UPS 2009 Pain in the Healthcare (Supply) Chain Survey


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UPS 2009 Pain in the Healthcare (Supply) Chain Survey

  1. 1. UPS 2009 Pain in the Healthcare (Supply) Chain Survey Overview Healthcare supply chains feel UPS, a leading provider of healthcare logistics and transportation services, has impact of the economy launched its second annual “Pain in the (Supply) Chain” survey to measure Healthcare companies certainly have not been healthcare industry experts’ concerns about specific supply chain issues. Findings immune to economic challenges, as seen by the show the greatest pain points and insights as reported by decision-makers in the many companies making alterations to business pharmaceutical, biotech and medical and surgical device industry segments. and supply chain plans and a continued focus The survey was a two-part study. The first phase included a blind, in-depth on managing supply chain costs. phone survey conducted by Harris Interactive on behalf of UPS of more than This year’s UPS “Pain in the (Supply)Chain” 300 primarily small- to mid-size healthcare companies. The second phase survey tracked some key differences in how included a targeted online survey comprised of large healthcare companies companies are planning go-to-market strategies from the same sectors with annual revenues of $1 billion and higher. Qualified versus a year ago, with the greatest changes respondents were supply chain decision makers. being seen among smaller and mid-size healthcare companies. 2009 key findings Key findings are organized around the following trend areas: Changing strategies and impact • Regulatory pressures and landscape • In 2008, 90% of small- and mid-size company respondents planned to make • Serialization requirements changes to their distribution strategies in the • Go-to-market strategies near future, whereas only 48% reported • Outsourcing trends plans to do so in 2009 • Managing supply chain costs • ast year, 61% of small- to mid-size survey L • Supply chain spending plans respondents planned to alter their supply chain distribution models to go direct-to- consumer; in 2009, 27% of these smaller Healthcare supply chain leaders’ companies plan to go direct-to-hospitals, pharmacies or retailers and 18% plan to go priorities for the new administration direct-to-consumers (patients or physicians) Healthcare priorities • hile planning fewer changes than last year, W • mall to mid-sized healthcare companies believe that ensuring product S 52% of large healthcare companies surveyed in 2009 have near-term plans to go direct to safety and security (ranked first by 33%) and simplifying regulatory consumers (patients or physicians) requirements (ranked first by 31%) should be the top two spending priorities for the new administration • early one-third of small- and mid-size N medical device companies reported that they • ore than half (52%) of large healthcare companies rank simplifying M were highly concerned about tightening regulatory requirements as the top spending priority for the new credit markets as a business issue administration, followed by ensuring product safety and security (33% ranked as first priority)
  2. 2. 2 Regulatory pressures and landscape Survey results show that companies large and small feel pressures from the tightening regulatory market. Numerous industry factors are likely driving this growing focus on regulations, including heightening concerns over security and patient safety, increased cross-border controls and an increase in temperature-sensitive products coming into the marketplace. Industry concern • ore than half (56%) of large healthcare companies report that they are highly concerned about increasing M regulations, ranking this their top business concern • early one-third (30%) of small- and mid-size survey respondents ranked increasing regulations as their top N business concern that could impact their business in the future • oth large and smaller healthcare companies surveyed believe that simplifying regulatory requirements should B be one of the top spending priorities of the new administration Challenges • ore than half (52%) of large companies report that keeping up with regulatory compliance laws is a challenge M in serving global and emerging markets • he majority of large companies (74%) cite temperature-sensitive concerns as the top regulatory challenge from T a supply chain standpoint • or small- and mid-size companies, the top three regulatory challenges from a supply chain perspective were: F – changing regulations in the U.S. and abroad (50% say it’s a challenge) – cost of compliance (50% say it’s a challenge) – training employees on regulatory requirements (47% say it’s a challenge) Serialization requirements • o large pharmaceutical companies (0%) are ready with everything in place to meet serialization requirements N • ess than half (48%) of large pharmaceutical companies are either planning for or taking any action to prepare L to meet requirements • hen asked about challenges related to product tampering and counterfeiting, supply chain visibility ranks as W the top challenge for both small- and mid-size respondents (47%) and large company respondents (70%); large companies also cite changing regulations (67%) as a major challenge Business Concerns % Highly Concerned Increasing regulations 30% 56% Tightening of credit markets 25% 15% Question: What are you most concerned Increasing competition 20% with from a business perspective? 30% Please rate your level of concern. Industry consolidation 14% 22% 13% Small and mid size company respondents Changing distribution channels 26% Large companies (revenues of $1 billion +)
