Logistic Supply Chain Management

The FDA has steadily increased its enforcement focus on supplier controls – a critical potential weak link in medical product manufacturing. Manufacturers can outsource goods and services but not regulatory responsibility or product liability.

Devices pose a unique set of challenges because of the exceptionally wide range of supplied products and services and a reliance on suppliers from other fields, who have limited knowledge of medical risk factors and regulatory requirements.

Another hot-button issue in all segments of the life sciences industry is full service fulfillment outsourcing. In the medical device sector, outsourcing initially took hold in the manufacturing phase, and companies raced across borders and oceans to capitalize on low-cost labor for potentially large profit gains.

Several trends are driving the need for single-source partners. Among these trends are rapid market growth and the emergence of new industry-spanning market segments. New markets, such as those for combination products and advanced drug delivery, are more complex than traditional markets.

Top business thinkers have known for some time that logistical success often equals business success. If you can find a better way to move goods in and out of your
organization and put the right things in the right people’s hands at the right time—your chances of success go up dramatically!

As the logistics outsourcing model continues to mature, companies are realizing that outsourcing key areas of sourcing, kitting and fulfillment can impart large productivity gains that translate into competitive advantages.

Medical device companies and medical marketing consultants, in turn, expanded their universe of external partners. But problems arise when too many outsourced firms are involved. Relying on a number of different suppliers to get a medical device to market can be inefficient and time-consuming. In response, medical device manufacturers have begun seeking partners that can provide full-service outsourcing and mail order fulfillment services.

Partnerships typically begin with a formal assessment process that helps evaluate the strategic elements of an organization’s outsourcing needs and short or longer-term “consult-to-action” retainer relationships often develop.

Programs for a formal logistics assessment look at an integrated supply-chain management approach to ensure more efficient movement of materials in and out of an organization including: procurement, warehousing, packaging, assembly, kitting, distribution, returns management, quality inspections and tracking with the ultimate goal of improving inventory visibility and velocity. 

By storing, assembling and distributing all manner of goods more efficiently, you will be able to positively impact your bottom-line. To learn more about how you can capitalize on low cost outsourcing, click here.



Jon Nugent | Director Client Services
Business Intelligence Solutions | www.busintellsol.com

According to a new article on third party logistics in Next Generation Pharmaceutical, “traditional pharmaceutical and medical device companies, along with newer biotech and equipment enterprises, are increasingly working together to produce systems that link drugs with devices and diagnostics. Their products are sent to consumers through multiple distribution channels: traditional wholesale, direct to pharmacies, to retailers for sale over-the-counter and directly to consumers’ homes”.

Bill Hook, UPS vice president of global strategy for healthcare logistics writes “These diversified channels can provide new revenue streams and new growth areas. However, manufacturers’ focus can be lost and critical errors made, particularly in transportation and distribution, when dozens of participants are involved”.

Outsourcing supply chain fulfillment operations is increasing for companies to regain their focus and remain competitive despite new market challenges. A third-party logistics (3PL) provider can help streamline the process – particularly in post-manufacturing handling and distribution.

In fact, more than two-thirds of pharmaceutical, medical device and diagnostics manufacturers surveyed in recent years by consultants at PRTM said they use or plan to soon use a 3PL. By using a 3PL, products can be moved quickly from manufacturing site to store shelf or dispensary. Quick market introduction is enabled because the distribution channels are already in place.

As the medical device industry continues to expand, companies are searching for ways to become more competitive. Medical device manufacturers are faced with intense competition, increasing regulatory pressures, shorter product life cycles, rapid new product introductions, globalization and higher quality standards. As a result, there is an increased focus on creating efficiencies in the supply chain similar to other industries.

Companies today are looking for Supply Chain Services and innovative technologies with proven best practices to improve service levels while reducing inventory and labor costs. In the process, customers gain end-to-end visibility to align their corporate business strategies and processes to their global supply chains.

