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Importance of Healthcare Logistics & Warehousing

Importance of Healthcare Logistics & Warehousing 

The healthcare industry is one of the U.S.'s most dynamic and rapidly growing sectors. In 2021, the the Centers for Medicare and Medicaid Services reported the U.S. national healthcare costs reached $4.3 trillion

On average, healthcare supply chain costs are higher than other industries. Supply chain costs  related to moving pharmaceuticals, medical devices and medical consumables to the receiving docks of more than 7,000 hospitals nationwide make up nearly 20-30 percent of hospital operations, or approximately $760 billion to $1.14 trillion. A recent report says hospitals waste $25.4 billion each year on inefficient supply chains.

Does Higher Healthcare Logistics Costs Equate to Inefficiency?

The unique requirements placed on medical products, equipment and supplies, requires additional expertise, certification, and often special equipment than most other supply chains. 

Medical and healthcare logistics are highly regulated in that it requires assets, systems and expertise that adhere to higher standards. One of the most important aspects of any healthcare logistics system is adherence to ISO 2000 compliance standards. ISO 2000 is an international standard for quality management systems (QMS). It provides a framework for organizations to establish and improve their quality management systems, helping to ensure customer satisfaction and regulatory compliance. By adhering to ISO 2000 standards, healthcare logistics providers have a system in place to deliver the highest level of service quality when it comes to medical device delivery.

In addition to meeting ISO 2000 requirements, medical equipment logistics companies must meet additional certifications such as:

  • ISO 13485: Medical devices - Quality management systems
  • Good Distribution Practice (GDP) for medical devices
  • Hazardous Materials Transportation (HMT) certification for the transportation of hazardous medical equipment
  • Compliance with regulations such as 21 CFR Part 820 (FDA) and EU MDR/IVDR (E.U.)


The Role of 3PL Integrated Services in Healthcare Logistics

Medical companies can reduce staffing and capital expenses by outsourcing their shipping, warehousing and inventory management processes. In addition, this will allow medical and pharmaceutical manufacturers to focus on the core aspects of their respective businesses.

The study highlighted the importance of staying up to date with the latest trends in healthcare logistics. Companies should track changes in technology, regulations, customer needs and other trends to remain competitive and successful. By doing so, they can gain insights into emerging opportunities and make decisions accordingly. This study provides valuable insights into the importance of healthcare logistics, as a path to greater market share and improved customer service.

Medical device companies must adhere to FDA regulations when developing medical devices. The approval process is rigorous, and companies must prove that their products are safe and effective before they are allowed to ship them. To ensure product quality, many companies prefer to distribute through single source 3PLs, which enables them to track products from when they leave the warehouse until they reach their destination. This provides an additional layer of assurance and makes it easier to identify potential problems.

Supply chain technology plays an important role in healthcare logistics. By using RFID tracking systems, leveraging fleet management and TMS systems and visual documentation tools, companies can quickly and accurately monitor their shipments, ensuring that all pharmaceuticals and high value medical equipment travels safely and securely. Additionally, these tools can help companies optimize their supply chains, helping them reduce costs and increase efficiency.

Transparency, Traceability and Control: Benefits of Outsourcing Healthcare Logistics

Outsourcing healthcare logistics is becoming increasingly successful as organizations strive to optimize their supply chain and increase efficiency. By outsourcing healthcare logistics, organizations can rely on 3PLs to develop economies of scale while improving customer service and satisfaction. Benefits of outsourcing healthcare logistics include:

  1. Relying on Experts: Outsourcing healthcare logistics allows organizations to tap into specialized knowledge and expertise from experienced medical logistics companies. This helps to ensure that the job is done efficiently and accurately. In addition, these 3PLs strive to stay up to date on all the latest regulations and technology related to healthcare logistics, so organizations can rest assured that their supply chain complies with all necessary regulations.
  2. End-to-End Visibility: Working with a 3PL provider typically features control tower visibility over the entire supply chain process. Organizations can easily track orders and deliveries in real-time, giving them greater insight into how their products are shipped and managed. This helps to ensure that shipments arrive on time and that customer orders are fulfilled quickly and accurately.
  3. Reverse Logistics: Reverse logistics refers to the ability to quickly locate returned or damaged items in the supply chain. Outsourcing healthcare logistics allows organizations to access reverse logistics services, which helps them keep better track of returned or damaged items so they can be replaced or repaired quickly and efficiently.
  4. Leading Technology: Working with a 3PL provider ensures access to state-of-the-art technology and systems that can help streamline processes, reduce costs and improve customer service. From automated tracking systems to advanced delivery, route optimization, outsourcing healthcare logistics provides organizations with access to the latest technology for improved efficiency and cost savings.

The Challenges of Outsourcing Healthcare Logistics

Outsourcing healthcare logistics requires careful consideration of the organization's needs and a clear understanding of the capabilities of the third-party logistics provider. Before deciding to outsource, organizations must also consider the potential risks associated with relying on a third party for their healthcare logistics needs.

