The Resilience Imperative: Reinventing healthcare supply chains
Written by Metin Parlak
This thought leadership paper identifies a number of key trends which could derail the industry’s logistics such as emerging market growth, burgeoning regulatory and compliance requirements, changing product characteristics, and rocketing counterfeit drug trafficking. Moreover, shrinking margins, escalating cost pressures and growing consumerism are transforming the business paradigm. What is emerging is a business model that looks and acts like the consumer goods industry, where the customer – not the manufacturer – holds the power.
Lisa Harrington, President of the lharrington group LLC, prepared the report in collaboration with DHL to identify the challenges and developments affecting the sector globally. Harrington is also Associate Director of the Supply Chain Management Center and lecturer of supply chain management at the Robert H. Smith School of Business, University of Maryland.
She says, “The stakes in the new normal of LSH are enormous. So large, in fact, that the U.S. Congress was willing to shut down the entire U.S. federal government for two weeks while it fought over healthcare reform issues. That shutdown, according to Standard and Poor’s, cost the U.S. economy more than $24 billion.
“The LSH sector finds itself in the position of needing to rethink its entire economic model, and find ways to reduce costs across the board, in order to maintain share in a marketplace that is no longer willing, or able, to fund previous pricing.
“The old LSH supply chain model is no longer fit for purpose. The new LSH environment requires a more resilient, adaptive supply chain model that delivers robust global management capabilities, reduces costs and hard-wires the agility, flexibility and resiliency needed to support the challenges of global health.”
For most industries, experiencing two or three complex challenges at one time is enough to cause turbulence. But the LSH sector is contending with a complex web of issues which amount to the end of business as usual and call for a corresponding change in supply chain management:
Patent cliff, changing products and profit erosion: In 2012, $38bn of sales was lost due to patent expiration on major drugs moving to generics, while the global austerity of from value-driven governments, commissioning bodies and private payers worldwide has contributed to prescription sales falling by 1.6% to $714 billion. A highly cost-effective supply chain that also delivers fast, reliable speed is required to meet the needs of an increasingly empowered, consumer-led market. Meanwhile, higher value products that are better protected from sales erosion carry significant financial risk if mismanaged in the supply chain. These include biological pharmaceuticals focused on unmet medical needs or medical devices with proven clinical benefits which have complex ranges, temperature requirements and final destinations (including hospitals and to home).
Emerging markets, demographic shifts and healthcare policy: The world’s population in aging with over 60’s expected to be more than 1/3 by 2050. In addition, emerging markets such as Brazil, Russia, India, China and Mexico and their growing middle-classes represent a significant growth opportunity for LSH companies. To adapt, LSH companies must adopt business models which allow for geographical range and therefore require tailored supply chains that deliver a higher volume of goods to increasingly diverse end points such as hospitals and distributed care in the home.
Regulations, compliance and product integrity: The growing issue of counterfeits has led to regulators enforcing stringent and diverse product integrity control. Intensified security and data collection adds pressure throughout the supply chain, as rigorous serialization is required at distribution touch point, often painstakingly at the unit rather than lot level.
Jonathan Blamey, VP LSH, DHL Supply Chain, says, “Providing life-saving products is a big responsibility, one with risks that far outweigh those in a typical supply chain environment. LSH companies have to configure their business for each market, meeting the regulatory requirements and operational constraints of each healthcare system. Add in manufacturing constraints, compliance, temperature control and other factors, and you get a highly complex supply chain.
“To capitalise on growth opportunities and prosper in this environment, there is a tremendous opportunity and pressing need for LSH companies to take learnings from other supply chain models such as the automotive and FMCG industries. We understand the challenges facing LSH companies and have created solutions that help our customers to meet today's challenges and anticipate tomorrow’s.”
DHL Supply Chain has expanded its global network of LSH services by over 25% in 2013 with the addition of 30 new warehouses, of which 12 are in emerging markets. It now operates over 150 facilities comprising over 2 million square metres of warehousing space and 1.9 million pallet locations dedicated to LSH, with over 4500 dedicated healthcare staff worldwide.
Download and view the full report at www.dhl.com/lifesciences-resilience. For more information about supply chain best practice, solutions and success stories, visit the DHL Supply Chain LSH pages at http://www.dhl.co.uk/en/logistics/industry_sector_solutions/life_sciences_and_healthcare_logistics.html.
Birdie aims to reinvent elderly care with tech
British startup Birdie has announced it has raised £8.2 million to invest in innovation and scale up the business.
The company's announcement is timely as it follows the criticism of the UK government over their lack of a plan for social care, despite acknowledging the sector is in crisis - around a quarter of the UK's home care providers are on the brink of bankruptcy due to a lack of funds and staffing.
Birdie was born with a mission to "radically improve the lives of millions of older adults", by using app-based solutions, IoT and machine learning to put preventative care at the forefront. The company was founded by Max Parmentier, after experiencing his own frustrations with the care system - his grandfather struggled with the impact of life in a care home, but lacked any other option.
In 2017 Parmentier partnered with venture builder Kamet Ventures to set up Birdie, in a bid to fix this problem. Since then, Birdie has partnered with almost 500 providers across the UK, and supports more than 20,000 older people every week. In the past 12 months alone the number of people Birdie supports has got six times greater.
Birdie’s solution is an app to help care providers deliver more coordinated, personalised and preventative care, by giving them access to digital assessments, medication scheduling and planning tools. By using digital tools to take care of admin, staff have more time to spend with their care recipients.
The new investment will be used to fund Birdie’s next phase of growth in the UK, as the company scales to meet the rapidly growing demand of the aging population. The company will also invest in product innovation, creating new features to address customer requests.
In addition, Birdie is piloting new care models, including partnering with the NHS to identify COVID-19 symptoms, building predictive pharmacy models with AI, and helping health authorities to detect early warning signs of patients’ health risks.
Internally, Birdie is committed to having a progressive company ethos. All salaries are transparent, and staff work asynchronously to maximise flexibility and equity. Staff members also volunteer in their local community during office hours, and the company offsets all its emissions.
These efforts have led to numerous awards, including having the best SME culture in the UK, an Honorable Mention in the Health category of Fast Company’s 2021 World Changing Ideas Awards, and innovation in care at the LangBuisson awards.
“We believe the future of care for older people should be helping them to live at home for as long as possible through the delivery of personalised and preventative care" Parmentier said.
"Birdie is already the partner of choice for caregivers up and down the UK, and this new funding will help us rapidly increase the number we partner with and what we can offer them - meaning more people benefiting from more affordable, quality care. We’re proud of our mission and the values we embody to pursue it.”