Globalization

Perhaps the most prominent factor that medical device companies have embraced supply chain outsourcing has been the increase in the number of companies operating in the global marketplace.  Companies are embracing global sourcing, production, centralization of inventories and the centralization of information. 

The difficulties of operating in a global environment can’t be understated; logistics and supply-chain networks have become far more complicated.  Meeting the need to plan and manage logistics as a complete and integrated system has also become far more difficult. 
The best solution for a global company or a company wanting to become global is to outsource their logistics operations.

Jon Nugent | Director Client Services
Business Intelligence Solutions | www.busintellsol.com

I have been asked to provide several key definitions surrounding the Supply Chain:

Supply Chain Management is the organization, planning, control and execution of a product from development and purchasing, through production, warehousing and distribution to the final customer in the most cost effective way possible. 

Logistics management is the planning, implementation and coordination of the details of the supply chain.  

Third Party Logistics (3PL) is the function by which the owner of goods (The Client Company) outsources various elements of the supply chain to one 3 PL company that can perform the management function of the clients inbound freight,  warehousing, order fulfillment, distribution, and outbound freight to the clients customers.

The Allied Group is a 3PL provider to the Life Science industry.  While we don’t create the product we assist our customers with the logistics on the assembly, kitting, warehousing and distribution of medical devices to physicians and consumers.  We are an outsourced Supply Chain Management solution.

An international market leader in the development, manufacturing and distribution of medical devices approached The Allied Group with an issue they were experiencing concerning the distribution of an adjunct product necessary in the demonstration of their device.

In other words, they needed help with third party fulfillment.

Their primary selling tool is to invite physicians to a weekend workshop to explore how they can expand their practices by offering new revenue streams. The company conducts approximately 80 workshops per year, avoiding the summer months and December. Typically, thirty-five to forty physicians will attend a workshop (the smallest being twenty and the largest being close to one hundred).

During the workshop, they demonstrate a variety of equipment and have testimonials from local doctors who have expanded their practice by offering these services. There are extensive hands-on demonstrations during break-out sessions that allow the physicians to see the tools in action.

Download the case study

ISSUES:

The Marketing Department at this company is responsible for the determination and coordination of these workshops. Marketing and Sales are responsible for the logistics of where and when to conduct the meetings, who to invite, and how to drive attendance. They are also responsible for coordinating the contracts for the locations and making sure all the participant materials are in place for a successful workshop.

• The company had tried several approaches to solve this issue and there was confusion among the ranks on how to return the protective eye wear.
• Some thought they were to forward to the next workshop in the area and others thought they needed to be returned but weren’t sure where
• Many times protective eye wear were mixed in containers and nobody was checking them before they went back out.

Click here to read about the other issues.

SOLUTIONS:

The Vice President of Marketing came to the realization that the coordination and distribution of the supplies was neither a core competency nor a focal point of their company and looked to an outside resource for help.

The company was experiencing issues with the coordination of protective eye wear needed and with properly conducting demonstrations at the workshops. Allied investigated what was happening and spoke to numerous workshop leaders, sales reps and other stakeholders in the process. The Allied Group was invited to help with the coordination and distribution of the supplies and marketing materials for each of these workshops.

To learn more about how The Allied Group’s Turn key Supply Chain Services helped an international market leader make continued improvements and save $70,000 in one year download the case study.

Jon Nugent | Business Intelligence Solutions
www.busintellsol.com | 1.800.782.0580 ext 6

Anything that we consider an accomplishment usually took great effort to achieve. If it were easy, we would not look upon it as an achievement. What is a hardship in the moment will add to our sense of accomplishment at a latter date. Many of my accomplishments grew out of my failures. I have learned as much from my mistakes in life as I have from my achievements.

Failure gets a bad rap in our microwave culture. People want instant gratification, but it is in the struggle that builds character.  As Edison once said when inventing the light bulb about his unsuccessful attempts to discover the light bulb “I have not failed. I've just found 10,000 ways that won't work.”