The first challenge is finding a qualified third-party logistics provider with the experience, qualifications and assets to handle the organization's specific needs. Refrigerated warehouses? Kitting and overnight shipping? Does your new provider offer both sanitary transportation and warehousing? SaaS-based WMS and TMS?  Do they have a track record in providing temperature-controlled distribution for pharmaceutical logistics and life science shipments?

The second challenge is ensuring the third-party logistics provider specializes in healthcare logistics and has invested in the resources required for world-class warehousing, transportation, technology, and inventory management. This means checking their safety standards and certifications and verifying that they follow industry best practices. What other medical equipment companies do they serve? Do they have a leadership position in the healthcare industry?

The third challenge is managing the costs associated with outsourcing healthcare logistics. This includes negotiating contracts with suppliers, cost-effective shipping rates, and reporting to make sure they remain within budget. Additionally, 3PLs must stay updated on new technologies and services that could help them reduce costs and improve efficiency, such as consolidation programs, building cost-effective truckloads, leveraging backhauls, and even managing inbound for the medical manufacturing client.

Overall, outsourcing healthcare logistics is not without its challenges, but careful planning and due diligence can be a successful endeavor for many organizations. Organizations can benefit from improved efficiency, cost savings, and greater customer satisfaction with the right third-party logistics provider as a partner.

Healthcare Logistics Trends

"The most important trend in healthcare logistics today is digitalization. With the rise of smart technologies, organizations can now access real-time data on their supply chain operations, enabling them to optimize the movement of goods across the globe." These quotes were taken from the Deloitte study titled "Healthcare Logistics: Outsourcing Options for Better Supply Chain Management". The study emphasizes the need for organizations to understand the impact of logistics on their operations and outlines the benefits of outsourcing healthcare distribution logistics.

  1. Automation: Healthcare logistics has been increasingly relying on automation and robotics to reduce costs, increase efficiency, and ensure the safety of products. Automation and robotic systems are now being used in many healthcare settings, including inventory management, warehousing, and shipping. Automation can help streamline operations, reduce errors, and improve the accuracy of orders
  2. Real-Time Tracking: The rise of real-time tracking technology has transformed the healthcare logistics industry. This technology allows for instant updates on the status of orders and helps to keep the supply chain running smoothly. With real-time tracking, medical device logistics shows exactly where products are at any given time so you can adjust accordingly.
  3. Regulatory Compliance: Adhering to compliance, certification and quality standards is critical for healthcare logistics companies. Companies need to be aware of changes in regulations, such as labeling requirements, data protection laws, and safety standards, in order to remain compliant. They need extensive training programs and rigorous employment standards to offer the best-in-class white glove handling and distribution of healthcare products.
  4. Last-Mile Delivery: Last-mile delivery is becoming increasingly important in healthcare logistics, even more critical given the increase of telemedicine and home health. Medical supply chain logistics providers must ensure that high-value medical products travel safely and securely.
  5. Data-Driven Decision: Analyzing data related to healthcare logistics is critical in order to optimize operations and improve decision-making. Actionable intelligence, continuous improvement is achieved through data analysis of shipments, trends, supply and demand. This information can then be used to streamline operations and ensure the efficient delivery of medical devices.

Decentralized Healthcare Logistics: Improving Regional Technical and Service Support

While some 3PLs may only be responsible for delivering the equipment to a specified location, others may offer additional services such as installation, setup, and configuration. In general, 3PLs that specialize in medical equipment logistics have trained technicians on staff who can handle all of This can be especially important for complex or specialized equipment, such as imaging machines or laboratory equipment, that requires proper installation and configuration to function correctly.

Like a distributor, a regional network of facilities provides end users with more responsive healthcare logistics. Companies can also provide customers with more flexibility when it comes to making their orders, allowing them to choose the most convenient delivery location. This can also help reduce the cost of delivery, filling orders in a warehouse closer to the healthcare facility, reducing the distance and associated shipping costs.

Having a regional network also allows companies to better meet their client's demands by keeping inventory closer to the customer base, which can also help to reduce transportation costs associated with cross-country shipping. This can be especially beneficial for large and heavy products that can be expensive to ship. This helps ensure that the right products are in the right place at the right time, which helps improve customer service and satisfaction.

A regional network of fulfillment facilities that offer technical services and reverse logistics is an important strategy for successful healthcare logistics, as it ensures that products are accessible to customers in different regions and at different locations, providing more flexibility and cost-effective delivery options, postposing final assembly, mixing and order building until near delivery.

We Can Help

SEKO is recognized as a leading 3PL in healthcare, life science, and medical equipment supply chain services. Our global transportation network can help you reach new customers, increase efficiency and reduce errors in your B2B orders and ecommerce fulfillment process. Our advanced technology platform can help you build more accurate data models to increase efficiency across your procurement, customer service, and logistics processes.

Partner with SEKO to enjoy greater visibility and increase control over your supply chain. If you are ready to expand your business globally, contact our supply chain specialists today.

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