Health delivered: challenges for logistics providers

Healthcare organisations around the globe are beginning to take a different approach to their dealings with suppliers and manufacturers in the industry. Things are more streamlined and efficient— as they have to be to meet emerging patient demands, address healthcare legislation, support an overall focus on improving patient care, and reduce healthcare costs.

A 2016 report by Gartner, Healthcare Provider Supply Chain Outlook, highlights a few of the most prominent issues and initiatives. In particular, the study notes that healthcare industry leaders are primarily looking to align their objectives with the strategic goals of an integrated delivery network (IDN), prioritise standardisation, and tackle pharmaceutical costs.

Even until a decade ago, many organisations negotiated and managed logistics almost as an afterthought—a necessary evil to make sure products were available as needed and to avoid supply chain fire drills. Today’s healthcare supply chain is different, finds the Gartner study, noting that it is shifting away from provider or group purchasing organisation (GPO) sourcing and toward total cost to serve.

Today, logistics companies provide highly specialised solutions to meet client needs—the storage, transportation, and distribution of the product is handled from A to Z by the provider, creating a hassle-free supply chain network. Global transportation giants like UPS, DHL, and FedEx have heavily invested in this industry. Aviation goliath Emirates offers specialised pharma solutions under its Emirates SkyCargo banner.

Emirates Pharma involves three levels of innovative transport solutions based on a requirement mix that includes the temperature sensitivity of the product, the packing solution used by the pharmaceutical manufacturer and the origin/ destination of the shipment. Emirates Pharma is the service designed for pharmaceuticals with a high tolerance to temperature fluctuations and those in passive packaging solutions. Emirates Pharma PLUS is ideal for high value pharmaceuticals with a thermal cover that can withstand minor temperature fluctuations during handling and transportation, while Emirates Pharma Active is ideal for high value pharmaceuticals that are extremely temperature and time sensitive, and need to be transported in active containers.

Julian Sutch, Emirates manager for global cargo accounts, says: “The most important trend that we are witnessing is that shippers and forwarders are becoming more stringent and will move cargo only with carriers who have specific solutions for transporting pharma products and those with a certification. There has been a huge shift from pharma products being moved as general cargo to being moved as specialised temperature controlled cargo. One of the biggest markets where we have seen this change is India. The Food and Drug Administration (FDA) now have auditors in India checking manufacturing standards for any drugs bound to the USA. This also includes how they are shipped from the factories in India to the stores and hospitals in the USA.”

Sutch also mentions that there is a drive from organisations like the World Health Organisation (WHO) and international and national regulatory authorities for pharma manufacturers to shift from shipping pharmaceuticals as general cargo to using specific temperature controlled solutions for transport.

“Modern pharma drugs are increasingly sophisticated to treat specific medical conditions but are also often more sensitive to temperature related changes. Hence there is a requirement for infrastructure including temperature controlled containers, thermal blankets for when the cargo is on the ramp and so on,” says Sutch. “As pharma becomes more sophisticated, the need to keep it within a tighter temperature range increases and therefore the demand for active containers increases. This has also seen the introduction of a new type of container based on vacuum insulation panels and phase change material, which gets rid of the need to charge or supply dry ice.”

According to Albert Asool, chief executive officer of Agility Dubai, the pharma cold-chain logistics will have a potential value of $16.7bn by 2020.

“Pressures from a rise in lifestyle diseases, mandatory health insurance schemes, and a growing hospital network will encourage increased local manufacturing and push efforts to keep costs low,” says Asool. He adds: “To meet this demand, companies across sectors are adopting a ‘hub and spoke’ model, with goods stored in a central location such as Dubai for the region, offering economies of scale and faster response time.”

The challenge of course centres around offering the best possible solution to the client, making it a highly competitive industry. Frank Courtney, chief operating officer at Global Shipping & Logistics, notes: “Compliance and traceability are forcing clients to request more sophisticated solutions. They cannot just have a shed to store goods in, they need the assurance that temperature and condition controlled facilities are in place to ensure that there have been no temperature excursions throughout the product’s life. Flexibility and quicker response times are also becoming increasingly important.”

Sutch agrees. He says: “Customers have quite rigorous demands and often require the transporting carrier and suppliers to sign SLAs (service-level agreement) which are derived from GDP guidelines to manage compliance and service levels.”

But keeping up with the client’s needs is not all the providers have to deal with. Transporting between countries ensues that there are rules and regulations to follow. Asool explains: “International shipping guidelines and customs regulations are affecting the cross-border movement of pharmaceuticals and biological material. This often includes dedicated shipping lanes and decontamination protocols. Standardised industry processes such as good distribution practices (GDP) established by global health authorities in maintaining product integrity are increasingly observed in the Middle East by logistics companies.” But Asool sees the positive side in abiding by the laws.

“In the long run, these stringent controls are good, as they increase customer security and ensure that 3PL logistics providers maintain strict quality control processes in every step of the supply chain.”

Technology has played an important role in shaping the industry the way it is today. Without the aid of communication technology, automation, and advances in the field of temperature control, transporting medical supplies in immaculate condition would be almost next to impossible. As Sutch explains, advances in technology means that there are now devices that can be used to track location, temperature, shock, light and other parameters impacting temperature sensitive pharmaceutical shipments in transit.

Courtney adds: “Technology is a great enabler, and improved visibility of the supply chain has allowed for quicker response to customer requirements. It will also affect the way people buy pharmaceuticals. Efforts by DHA to integrate medical records is boosting real-time diagnosis and online dispensing of prescriptions. This is helping patients seek medications online with less need to go to pharmacy to get prescriptions. Businesses will have to have their back-offices up to speed to deal with this change and B2C will be the new norm.”

Agility Dubai has created a new technology venture to invest in disruptive technology related to logistics. Cargo X is a platform seeking to revolutionise how road freight is booked in complex markets like Brazil. Asool says: “Our goal is not just to see it succeed in Brazil, but to help bring the model to other emerging markets where we have strong local relationships with regulators, shippers, and transport suppliers. A philosophy of finding multiple points of application is the core of our tech strategy.”

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Find our other features, on topics such as the Mars Dubai factory site visit, alternate fuel sources for forklifts, and green supply chain management, in our January issue.