Increasing research and development costs and lead times and reduced margins driven by generics and challenged healthcare budgets are putting increased pressure on medical device supply chains. Regulatory compliance and patient safety must be maintained while streamlining traditionally 'inventory laden' supply chains.
Supply Chain Imperative
Healthcare budget pressures impacting margins.
Patient safety and regulatory compliance across multiple geos.
High cost and management effort around consigned inventory
Distributed distribution models adding to working capital and costs.
Poor visibility and forecasts of end customer consumption.
High cost of Research and Development.
Market consolidation - high levels of mergers and acquisitions.
Medical Devices Supply Chain Opportunity
Accelerating inventory velocity while maintaining service is one of the key challenges for Medical Device OEMs.
Inventory has been the traditional buffer for demand variability but in the context of geo specific skus, multiple tiers of distribution, poor visibility into end customer consumption inventory this bufer comes at a high cost.
This can be addressed through a series of initiatives designed to create a more responsive and streamlined supply chain.
The implementation of late stage postponement can address many of the regional product variations.
Mapping the tiers of distribution and associated inventory and replenishment lead time can expose opportunities to remove inventory and lead time.
Combining this with a formal network optimisation study can identify the optimal distribution nodes and associated costs to maintain service levels for customers.
Many companies still use geneic rules in terms of number of weeks or number of days inventory on hand to determine inventory levels. This can often be suplemented by 'just in case inventory' resulting in excess. Moving to a more scientific inventory calculation based on demand history, variability, forecast and service levels will produce an optimal level of inventory for service.
Working with customers to improve forecasts through structured S&OP processes can yield long term benefits as can replacing fixed inventory at individual hospitals with rapid replenishment inventory serving multiple facilities.
Consigned inventory at customer locations and with sales reps can be an expensive blind spot that can be addressed with distributed inventory visibility tools.
Having the right distribution and logistics partners on board can extend the execution capability to realise the strategic goals of medical device supply chains.