UPS sees new tech, distribution models for supply chain

Healthcare changes coupled with increasing and changing regulatory requirements are among factors accelerating the pace of supply chain change among pharma, biotech and medical device companies. Many are turning to new technology to keep up, according to UPS's fourth annual Pain in the Supply Chain report.

Through phone surveys this spring of nearly 250 supply chain execs in the U.S., Europe and Asia (compared with 150 U.S.-only respondents in the 2010 report), UPS is seeing "a complete rethinking of supply chains," says John Menna, director for healthcare strategy, in a phone interview. Supply chain executives are looking for "step changes, not incremental improvements. They have an increasing appetite to do things differently."

Menna's observation of the accelerating pace of change comes not just from respondent answers to survey questions, but also from the types of analyses they undertake and the changes they're making now, he says.

The survey finds 86% of respondents saying they will turn to new technologies as an investment strategy within the next three to 5 years, with 72% saying they have made such investments in the last 18 months. "They're looking at tracking technologies," says Menna, "radio frequency identification tags, for example, and integration of corporate systems with UPS tracking systems."

The respondent company universe is roughly a two to one mix of pharma/biotech companies and medical device companies, respectively.

Also on the tech shopping list: sensing devices, warehouse management software and order-to-cash systems. "They're looking for anything that will make it easier for product ordering, as well as newer functions for supply chain planning," he says.

On the non-tech side, the survey finds changes in distribution channels and models a tactic for achieving greater efficiencies. Some 63% of pharma/biotech respondents say they've used this strategy--including more direct shipments to providers, retailers and patients, as well as increased use of wholesalers and distributors--over the past 18 months. And 81% say they plan to do so in the next three to 5 years.

One distribution model change is a form of logistics handover, in which a drugmaker relinquishes post-manufacturing ops to a logistics provider. One example is the growing collaboration between Merck and UPS. Others involve DHL's Exel unit, which has relationships with Bristol-Myers Squibb and Pfizer.

- here's the release
- see the report (pdf)

Suggested Articles

Lonza CEO Marc Funk is leaving for "personal reasons" after less than a year in the top job. 

Drugmakers have voluntarily recalled their generic Zantac from the U.S. market after the FDA raised concerns, but it has not been without a cost.

Just weeks after selling the sterile manufacturing assets of its Kyowa operation in Japan, it has unloaded the rest of its Kyowa drugmaking operation.