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Analysis

Technology Transforming Health Logistics, Supply

By Miriam Bello | Thu, 08/26/2021 - 13:14

Technology adoption has been a key trend across the healthcare industry. As the sector moves towards a value-based system, logistics and supply chain management technology becomes essential for companies to streamline processes and thrive in a demanding environment. “Thanks to technology, we can generate the necessary solutions, redesign of routes, calculate the demand levels of our customers and generate the services they require,” wrote for MBN Ingo Babrikowski, CEO of Estafeta. “Today, logistics companies are information companies as well.”

The logistics industry has already demonstrated its leadership in tech disruption. Amazon’s fast-paced delivery service is one of the most evident testimonies of how fast and efficient deliveries can be through the use of integrated shipment tracking systems, IoT sensors linked to monitoring and information transmission systems, autonomous trucks and drones, enhanced GPS systems and even social media to connect with customers. These tools can be easily adapted to different sectors. However, their use in healthcare involves additional complexities to fully respond to care provision while reducing cost without compromising care. A Cardinal Health survey in 2019 indicated that 42 percent of respondents said supply chain work takes too much time away from patient care, while 45 percent of frontline providers say that manual supply chain tasks have a “very” or “somewhat” negative impact on patient care. Hance the importance of continuous improvement in logistics operations.

A study by Deloitte points out the primary goals of health providers in optimizing logistics and supply chain operations:

  • Optimizing costs. The healthcare industry’s transition from a focus on volume to value is driving providers to look for new ways to manage resources and reduce company-wide costs. Using data analytics to monitor resource management and utilization can help to minimize and/or eliminate redundancy in the healthcare supply chain and to provide an opportunity to optimize from 2-10 percent total supply chain cost depending on the size of the health system.
  • Reducing unnecessary variation. This can be achieved through the collection, cleansing and analysis of data. From hospitals to API manufacturers, tools such as machine learning and process automation can streamline redundant, transactional tasks and provide accurate, repeatable and standardized processes that help to reduce variation and errors, thus freeing up employees to engage in higher-value activities.
  • Enhancing patient care, delivery, and engagement. Efficient supply chains can improve the patient experience by increasing their time spent with caretakers, reducing waiting times and lowering the number of rescheduled appointments due to expired or unavailable products, thus creating a more seamless visit for the patient.
  • Addressing new value-creation priorities: Digital supply networks are fundamental for operating model changes to spur clinical and business innovation. For instance, digital supply networks in telemedicine can go beyond virtual meetings and provide wearable devices to track patient outcomes, delivering specialty prescriptions and medical equipment to patients’ residence.

Responding to these requests, logistic and supply chain actors have adapted diverse digitalized solutions to their already existing services. According to the carrier and freight-forwarder Logistics Titans, these include:

  • Artificial Intelligence (AI), which can be used for better planning of the services and products needed to support patient care. Furthermore, it can help to ensure the availability of products where they are needed by helping predict potential backorders or shortages while avoiding overstocking products that are at risk of expiring.
  • IoT applications to collect, analyze and visualize data. IoT applications will help the holistic interconnection of manufacturing, transportation and distribution of medical products, as well as their use at medical facilities.
  • Traceability through product tracing, supported by real time information and a dedicated and trained staff to obtain results that guarantee quality of service. “Traditional logistics have become a commodity but accurate, real-time information is what differentiates a company from others,” explained Alesio Bereciartu, Commercial Director of OCASA’s Healthcare Business Unit Latin America, to MBN.

Traditional product traceability is done through packing. However, company Colorcon has developed micro-taggant technologies, a molecular DNA taggant and a silica taggant, which are included directly onto the pill itself via the film coating and are not detectable by the naked eye. “With this innovation, companies are now able to uniquely tag their tablets and authenticate them in the field using a desktop reader,” explained to MBN Gary Pond, Global Product Authentication Lead of Colorcon.

  • Drones that provide the opportunity to support the supply chain in healthcare beyond the hospital walls. In case of emergencies, a faster response would potentially save lives and prevent medical trauma. Deploying samples via drone would help smooth out the inflow of test samples into labs by ensuring that specimens arrive quickly and efficiently.
  • Automating healthcare supply chain management that allows streamlining inventory, minimizing waste, enabling timely data-based decision-making and reducing supply, labor and operational costs. These types of systems tend to focus on specific areas, like surgery, interventional medicine and other healthcare departments where expenses amount to 60-70 percent of a facility’s total supply costs.
  • Smart logistics platforms that speed booking shipment processes by enabling the freight booking market to operate more efficiently, getting trucks to the right load in a shorter time. In healthcare, these platforms grow as matching algorithms, freight pricing and mobile applications become more convenient and sophisticated.

One concrete example of how these tech applications are working out for the healthcare industry is GNK Logística’s medicine distribution process, which includes almost all public hospitals in Mexico. The company developed a software system called Administration and Logistics System for the Health Sector (SIALSS), which is installed at hospital warehouses, regardless of whether they are located in large cities or rural communities. This system allows GNK Logística to measure the real consumption of the facility. “This has given the authorities real-time information that allows them to create accurate consumption plans for future purchases,” said Javier Calero, Vice President Commercial of GNK Logística. SIALSS also tracks expiration dates, oversupply, stock with relation to consumption behaviors and the profile of the patient consuming the supplies. Through data analysis, GNK Logística evaluates all the different items to develop a detailed report to identify possible supply deviation or expiration dates, reporting consumption rates and red flags related to the generation of fake consumption needs, which would create additional costs.

Maypo, one of Mexico’s largest pharmaceutical distribution companies for the private and public sector also shared with MBN that to achieve a successful delivery to over 20,000 delivery points, “technology becomes essential and allows us to optimize the cost-benefit ratio. Not giving this process the necessary attention can compromise the supply to the population,” said Jesús Arenas, Corporate Communication Director at Maypo.

According to Arenas, technology has not only allowed Maypo to keep track of their inventories, consumption trends and placed orders, but it has also saved them time and costs through the automated system of picking and packing in their warehouses. “We have to keep in mind that we are dealing with medicines and healing materials, which are some of the most complex products to distribute. We understand their complexity which is why we adopted technology to meet the demand,” Arenas said.

Mario Alberto Aguilar, President of Mexico's Association of Logistics Operators, shared with MBN that the COVID-19 pandemic will undoubtedly cause traditional supply chains to change. To Aguilar, there is a great need, while maintaining economies of scale, for a more distributed, coordinated and traceable supply of components across multiple geographies and suppliers. “This would require the creation of global platforms that use sophisticated technologies such as 5G, robotics, IoT and blockchain to help to reliably link multiple buyers through a ‘mesh’ of supply chains with multiple suppliers.”

Photo by:   Elevate on Unsplash
Miriam Bello Miriam Bello Journalist and Industry Analyst