Health care Embraces E-commerce Trends
At Gartner’s Supply Chain Conferenceheld in mid-May, one of the main tracks was regarding health care including the presentation by the leader of Amazon’s global health care strategy. Amazon eyeing the health care space is no secret which is presenting a plenty of low-hanging supply chain fruit having maintained the high margins and overly cautious inventory practices. Amazon entering your market, you know its importance even if your business has nothing to do with health care.
There is a considerable threat to the survival of any e-commerce business by the universal pressure of cost, speed, accuracy and traceability. To meet such challenges, the health care industry is looking to centralization, direct-to-consumer strategies, tracking and goods-to-person-technologies.
The director of health care strategy and sales for SCI logistics, Roger Sharpe, has got experience in health care and e-commerce. In the merging of the two, he finds himself convenient enough.
“Finding the sweet spot between health care and e-commerce is our main focus which in the last 12 months has exploded” said Sharpe. “ a profound number of requests are coming. This wave of change is looking to evolve a range of companies whether they are traditional consumer goods companies to diabetes supplies or other specialty companies.
A hunger of convenience is shared between patients and consumers, says Sharpe. “No matter what the market is, the culture of immediacy requires change in distribution centers as well as brick-and-motor locations, a two-week snail mail won’t cut it,”says Sharpe. “It’s about upping the ante in-order to compete with the bigger players in terms of service level and at the same time building better relationships with the clients.”
Health care operations
In-order to bypass third parties, many hospitals have been centralizing their distribution operations by the availability of off-the-shelf software and materials handling equipment. Some similarities between the early 1990s trend of retailer adoption of centralized distribution has been noted by Chris Lingamfelter, president of SencropWhite’s White Systems.
“Having a complexed DC, reduction of stock in the storerooms of hospitals, better management of the inventory and efficient working with the suppliers can be made,” Lingamfelter says. “Outside the hospital, space and labor are much less expensive than inside adding the benefits to the more efficient pick paths.
Having the capabilities of direct-to-consumer, the new health care supply chain models, taking the benefits from the learned lessons in the broader e-commerce shift from pallet and case quantities to high-throughput piece picking.
“Beginning the direct-to-consumer path, the interest of companies’ increases incredibly as they keen to know how that channel can be exploited further,” Sharpe says. “The sudden placement of marketing materials or to order customizedkitting in with shipments has a sudden impact on the typical handling materials equipment in a facility which changes it completely.”
Since same day shipments have become a norm, suppliers of health care and consumer good s are trying to reduce the cycle times, according to senior consulting engineer for Bastian Solutions, Jose Bejarano.
“Distributions or manufacturers have been pushed to inventory by the customers a little bit, and many specialized devices and treatments would not be available in the hospitals as they once did,” says Bejarano. “For consumer, saline and sutures are always available but implants for knee replacements are tailored, so as opportunity arises, you make them to order. There’s not a lot of foresight on the distribution side for orders, which as a doctor’s office closes might come later in the day.as we see in e-commerce, they need to go quickly. The ‘catch up with Amazon game’ is likely to be started by the health care companies or they make sure they are better at what they do and go defensive before Amazon gets there.”
A tamper-proof seal
Investing in the distribution challenges solutions depends on the company’s confidence as they can have an idea of how the future looks like, says the senior director for SCE solutions for TECSYS, John Reichert.Any company that that handles any supplements that has temperature and licensing requirements as of pharmaceutical companies- they have to contend with the Drug Supply Chain Act (DSCSA). The management and capture of the details of transactions have incremental deadlines through the act passed in 2013 till 2023.
“If a thing is not ideal in a couple of years then nobody wants to invest money in that,” says Reichert. “With materials handling trends it is another parallel in general; the ability to quickly and cost-effectively is needed in-order to adapt systems to change. The becoming of automation is more flexible and relocatable, like autonomous mobile robots. The automated software systems will need to adapt and integrate as with new technologies data collection requirements will change.”
The element of data collection is pretty challenging. The progress of a drug in terms of time and location of manufacture via shipment (including temperature control as appropriate), storage, fulfillment, delivery to the customerand tracking it with 100% authenticity is the ultimate goal of DSCSA. We can have a glimpse of not-too-distant future where complete control and visibility of orders is offered to consumers by such extreme requirements of the DSCSA.
“Someone able to scan the entire traceability history and confirmation that the bottle of Tylenol which is received at their home is legitimate, I can certainly envision that,” says Reichert. “Like Carfax for drugs.”
DSCSA in full effect would be like, a unique serial number will be required by every salable unit, own serial numbers will be there on the box holding several units, every pallet would be labeled holding several boxes, and so on.
“Huge amounts of data will be produced through three or four nodes of the supply chain by that highly nested, serialized structure,” Reichert says,” before entering the building, the product’s legitimacy will have to be verified by the person receiving it.”
The continued growth of the 2D bar codes is predicted by Reichert, given the scale of data. Two types are currently available: Health Industry Bar Code (HIBC) and GS1, which are small and have the capacity to accumulate multiple values like item, dot, date, expiration etc.
“It must be a necessity of any software application or any automation which should be able to decode and parse into individual components and the data should be pulled out individually from handling the goods accordingly,”Reichert says. “From a system standpoint, this is radically different from what you need.”
For the buying public, high-profile food recalls are top of mind for now, from drugs to food to shoes, demands for traceability will begin which is expected by Lingamfelter. The increasing number of demands of consumer will drive adoption, keeping in mind most of the required technology exists. Meanwhile, extreme steps are taken by some companies to ensure accuracy. Quality assurance (QA) measures are paramount as it is more disruptive to have a wrong item than a late one.
“A spectrum of ideology, consequences and cautiousness is starting to appear.” Lingamfelter says. “Every order is scanned which means this operation does 100% QA unlike a traditional wharehouse where only 1% audit is done on the outgoing products. It is scanned and re-scanned at the point of the pick and at shipping once they empty the order respectively.”
Data collection, stat
A robotic pick confirmation for QA is now prototyping for Lingamfelter’s customer, where scanning, replacing and removing is done by a collaborative robot, but for improved accuracy there are plenty of low-tech solutions. Familiar A-frames and goods-to-person methodologies are making inroads says Bastian’s Bejarano.
“The idea of goods-to-person is extremely popular everywhere, since the number of SKUs has grown, it serves just well the health care,” he says. “A good density and efficient picking is given by goods-to-person and pills and devices customized to the patient have proliferated.”
In an increasingly global marketplace, there is an importance of software in coordinating the flow of goods which is emphasized by Bejarano. The country of registration is a critical data point in addition to all the other detailed information to be managed.
“One of the biggest opportunities- but also a bit challenging- is the data to be tracked,” he says. “For a given country, you have to register a product with the proper authorities therefore registrations can be a bit tricky and at times one product can have to or more registration codes. Legislations can change any time and it’s tied to it so it’s an opportunity and a constraint.
User defined attributes and data fields can be made with flexiable software architecture that perhaps no other company would ever need, but it would be important for a particular prodct and timeframe, he says.
“As softwares are sometimes seen as a mystical place in the clouds that nobody understands, with hardware it is easier to visualize the physical space,” Bejarano says, “but it will help a project to go smoothly once software considerations are kept in mind.”