Most freight in healthcare is transported via LTL (less-than-truckload) services, meaning that the trucks are rarely full to their capacity. The best way to transport freight at full capacity is to combine shipments from multiple shippers, whose products are headed to the same destination. Third-party logistics companies understand this. On top of that, consolidating freight means fewer product touches (compared to the traditional LTL approach), so there is less risk of potential claims and damage, leading to fewer losses and shortages.
Operational expertise and industry
Third-party logistics providers that specialize in healthcare logistics know the best practices. They are familiar with the best practices for picking up and delivering equipment, ordering configurations, and scheduling. They are able to communicate the requirements of healthcare organizations to carriers. This can make a huge difference in your performance. Your 3PL can also help you improve your operations by establishing industry connections and transport expertise in your sector.
Healthcare organizations must verify that the product is safe before they hand over the product to a driver. You can trust your 3PL partner’s proven, vetted carrier network as you vet potential carriers for insurance, qualifications, and equipment. Because of their network of qualified logistics companies, third-party logistics firms can help you get more capacity. If a 3PL is non-asset-based, it has a diversified carrier base and maintains relationships with hundreds or even thousands of drivers. 3PLs can access many solutions and options through their diverse network. This can help you save a lot of time.
Spend more time on the important work
If you let a third party company manage your logistics, it will free you up to spend more time and money on the things that matter most: delivering medical devices and products to patients (if your business is a hospital) and providing care for your patients (if your business is a doctor). Third-party logistics providers can help you reduce the cost of staff, technology, warehouse space, transportation, and other costs associated with managing your supply chain. Your 3PL partner will manage staffing, optimization, training, and other supply chain functions. A 3PL partner can help you with the following tasks:
- Communication between driver and facility
- Management of issues
- Tracking your order
- Appointment scheduling
- Finding and booking the best service model and provider
- Performance reporting
- Documentation and billing
Healthcare organizations can save time and money by using third-party logistics providers to help them build a more efficient supply chain. Implementing some (or all) of the practices we outlined here is challenging, and you will have to undertake operational changes – focusing more resources on compliance, gaining more transparency, increasing visibility in the supply chain, and becoming more streamlined. Healthcare organizations must be agile, flexible, creative, innovative, and flexible to support operational changes.