  3. 3. 3 Go-to-market strategies As shown on page one, some of the greatest differences between 2008 and 2009 survey findings relate to how companies plan to alter their distribution models in the coming years. While significantly fewer small- and mid-sized companies are planning changes this year, large healthcare companies will make significant changes in their go-to-market strategies. • ore large healthcare companies are planning distribution model changes, with: M – 56% planning to go direct-to-hospitals, pharmacies or retailers – 30% planning to go direct-to-wholesalers – 48% planning to work with a third-party logistics provider – 52% planning to go direct-to-consumers (patients or physicians) • ore than half (52%) of small- and mid-size companies are not planning to make any changes to their distribution models M in the near future • pproximately one in four (27%) small- and mid-size company respondents plan to change their distribution models to go A direct-to-hospitals, pharmacies or retailers in the near future • wenty one percent of small- and mid-size company survey respondents are planning to go direct-to-wholesalers in T the near future 2009 Changes to Distribution Channel Strategy Going direct to hospitals, 27% pharmacies or retailers 56% Going direct to wholesalers 21% 30% Question: How will you change your Using a third party 19% distribution/go to market strategy logistics provider 48% in the next 1 2 years? Going direct to consumer 18% (patients or physicians) 52% None of these 52% 2008 Changes to Distribution Channel Strategy Go direct to consumer 61% 39% Go direct to wholesalers 55% 6% Work with third party 42% logistics provider 42% Question: How will you change your Other 10% distribution/go to market strategy 17% in the next 1 2 years? Will not make any changes 10% 36% Don't know 2% Small and mid size company respondents Large companies (revenues of $1 billion +)
  4. 4. 4 Outsourcing trends The healthcare industry is increasingly embracing outsourcing, especially large companies, who are turning to outsourcing as a means of driving efficiencies across the supply chain while allowing them to focus on their core business. Most small and mid-sized healthcare companies on the other hand have kept the majority of supply chain functions in-house. • ore than half (59%) of large companies currently outsource distribution management and 44% outsource M transportation management • ne in four (25%) large healthcare companies surveyed currently outsource order-taking/customer service O • ixty five percent of small- and mid-size companies surveyed do not currently outsource supply chain functions related to any S of the following areas: billing/accounts receivable; regulatory compliance; inventory management; order-taking/customer service; transportation management; distribution management • he largest difference between the smaller and the larger healthcare companies surveyed are their outsourcing plans: T – Forty three percent of large companies expect to increase the amount they outsource in the next two to three years – f the two-thirds of small- and mid-size companies that do not currently outsource any supply chain functions, O no more than 3% expect to outsource in the next one to two years Expected Change in Outsourcing Expected Change in Outsourcing Small to mid size companies Companies with revenues of $1 billion + Stay the same – 76% Stay the same – 42% Decrease – 6% Increase – 13% Decrease – 15% Don’t know – 5% Increase – 43% Question: In the next 2 3 years, Question: In the next 2 3 years, will the amount you outsource will the amount you outsource increase, decrease or stay the same? increase, decrease or stay the same? Functions Currently Outsourced Companies with revenues of $1 billion + Billing / Accts Receivable 19% Regulatory Compliance 0% Question: Which of the following functions do you currently outsource? Inventory Mgmt 19% Order taking / Cust Srv 25% Transportation Mgmt 44% Distribution Mgmt 59%
  5. 5. 5 Managing supply chain costs Despite a dramatic decline in fuel costs over the past year, the current economic situation and other industry pressures have made managing costs the top supply chain concern once again for healthcare companies in 2009. While ranking as a primary concern, few companies report success in managing costs. • anaging supply chain costs ranked as the biggest concern for smaller company respondents, with 55% reporting that M they are “highly concerned” with managing costs • ess than half (46%) of these companies report that they have been successful in managing supply chain costs, L despite this ranking as the number one concern • mong large healthcare companies, 81% are “highly concerned” about managing costs and only 41% report success A in managing costs Supply chain spending plans In 2008, 60% of respondents from small- and mid-size companies planned to increase their supply chain spending. Despite the economic slowdown, many companies still plan to increase spend in the supply chain, although to a lesser degree than before. • early half (45%) of smaller company respondents say that they will increase their supply chain spending over the next 18 months N • he average expected increase in supply chain spend is 18%, down from 23% in 2008 T • orty three percent of small- and mid-size companies will keep their spending the same over the next 18 months, F and only 9% say they will decrease spending • or those planning to increase spending, 51% cite a greater demand for their products and services as the reason F • mong large companies surveyed, 44% expect supply chain spending to increase, while approximately one-third A expect to decrease spending over the next 18 months Supply Chain Concerns Managing supply chain costs 55% 81% Meeting customers’ changing 42% demands for services 48% Product damage, 42% loss, or spoilage 52% Product tampering 34% or counterfeiting 48% Question: What are you most concerned with from a supply chain perspective? Access to global or 18% Please rate your level of concern. emerging markets 44% Changing distribution & 12% go to market channels 37% Expected Change in Supply Chain Spending Increase 45% Question: In the next 18 months, 44% will your supply chain spending 43% increase, decrease or stay the same? Stay the same 19% 9% Small and mid size company respondents Decrease 37% Large companies (revenues of $1 billion +)