Wednesday 30th Sep 2020 - Logistics & Supply Chain

Healthcare commoditisation puts focus on supply chain

To the outsider, the healthcare sector is characterised by the critical nature of so much of the activity. Getting the right drugs and equipment to the right place at the right time can mean life or death.

Malory Davies FCILT, Editor.

Malory Davies FCILT, Editor.

So it is perhaps surprising to find that companies in the sector, which is worth some $3 trillion, are increasingly looking to supply chain to stay competitive.

The finding comes from a study by Frost & Sullivan who surveyed 39 senior executives from the healthcare sector attending the FedEx Healthcare Forum in October 2014. Companies in the survey included manufactures and distributors of pharmaceuticals and medical devices.

It found that many healthcare products are becoming increasingly commoditised despite their high level of technological sophistication, and companies manufacturing and distributing these products are responding by transforming themselves into broader solutions-orientated providers.

Carl Asmus, vice-president of global supply chain solutions and market development at FedEx Services, which commissioned the report, highlights the fact that more healthcare companies are using their supply chain as a way to stand out from their competitors and realise their financial goals.

Almost 80 per cent of executives said that supply chain success was critical to their ability to remain competitive and drive both top and bottom line performance. Not only that, some 61 per cent of survey respondents reported that cost reduction strategies in their supply chain have been extremely important to their ability to respond to customer price pressure.

It’s a reminder that no matter how sophisticated the product, it’s important to be aware that no-one is immune to the trend towards commoditisation. And having an effective supply chain strategy is vital to business success.

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