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The supply chain, particularly the route from OEM to hospitals or surgery centers, has undergone greater scrutiny as all sides question ways to find efficiency in process and spend. Outcomes-based, data-driven decision making is expected to be the answer, playing a larger role in day-to-day supply chain management. This is not a discipline that every manufacturer possesses, nor can most manufacturers handle this shift on their own.
This was the underlying theme of an OMTEC 2016 panel discussion that brought experts together to discuss the ways that device company supply chains will operate in the future.
Question: What will the leading supply chains look like five years from now?
Robin Hooker, UPS: There’s this notion that providers want to take control of freight and visibility, and management of transportation not being a hidden cost on top of product sourcing. We need to meet that need or at least alleviate the pressure being generated by that trend. Also, with the visibility component, you’re going to have a high degree of interconnectivity and also at the same time contingency resiliency—the ability to react to scenarios that drive a lot of trauma, such as has happened in Orlando or in Boston—you have a flexible network that pulls inventory and meets demand in key areas without a lot of unusual activity.
Firms will be leveraging UDI for non-standard, noncompliant types of solutions, so there will be better managed inventory and visibility through existing investments.
Over the next five years, a lot of redundancies will be carved out of the supply chain in order to end up with a system that is networked, has contingency built in and at the same time is borrowed from high tech and automotive and all the other fields to push down inventory levels with better visibility.
That doesn’t reside in one firm, but rather across multiples and it’s going to look networked and fabric-like, in terms of relationships.
James Kwan, OMP: If you look back at automotive and even the electronics industry, one of the main points of competition for the Asian market, for Japan and China had been their relationships—their networks within their supply chains. They would leverage and streamline that and create consortiums among different component makers.
It’s a little bit harder to do in our free enterprise system in the U.S., but we probably have to do that, especially the smaller- to mid-size companies, because the big five companies are dominating. They are leveraging third-party providers. [Smaller companies] almost need to have leverage in terms of scale by having a consortium or some sort of network that works for orthopaedics. Even generics could go to some sort of heavily regulated eBay or Amazon at some point for instrumentation and other products. Stranger things have happened.
There are disruptive trends and technologies out there that require both the contract manufacturers as well as the OEMs to be more nimble, and they have to learn from the past in terms of the electronics and automotive industry and how they dealt with and responded to changes.
Lars Rohrberg, Cardinal Health Inventory Management Solutions: We’re going to see a greater recognition of manufacturers and providers that need each other to solve this. The shared data between the two parties is going to help drive this.
[A recent trend] is creating visibility to the data as to where the products are and also visibility into the actual true consumption, so that signal basically channels all the way back to the point of manufacture.
(Mr. Rohrberg expounded upon this thought during the panel’s discussion on speeding the supply chain.)
You can’t manage a supply chain unless you actually know where the items are. If you leverage machine-readable codes, whether barcodes or RFID, you make it possible for those on the front line—the sales people— to have an efficient way to handle inventory management on a single, unified platform. That creates visibility for corporate, to show where the items are. Then when things go missing, because they do, you can know before the business day is over and can start tracking those things down. You can tell the sales rep, “I forgot; I transferred that in the hallway of the hospital, because there was an emergent case somewhere else.” They catch up on these records. You can’t catch up in December, because nobody will remember what happened; the item is just lost, and that’s a write-off.
That’s where things have to go.
