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SUPPLY CHAIN
A Site Selection Web Exclusive, October 2014
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Disruptive Solutions to Avoid Disruption

Contingency planning and global expansion are vital for the future of the healthcare industry.

by ROBIN HOOKER, DIRECTOR, HEALTHCARE SECTOR MARKETING, UPS
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Robin Hooker is director of healthcare sector marketing for UPS.

In today's rapidly evolving healthcare marketplace, logistics decision makers are grappling with a number of challenges while simultaneously planning for new opportunities in a growing number of markets. It's an exciting time for the industry, but companies must take calculated risks and develop supply chain strategies that position them for success.

Each year, we take the pulse of the industry with the UPS Pain in the (Supply) Chain survey , conducted by TNS. The study targets logistics executives at pharmaceutical, medical device and biotech companies around the world and focuses on top supply chain concerns and successful strategies for managing them, along with future investment plans.

This year's survey revealed some interesting findings and two major themes, which are particularly relevant when it comes to planning for and investing in new locations around the globe:

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  1. Contingency planning and risk mitigation need to take center stage.
    Healthcare is reaching new corners of the world and the middle class is quickly expanding in today's increasingly connected marketplace. With this growth, supply chain networks are becoming more complex, and contingency planning has never been more important. In this year's survey, only 26 percent of healthcare logistics executives cite contingency planning as a top issue, likely due to competing priorities on their radar such as compliance, product protection and cost management, coupled with the belief that disruptions are too unlikely. But in regions where there have been high-impact events in recent years - ranging from the earthquake in Haiti to the nuclear meltdown in Japan - executives report that disruptions have a high impact on their operations.

    In Asia-Pacific, 34 percent of those surveyed report having more than 25 percent of their supply chain impacted by unplanned events. Twenty-two percent of healthcare logistics executives in Latin America also report disruption to more than 25 percent of their supply chain.

    One issue we see in the industry is many companies think of large-scale natural disasters when they think of unplanned events, but often an event as simple as a power outage can threaten a company's operations and bottom line. For example, in 2011, the Southwest Blackout disrupted power in Southern California, Arizona and the adjacent portion of Northern Mexico. And, in 2013, in the wake of Superstorm Sandy, the FDA began seeking input around minimizing the impact of weather events.


    When a network is being evaluated for optimization and efficiency, it is critical to discuss strategies to build in resiliency at the same time.

    Contingency planning is particularly important when developing operations strategy and planning for future expansions. Often, having an alternate distribution facility and additional transportation capability is vital if an unplanned event occurs. When a network is being evaluated for optimization and efficiency, it is critical to discuss strategies to build in resiliency at the same time. In many cases, optimization and business continuity initiatives complement each other. At UPS, we work with our healthcare clients to develop these strategic plans, based on our in-depth knowledge of emerging healthcare markets and regulations, along with our experience in contingency planning and risk management. We are bringing in disruptive solutions for supply chains that can't be disrupted.

  2. Global expansion is a top opportunity to reach the markets of tomorrow.
    Again this year, healthcare logistics executives highlighted the importance of global expansion as a strategy to increase their competitiveness. As the healthcare-consuming population grows, so do the opportunities for healthcare companies around the world. To illustrate this, by 2030, Nigeria is expected to be the third most populous country, surpassing the United States. Even though that may seem like the distant future, the time to expand to meet the demands of rapidly growing populations is now.

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    When asked about challenges to global expansion, executives cite the complicated regulatory environment (66 percent), inadequate infrastructure in emerging markets (62 percent), and simultaneous multiple emerging markets complicating strategy (57 percent). While these challenges may seem overwhelming, companies don't have to go it alone.

    At UPS, regulatory compliance is in our DNA. We have a growing network of 46 dedicated healthcare facilities strategically located worldwide, totaling more than 6.4 million sq. ft.. Many of these facilities are multi-client operations, which allow our clients to enter new markets quickly, taking advantage of our best-in-class regulatory compliance expertise to access new markets. Additionally, this model conserves capital and allows them to access multiple geographies with a unified platform based on demand and growth priorities.

As companies set themselves up for success, whether developing contingency plans or selecting the next market for expansion, collaboration and partnership can be vital. Also a top strategy in this year's survey to address a number of supply chain issues , collaborating with a healthcare logistics industry leader like UPS allows companies to focus on their core business and goals.

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