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Top Trends Impacting Supply Chain Management in 2019

As the orthopedic industry becomes increasingly competitive, greater importance is placed on supply chain management. In order to maximize customer value and maintain a competitive advantage, what trends do supply chain personnel need to understand in order to ensure that products are manufactured, packaged and delivered to their hospital customers to spec and on time?

DHL, a global logistics leader, identified technology, trade, talent and transportation as four broad trends that will likely have the greatest impact on companies supply chain management in 2019. All four are key drivers that can help supply chain organizations meet customer expectations this year. 

“Supply chain complexity has been growing for years, and several of these trends threaten to create even more complexity,” said Scott Sureddin, CEO of DHL Supply Chain, North America. “However, we are also now seeing key technologies reach a level of maturity that enables them to be used to better manage complexity while also increasing productivity and reducing costs. That makes 2019 a very exciting year in the continuing evolution of the industry.”

To gain additional perspective on two of the trends that have a direct impact on orthopedic companies—technology and talent—we spoke with James Kwan, Vice President of Operations for Innovasis and Founder and Principal of OPM Consulting. 

“There is an expectation—considering Amazon—that everything should be in inventory and should arrive tomorrow,” Kwan said. “Supply chains are much more complicated than that. Every company cannot carry every component or always have enough safety stock. Managing expectations with customers is important. The way you manage the demand and inventory challenge is through sales and operational planning.”

Companies that utilize technology properly, in terms of analyzing what is being sold and what should be kept in stock, are “better prepared to support customer needs,” Kwan said. But this is easier said than done, he cautioned. “Take Apple, for example. They launch a new iPhone or iPad and next thing you know, the products are on backorder. Even though Apple has all the technology in the world to plan its supply chain, they go on backorder. Or, they make too many of the iPhone X, XR, or XS and now they’re giving discounts because they’ve overproduced. It really is an art to balance that. 

“It comes down to communication. It does no good to deliver something quickly if it doesn’t meet specifications. The reason this doesn’t always happen? In many instances, it’s because of poor communication.” 

Kwan also said that technology provides some companies with a false sense of security. “Someone might say, ‘Oh, I put that order in. It should be there tomorrow.’ But nobody verifies or calls the customer to ask if the package was received,” he said. “There is a challenge of not losing that personal contact, especially with sales reps, distributors, hospital customers and surgeons. The message here is to not over-rely on technology.”

So, if companies aren’t over-relying on technology, what do they need?

“Talent,” Kwan said. “We all know that in this economy right now, people don’t even show up for job interviews. Companies are being ghosted and companies are ghosting talent. This is a culture thing. Make sure your company,
culture and leadership are inclusive and people want to be there. Everything starts and stops with people. If you don’t have the right talent, it’s hard to manage technology, trade and transportation.”

OEMs should seek to build both agile supply chains and quality relationships with their suppliers. It is in this framework that technology, trade, talent and transportation converge to equal “consistent quality, communication and reliability,” Kwan said.

Another supply chain trend Kwan is currently focused on: lead time bottlenecks. He will speak on the topic at OMTEC® 2019 in June. “The thing with lead times is, it depends on whether you’re a small, medium or large OEM,” Kwan explained. “The larger players have a lot more leverage and represent a larger percentage of business for an Orchid or Tecomet. It’s the small and medium companies that are trying to get in there and get machine time at the contract manufacturers. If you’re a small company, you can’t always have multiple sources. You probably work with one or two suppliers that satisfy your needs.

“For the medium- and larger-sized companies, there are more corporate policies for who you can use, who is on your approved supplier list…rules and regulations may get in the way from having that agile supply chain.”

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