From porsches to pacemakers: what healthcare can learn from automotive supply chains

How can automotive supply chains improve healthcare logistics? 

James Wells, UK International Freight Manager at Aramex explores the transferable practices that automotive manufacturers follow, and how they could deliver real benefits to the healthcare sector.

There may not be an obvious correlation between the automotive and healthcare sector, but there are aspects of the automotive supply chain that, if replicated in the medical sector, could deliver a more flexible and efficient supply chain.

Healthcare supply chains are one of the most regulated and monitored and this, alongside the increasing demand and cost pressures the sector faces, means it needs to look for improvements wherever it can.

The automotive supply chain is not without its challenges, whether it is a global supply chain, with parts and finished goods moving internationally on multiple occasions or tracking of all these parts simultaneously. Yet, the way their supply chain is structured and operated means they can keep disruptions to a minimum.

Asset tracking

Due to the complexity and globalisation of automotive supply chains, parts can be located in all four corners of the earth. That is why end-to-end visibility and traceability of parts is so integral. The loss of even one part could bring production to a halt. For healthcare, a missing product could mean the difference between a patient receiving treatment or not.

Many suppliers in the automotive sector have begun implementing some form of supply chain management system that tracks the whereabouts of parts. The likes of the internet of things (IoT), GPS tracking and artificial intelligence (AI), can provide real-time data on a goods location.

The same level of visibility is critical in the healthcare sector; suppliers are handling sensitive goods that could easily be damaged or become unviable if they were exposed to too much heat or excess volatility. So being able to understand if they are delayed at a border, or taking an extended route is paramount. This is especially important when you consider the GS1 Standards that are required when supplying to any NHS Trust in England.

Just-in-time

Many automotive manufacturers operate a just-in-time model, to keeps parts flowing and minimise stock holding. If medicine, or even equipment, isn’t available when it is needed, it can be a life-or-death situation. Most pharmaceutical goods and medical equipment come with an expiration date and each year in the NHS alone around £100million[1] of goods are wasted due to this, so operating a more lean model like just-in-time can help to provide increased efficiency and reduced waste. For this to be effective however, hospitals or surgeries need to implement some form of digitalisation into their inventory management process to ensure accurate figures.

Using a more automated inventory management system also provides time efficiency in terms of labour. It is reported that nurses spend upwards of 25%[2] of their time doing inventory management and materials management. That time needs would be better spent dedicated to patient care.

Agility

Whilst demand forecasting is critical, not all eventualities can be predicted – no one could have predicted a global pandemic and have all the stock prepared. So, when these eventualities occur, suppliers and hospitals alike need to be flexible to receive the equipment they require, fast. Having a globalised supply chain usually offers cheaper access to goods, but this also means they are thousands of miles away, which presents challenges where there is an unexpected spike in demand. There are two ways to tackle this; either regionalise areas of the supply chain to make it less ‘risk adverse’ or build strong partnerships with suppliers and a logistics provider that have a strong international infrastructure to allow a quicker transition through borders in an emergency.

Healthcare, as a whole, is one of the most innovative sectors, but there needs to be a greater focus on its supply chain, to deliver both efficiency and adaptability. Whilst the end result is a very different focus in automotive, they are continuously driving new ways to make logistics operations more effective. Healthcare needs to take note and operate a supply chain that is both efficient and can be adaptable at a moment’s notice.

References

[1] https://pharmaceutical-journal.com/article/ld/how-to-reduce-medicines-waste

[2] https://www.linkedin.com/pulse/challenges-healthcare-supply-chains-lessons-we-can-learn-mark-graban/

James Well is the International Freight Manager at Aramex UK. He predominately focuses in the medical division, helping UK-based medical companies expand into new territories and distribute goods globally.