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Make: Affordable Healthcare Requires Invaluable Logistics

Dec. 12, 2013
Supply chain best practices in the medical fields are setting service standards every industry should appreciate.

In line with the "markets of one" concept made feasible by e-commerce logistics models, more and more pharmaceutical and healthcare supply chains are leading directly to a consumer's door or bedside. This direct-to-patient model depends on a high level of supply chain connectivity. Working through a network of carriers and couriers, companies are delivering temperature-sensitive products customized with the safety and compliance guidelines patients need for their particular treatments. 

This concept is applied whether delivering insulin pumps or pills, according to Robin Hooker, director, global strategy for UPS Healthcare Logistics (

"If you have a child with diabetes who wears a pump and you're on summer vacation, what happens if they're pushed into a pool at the hotel, and all of a sudden you need to manage the crisis and get the child back on the pump? We have a logistics and distribution pharmacist on staff who oversees the entire process for distributing these pumps direct to patients for a large player in the diabetes device space." 

That's a very specific scenario, but even with some prescription medications, that kind of specificity is getting more important. 

Managing Climate Control

The pharmaceutical and medical fields are introducing more temperature-sensitive products into their supply chains, with patient-driven handling specifications. For example, many oncology therapies are based on a patient's blood, which is drawn then infused with cancer fighting treatments on a monthly basis. This blood must be maintained at a precise temperature range throughout the delivery cycle. 

The same goes f
or many other products flowing through that chain. Such chains can span a 150-degree temperature spectrum. Even for some items that are kept at room temperature that temperature profile may have to be precisely defined, not just classified as "ambient."  This requires information technology through which the supply chain's environmental conditions can be monitored.

"We develop contingency plans with clients," Hooker says. "That could involve adding more dry ice if there's some unusual weather event that disrupts the supply chain. Having these protocols established beforehand can determine who needs to be contacted and the necessary steps to ensure delivery. That may mean using a specialized courier or leveraging a set of standard scenarios."

Tracing Product Pedigrees

These services come with a cost, and as the U.S. hammers out the infrastructure for delivering affordable healthcare, the challenge for supply chain professionals in the pharma and medical supply chains will be to become even more efficient. That happens with standards. California is among the test beds for product serialization and E-pedigree. That calls for each pharmaceutical product to have its own birth certificate, social security number, visa and passport so everyone in the chain it travels through knows where it's from, where it's been and where it's going. This protects the market from counterfeits.

"Serialization and e-pedigree will eventually create visibility in the supply chain that will start to put pressure on counterfeiters," says Hooker. "They won't be able to adapt to a good universal standard. That will help alleviate some of the cost of manufacturing and entering new markets.  If we do enter a new market, we'll go in understanding the risks related to legislation as well as the necessary IT platforms to support product protection and security in the supply chain. So I see universal standards driving down IT investment because you won't need boutique solutions going across many countries." 

Healthcare in the Cloud

Accenture (, the global consulting firm, recently published a report on how cloud computing is changing life sciences supply chains. The authors state that as these companies expand globally, cloud technology will help them serve emerging markets, especially the four BRIC nations—Brazil, Russia, India and China. They cite research from IMS Health, an information services provider to the life sciences industries, that predicts the BRIC countries will be among the top ten global pharmaceutical markets and will constitute 30 percent of the top-ten market. That will require a single coherent strategy for serving those markets.

It will also change how pharmaceutical manufacturers work with suppliers. Pfizer (, one of the pharma giants mentioned in the Accenture report, required its 500 suppliers to implement a cloud-based common-information-exchange framework. Pfizer's vice president of supply network services, Jim Cafone, says the new visibility enables his company to trace the progress of shipments to places as remote as Kenya. 

As these shipments include more sensitive formulations containing nanoparticles and stem cells for the treatment of neurological diseases, the advanced visibility afforded by cloud-based networks will have to be combined with the bedrock of logistics fundamentals. That means paying attention to whether pallet configurations are designed for maximizing cube utilization and reducing or eliminating the damaging physical and environmental forces of transportation and distribution. The ability to integrate the small picture into the big picture is key to success in the healthcare and pharmaceutical industries, and must become part of every supply chain manager's skill set, whether they're managing pharma or a farm.