The implementation of supply chain management strategies for life science companies have become a real test for The Allied Group. We take great satisfaction from our achievements.

The Allied Group specializes in assisting medical test kit companies build and distribute their lot controlled kits to their end users typically consumers and physicians. They understand the science but they need help with the logistic supply chain management issues.

We develop Supply Chain Management Strategies that enable them to kit, distribute and invoice their customers. I essence we become a one-stop shop for companies back room operations. We currently work with ViaCord, Signature Genomics and NTD with kit building and distribution. Further we have helped Depuy Ortho Visc with their marketing efforts.

How about you have you learned from your success or your failures?

Wow, you guys are brilliant! I can honestly say that I have not heard that statement too many times in my career. Those words were spoken to The Allied Group team by the member of a genomic testing company. I have to be honest; I had to ask my son who is in medical school to explain everything his company did. They were brilliant; we were a company that could supply them with business process outsourcing solutions like supply chain management, marketing solutions, contract packaging and direct mail fulfillment services. 

We entered a dialogue and one by one we were able to help them improve their business processes.  They understood what they do best which is the science and the laboratory to process the blood.  We understood how to market the service, create a package that we could ship their clients and how to bill the client for the service. We became part of their back room operations. 

In my previous blog I discussed some of the supply chain management principles used in both 3PL providers as well as for trips to the back country. It is useful to consider some guiding principles for Supply Chain Management Strategies. They act as a reminder so that the proper effort is exerted. They are the checks and balances of Logistic Supply Chain Management. Every decision, change, or idea should be judged against these principles to ensure that the criteria of the principles are met. For those with an extensive familiarity with Supply Chain Management Strategies, these principles become second nature. For those who are still developing that level of experience, I advise thinking in terms of the following:

Planning:   Planning is the most critical aspect of any logistical event. Complete plans must be made to cover all likely courses of events. Furthermore, contingency plans should be made for the most likely problems, such as inclement weather or a participants health issues. Planning effort should be given to what-if scenarios. What if we can’t cover the distance due to inclement weather, do we have time on the back end to make up for a lost day? Finally, planning should include numerous decision points that act as balances against possible drift. This keeps the trip streamlined, promotes momentum, and ensures good anticipation.

Efficiency:  Every resource and the way it is used must produce the maximum positive impact possible. Resources that are used infrequently, such as luxuries, will burden the expedition and make logistical management slow and unresponsive.

Effective: There has to be a reason for every logistics effort, and this reason has to promote the success of the trip or enable an objective or goal that will promote overall success. There is no point in pushing many resources at an effort that will have negligible positive impact on the expedition. Every resource and the way it is used must have an effective impact on the progression of the expedition towards its conclusion.

Simplicity: In times of stress or difficult conditions, a simple logistics plan is more likely to survive than a complex one. In project management terms, this simplicity can be achieved by identifying a critical path with as few links as possible. Effort should be made to achieve this critical path.

Flexibility: Despite the best planning, things will not always develop in the way that they were envisioned. For this reason, a flexible approach to the management of logistical effort is required. The ability to anticipate and react to situations in an appropriate and timely fashion is essential.

These principles make it abundantly clear that it is not only impossible to produce a logistics capability that provides for every eventuality, but it is counterproductive and undesirable to even try to do so. For this reason, there is an element of risk involved with every logistical and planning decision. A balance must exist that allows logistics to be robust enough to be effective yet not so cumbersome that it becomes an uneconomical burden. Erring too far in either direction can place a trip at risk. Achieving a good balance reduces overall risk of failure. The primary responsibility of the planning and logistics team is to achieve and maintain this balance. The trip organizer must control this balance, especially when responsibility is devolved to area or function managers. It is easy to become so engrossed in one’s own responsibility that one forgets the overall picture.

Outside my family, some of my passions in life are rock climbing, backpacking and mountaineering. In many ways these passions are complimentary to my profession of supply chain management strategies. Both of them require a keen eye for detail and the need to apply logistic principles.

