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TheStreet Open House

DRIVING THE FUTURE: 7 Lessons The Medical Device Supply Chain Can Learn From The Auto Industry

Stock quotes in this article: CAH





DUBLIN, Ohio, July 1, 2014 /PRNewswire/ -- In the 1970s, America's automotive industry faced one tough competitor. That competitor was a better supply chain – operated by Japanese car makers – who leveraged their precision, just-in-time inventory management processes to step in and meet the growing American demand for fuel-efficient cars. To respond, American carmakers had to quickly create a leaner supply chain that delivered far better products, much faster. 

Rob Doone, vice president of Integrated Logistics Services at Cardinal Health, believes that today's health care supply chain faces many of the same challenges that America's automakers faced three decades ago:

  • Too much waste everywhere you look
  • Too many hands pulling the supply chain in different directions
  • Shortsighted product development
  • A failure to modernize
  • No consistency with product identification

In a new blog post on Cardinal Health's online thought leadership site, Essential Insights, Doone shares seven practical steps the health care industry can take, working together, to apply supply chain lessons from the American automotive industry. Doone sees the potential to unlock billions of dollars from the health care supply chain through reduced waste and improved efficiency, by:

  1. Streamlining – Cut the number of touch points in the supply chain down to size.
  2. Being transparent – So we can better track products as they travel from plant to the patient. This requires a significant investment in technology to see a product's entire path through the supply chain.
  3. Focusing on compliance – To meet growing regulatory requirements. For example, at Cardinal Health in the last five years alone, we've seen a 300% increase in regulatory inspections of medical products. That's why deep expertise in health care logistics is key to staying ahead of such complex and critical change.
  4. Being flexible – To accommodate the growing shift in care from the hospital to more cost-effective locations—including patient homes.
  5. Leveraging intuition – Use technology to establish clear demand signals optimizing inventory levels.
  6. Collaborating – Create more effective shared warehousing and transportation strategies.
  7. Being Nimble – Manage the constant change in product complexity, regulatory compliance, transportation and warehousing.

Doone also shares specific, practical steps for how this vision can be brought to life for both medical consumable products and for high-dollar physician preference items.

"We need to rethink how the health care supply chain works to lower costs, improve efficiency and help manufacturers move their products to point of care via a network built just for them," said Doone.

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