Supply Chain Insights: UPS Executive Talks Moving Orthopedic Devices

Josh Cannon, director of global healthcare strategy for UPS (United Parcel Service Inc.) discusses supply chain relationships with ODT. For more on the subject, see the supply chain feature from ODT’s Jan/Feb issue.

Ranica Arrowsmith: What are some of the biggest challenges facing the orthopedic supply chain?
Josh Cannon: The orthopedic supply chain is challenged with excess inventory in multiple areas of the supply chain. For many manufacturers, upwards of 70% of their inventory is located out of their direct control with distributors, sales reps or in hospital consignment. This makes it increasingly difficult to track and manage inventory, oftentimes resulting in product expiration, scraps and write-offs. With multiple price and cost pressures hitting the medical device industry, efficient supply chain and inventory management can be the difference between business gain and loss.

Arrowsmith: What is the biggest misconception out there regarding supply chain practices?
Cannon: Traditionally, in the orthopedic supply chain, deliveries are often sent next day air in order to make operations in time. However, the most expensive transportation option is oftentimes not the most efficient. By engaging in inventory planning and stocking inventory near demand centers, deliveries can reach their destination in a faster and more cost effective manner.

Arrowsmith: How has your orthopedic supply chain practices adapted over the years to meet changing demands?
Cannon: The aging population and the Affordable Care Act are driving the upward demand of orthopedic surgeries. However, the face of the decision maker or customer is changing from individual surgeons to hospital procurement groups. Success in this higher volume, lower price world often hinges on effective supply chain practices. It is critical for manufacturers to understand their entire supply chain and have visibility and control of their inventory at all times. This not only lowers expensive inventory write-offs, but it also ensures devices reach the intended destination on time, every time.

Arrowsmith:  What logistics trends should orthopedic device manufacturers pay attention to?
Cannon: Across industries UPS is seeing manufactures and retailers beginning to stock and source inventory closer to demand centers. This can be a game-changer for device manufacturers looking to lower time in transit and gain increased visibility over their inventory.

Leveraging technology to streamline processes such as order placement for surgeries and inventory tracking is also critical for manufacturers looking to optimize their supply chain. Many processes that were traditionally manual can now be automated which improves both efficiency and service levels.