Under pressure: Adapting to pressure in the supply chain

Andrew Mitchell, VP Life Sciences & Healthcare EMEA, DHL Customer Solutions & Innovation Logistics group discusses how to adapt under pressure to create more speed and reliability in the supply chain. 

Among all of the EU’s manufacturing sectors, only the pharmaceutical sector has increased its share of output since the year 2000, according to the European Commission. And sustained growth has been a hallmark of the entire EU life sciences and healthcare market, despite the financial crisis. Statistics indicate that our region is on track to achieve a substantial share of the predicted $1.235 trillion global pharma market by 2017 – together France, Germany, Italy, Spain and the UK are likely to secure a 13% share. 

But now that the New Year has begun, this is no time for EU manufacturers to sit back and relish what analyst Deloitte refers to as “cautious optimism”. Life sciences and healthcare companies must also use this opportunity to “re-evaluate and adapt traditional supply chain models”.

To tackle increasing operational and regulatory challenges, including escalating cost pressures, burgeoning regulatory and compliance requirements, and growing consumer demand, EU manufacturers are under pressure to adapt. They need faster, more reliable supply chains to ship, store, protect, and report on their pharmaceuticals and medical devices.

Adapting for more speed

Today, as consumers, we all expect more speed and convenience in many aspects of our lives: our access to healthcare is no exception.

Though still a growing niche in the industry, the rise in e-commerce is steadily escalating direct-to-patient shipment volumes, particularly for medical devices. Many EU manufacturers are exploring supply chain changes to send their products via more direct routes than before, effectively cutting out traditional intermediaries such as importers, regional wholesalers and distributors. A supply chain that is shorter and less convoluted promises some relief from margin pressure while providing the huge value of an improved relationship with end customers and better security through end-to-end visibility and traceability.

However, end customers don’t have large temperature-controlled warehouses in which to hold stocks of pharmaceuticals and medical devices. So on-demand just-in-time delivery is becoming essential for EU manufacturers.

To support shippers in adapting their supply chain models for more speed, logistics providers are now investing in new and expanded facilities in strategic EU locations. Recognizing Germany as the world’s third largest market for medical equipment, with the healthcare industry being the country’s largest employer, DHL for example has expanded its hub at Leipzig airport. This European market leader for Time Definite Shipments can now process around 150,000 shipments per hour at this hub and it is much easier to handle heavier, bulkier items of medical equipment.

Belgium is the second largest exporter of pharmaceutical products in Europe and the fourth largest pharmaceutical manufacturer on the continent. To meet this demand, DHL has plans for a 36,000m2 expansion of its hub at Brussels airport. This will allow greater flexibility in EU manufacturer supply chains, particularly for later pick-ups each day of pharmaceuticals and medical devices destined for more than 220 countries and territories around the globe.

Adapting for more reliability

While EU manufacturers are seeking more speed in the supply chain, they also need to balance this with increasing regulatory constraints, particularly when expanding in emerging markets and into the e-commerce space. Speed must be combined with reliability.

New and emerging markets signal complexity, often with variable regulatory environments and difficulties in cross-border transportation. Even highly regulated markets are challenged by the growth in counterfeit drugs, and therefore greater levels of regulation are now required across the supply chain.

Exploiting technological advances, EU manufacturers can apply new supply chain models that track pharmaceutical and medical device products throughout their entire journey, reporting any variation in their environment (temperature, impact and item-level security) to ensure reliable end-customer receipt of products with complete integrity.

With more speed and reliability in the life sciences and healthcare supply chain, every participant in the end-to-end product journey can benefit especially EU manufacturers and their customers around the world.