Digital technology: The Antidote To The Health Industry’s Supply Chain Woes?


Posted by katy on
Reading time: 6 minutes

In a sector characterised by cost pressures and long lead times, could smart tech offer supply chain solutions?

From slow lead times to poor visibility, the health industry supply chains are known to be afflicted by numerous ailments. According to recent research by McKinsey & Company, pharma supply chains have traditionally been characterised by lead times of up to one year in some cases, as well as high inventories (250 days).

Like other long-term health conditions, this has knock-on effects: in this case, growing costs to the organisations affected. The outlook isn’t all bleak, however.

Supply chains experiencing challenges may find new or emerging digital technology could be one remedy for their supply chain woes. Here are some potential benefits:

1. Centralisation alleviating slow lead times

The reasons for the health industry supply chains’ long lead times are complex, but they are connected to the fact that pharmaceutical production and distribution has many moving parts — including strict regulation.

One possible solution is offered by blockchain technologies. Blockchain records (or ‘blocks’) are secure, linked and timestamped. Creating a shared record system based on blockchain could remove tonnes of paperwork. It could help centralise fragmented processes involving many separate emails and texts, separate purchase ledgers, delivery notes and invoices.

As for related spending, an example IBM and Maersk test found that the associated paperwork for transporting a shipment of avocados amounted to 20% of the total costs. IBM estimates blockchain could save shipping carriers $38 billion a year and is working to bring shipping companies on board, although some sources claim that the industry has been slow to sign up, needing more proof of blockchain’s potential.  

2. Smart technology streamlining procurement and ordering processes

Another time-saver would be more efficient ordering, with much NHS buying and inventory control done manually. The Internet of Things and automatic ordering systems are two ways that smart devices could monitor stock and re-order it, rather than waiting for manual checks.

AI and machine learning are ways of being able to predict shortages or level of demand. These automatic processes could potentially save many hours of searching stockrooms or interrogating spreadsheets, as well as the associated costs of labour time and wasted products.

3. ‘Track and trace’ technology offering a cure for poor visibility

If a product isn’t tracked — or trackable — visibility about its whereabouts and eventual use will be dangerously inadequate. Over-ordering, waste and over-consumption all come about due to not knowing where a product is, how much is in stock, etc. A lack of visibility also leaves the door open for counterfeiting. Sources differ on how much counterfeiting costs the industry, but the World Health Organisation suggests it is over $30 billion.

There are a number of digital technologies that can help. In the case of counterfeiting, blockchain is high on the list as its secure records can’t be tampered with. This would make it easy to find out the life history of a medicine (or medical device), including who sold it and when it entered the supply chain.

RFID tags are another useful tool. They could be scanned at the inventory stage, but fixed readers in stockrooms would also enable scanning on a regular basis. RFID labels placed by manufacturers can be used in the quest for security as an identifier for genuine products. It’s even possible to place specialist tags on metal instruments to ensure they have been through the sterilisation process.

In logistics, the transfer of data between vehicle, supplier and customer assists in tracking and compliance during the transport stage and when it comes to assessing and monitoring those long lead times.

4. Digitisation and robotics addressing safety issues

Aside from the effects on patients, medical failings have huge potential to become costly embarrassments for clinicians and firms. Prescription errors, drug shortages and failure to track medications are all issues that directly relate to supply chain management.

Although they can’t remove human error, digital systems and shareable records can bring greater accuracy with ways to be sure about a product’s origin and stock numbers. They can also be a valuable double check when searching for a particular strength medication or keeping track of what’s already been given to a patient.

There’s also an increasing role for robotics in order picking, transport and menial yet physical work like collecting/delivering laundry. In factories and warehouses, robots reduce picking time and increase accuracy since they don’t get tired of repetitive tasks. That said, robots can’t do everything; in the case of decision-making, perception and dexterity, humans outclass robots and are likely to continue to do so without substantial investment. This makes robots useful assistants to human colleagues but not a replacement.

Investing in the right antidote for your supply chain woes

The particular complexities characterising today’s healthcare supply chains remain in part due to outdated processes, the slow speed of digitisation and lack of uptake in some quarters. Not only that, but external factors such as politics and macroeconomics play a role; Brexit and America’s recent protectionist tariffs are two prime examples of added costs and extra pressure, neither of which were predicted by AI.

Nonetheless, digital technologies may help us cope with many of the ailments that currently — or are set to — afflict healthcare logistics. When properly planned and implemented, new and emerging smart technology solutions are capable of making healthcare supply chains more cost-effective and efficient, improving not only your logistics’ health but that of your organisation’s bottom line.

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