At a very basic level, good Logistic Supply Chain Management will result in a more cost effective, more efficient, and more enjoyable trip for the participants. At the highest level, good logistics are critical to the safety and well being of the team members.  

Logistics deals not only with the tangible items like food, shelter, equipment, clothing, transport and the other physical elements of an trip, but it also deals with the participants. The central theme of logistics is to provide physical items to satisfy people’s needs. Logistics then is the key to assisting people so that they can accomplish a task. 

Poor logistics may have a negative effect on the morale of the participants and their ability to perform. The maintenance of morale then becomes a logistical effort. To deliver these physical and personal components in a coherent and effective way will provide the conditions that allow the team to perform.

In the next post, I will describe some of those key logistics principles that good 3PL providers will use. These check and balances should be integrated into good supply chain management strategies. 

Does your 3 PL provider understand your business? Do they take the time to comprehend your logistic supply chain management strategy? Do they understand what you are trying to accomplish and recognize what is important to you? What is their supply chain management strategy does it fit with yours? Have they built metrics around those key aspects of your business? Do they understand the quality and regulatory needs of you business? Do they act like a key consultant?  

During the selection process for 3PL providers it is important to ensure that the vendors you are considering understand the quality, regulatory and logistic supply chain management goals of the project. You want a vendor that understands your needs and can respond to them.  You will want a vendor that asks for frequent, open and straightforward communications.  

During this process you need to assess the 3PL providers ability to understand and respond. Do the potential 3PL providers have the ability to anticipate and respond to your needs? Do they have the ability to manage and address issues that arise? You are looking for a provider that can offer suggestions for improvements to your logistic supply chain management strategy to ensure that you are as efficient and you can be.

There is a vast difference in approaches 3PL providers take to achieve customer satisfaction. The simplest form of customer satisfaction is to understand if your 3PL providers will accomplish what they say they are going to do.

You need to go beyond what the potential 3PL providers have told you or what is written on their website.  You need to understand the potential 3PL providers' supply chain management strategies and their strengths and weaknesses surrounding this strategy.  Know whether they have been successful in developing similar logistic supply chain management programs in the past. Have they been on time and on budget?  During you due diligence do they meet your deadlines?  The potential 3PL provider will be doing their best to meet your needs during due diligence.  If they fail to deliver during this process will you be able to trust them once you enter an agreement?

Although it would seem like common sense, make sure to check references and ask those references questions of them about the vendor’s size, technical capabilities, and ability to respond to their needs.

It is imperative that you do your homework to ensure that your Supply Chain Management partner will respond to you.  Have a list of prepared questions.  Ask the reference to explain a time this vendor made a mistake and how they responded.  You can find out much about how a vendor will respond during a crisis.

Once you select a Supply Chain partner, you must set concentrate on deliverables.   You must have an action plan that outlines requirements, due dates and milestones.  You must continue to monitor if their words match their deeds.

Up next: Does your 3PL provider understand your business?

How much time do you spend focusing on your supply chain as opposed to growing your business? Let the experts at The Allied Group take away that burden so you can focus on what you do best: growing your business.

At The Allied Group, we can assist you with true 3rd Party Logistic (3PL) solutions that will positively impact your efficiency, and in turn your bottom line. Our warehouse management system allows you to outsource with confidence and help you with:

* Cross-docking of products, samples, parts, supplies and literature
* Decreasing operating costs
* Reducing staffing levels
* Concentrating on core competencies
* Improving customer satisfaction

Business experts all over the world continue to emphasize the need to improve supply-chains to improve productivity and profitability. Does your system measure up?

The Allied Group has resources that help you control the 7 key aspects of supply-chain management; planning, sourcing, production, assembly, packaging, inventory control and distribution. Because we do all this in-house, under one roof, we can offer a streamlined process that ensures superior efficiency and superior results!

For more information on the fulfillment supply chain fulfillment process, contact us today!