Manufacturers must 'seize control' of distribution says DHL
Logistics giant DHL says that the healthcare industry is currently under siege, buffeted by a host of new market forces which are changing the business paradigm.
‘Going Direct: Bold strategy for healthcare supply chains’ is the group's latest whitepaper which looks at how new market dynamics are having a direct impact on the performance of medical manufacturers. Cost pressures; wholesaler, manufacturer and pharmacy consolidation; along with new regulations, are forcing life science manufacturers to look at different opportunities to reduce costs and improve margins.
The time has come for life science manufacturers to future-proof their businesses by considering the adoption of a bold approach to distributing some products directly to market (D2M). With a D2M approach, the manufacturer assumes full, direct control of distribution to the customer in a direct channel. D2M offers a wealth of powerful business benefits including improved margins, visibility into sales data, and full and direct control of distribution without hand-offs to an intermediary.
The ‘Going Direct’ white paper details how healthcare manufacturer companies can assess the trends driving D2M and provides advice on evaluating whether the strategy makes sense for them.
The D2M approach is being adopted by selected companies, but the industry as a whole has been slow to respond to market dynamics and adjust accordingly. DHL will be driving this message home during its presence at leading industry event LogiPharma 2015 between 14-16 April in Switzerland. DHL staff will be holding sessions on ‘Leading the supply chain of the future’ and ‘Redefining the supply chain strategy to ensure efficiency in a growing and more complex environment’, which will include a detailed look at D2M and the themes explored in the research paper.
The ‘Going Direct’ white paper was prepared by Lisa Harrington, President of the lharrington group LLC, who said, “The healthcare industry is under siege. The perpetually rising cost of healthcare globally, the trend towards more complex biologics, coupled with the consolidation of wholesalers and increases in regulation, have frozen the industry into inaction. We’ve seen previously in DHL’s Supply Chain Maturity Index that the industry is behind the likes of the automotive and technology sectors in supply chain development. This means the response to these new challenges has been slow and disjointed from a supply chain management perspective.
“Manufacturers need to be shaken out of inaction and realise that D2M offers powerful benefits including improved margins, visibility into sales data, and full and direct control of distribution without hand-offs to an intermediary. By assuming full control of distribution, the manufacturer can gain ownership of the customer relationship, improve product security and tap into the growing e-commerce channel. This is currently a huge missed opportunity.”
Michael Terhoeven, Vice President Strategy and Development for LSH, DHL Customer Solutions and Innovation said, “There is no question that going direct is a big strategic decision for a life sciences manufacturer. But the time is right for considering it. As downward pressure on pricing increases worldwide, manufacturers are realizing that they could capture a greater share of the value by extending control of what happens to their product beyond manufacturing and another 50% of value is added.
“The key question for companies is in what markets and for which customers should they consider a direct channel strategy. Also, should they adopt a full direct model or a blended one, in which wholesalers continue to play a modified but still important role?” adds Mike Bebbington, Vice President, Global Product Development, Life Sciences and Healthcare, DHL Supply Chain.
Paolo Rosanna, VP Head of Business Development, LSH EMEA; Susanne Amholt, VP Business Development LSH EMEA; and Thorsten Roggenbuck, VP Global Account Management LSH will all be speaking at LogiPharma to discuss new strategic pathways for the industry, and will be available for companies wanting to find out more about D2M as a way to modernise and future-proof their supply chains.
‘Going Direct: Bold strategy for healthcare supply chains’ is available for download here: http://supplychain.dhl.com/LP=603