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The A to Z of Healthcare Logistics

Decoded: The A to Z of healthcare logistics

Of all the industries in the global economy, healthcare is truly unique as it is directly responsible for the lives of billions across the world. Population growth, coupled with advancements in medical technology and improved access to healthcare, has meant the continual flourishing of the industry.

According to Deloitte, healthcare spending globally is expected to rise and will continue to be a vital pillar of economic growth and development.

As with many industries, the effective functioning of the healthcare industry is underpinned by the efficiency of its underlying supply chain. However, the coronavirus pandemic has forced the industry to reconsider the principles and priorities their supply chains run on. Understanding the myriad factors behind this disruption requires knowledge of how the supply chain works. An uphill task, given that its complexity is arguably analogous to the complexity of administering healthcare itself!

What to look out for in route planning software?

Rider preferences

Taking into account rider skills, expertise, and preferences for a smooth transition from traditional routing to AI-based route planning platform

Autonomous route planning

AI-driven route planning that can reduce errors caused by human negligence and minimize human intervention

Accurate geocoding

Advanced geocoding abilities that can convert fuzzy addresses into precise geographic coordinates on the map

Intelligent vehicle allocation

Smart vehicle allocation based on traffic, shipment, vehicle type, etc.

Optimal fleet mix

Offering a best-fitting fleet mix based on consumer preferences

First attempt delivery

First attempt delivery is ensuring deliveries in the first time around, saving you storage and re-delivery costs.

The various arms of healthcare logistics


To ensure that patients get the healthcare products they need, supply chains grew to become incredibly efficient. And incredibly complex. Healthcare supply chains are notorious for spanning across several touchpoints and geographies. A McKinsey report noted that such supply chains could start in Asia and circumnavigate the globe twice! Despite this immense complexity, healthcare supply chains can broadly be categorized under three types: the first mile, the middle mile, and the last mile. The principal players of the first mile are pharmaceutical companies and medical equipment manufacturers. Once an order is placed with these drug makers and product manufacturers, they are shipped off to distribution centers. From here, these products are then shipped to the hospitals, clinics, other healthcare centers, and pharmacies that ordered them. The transportation of products from the manufacturer to distribution centers and the healthcare centers constitutes the middle mile. The patients are central figures of the last mile in the supply chain, as it involves the delivery of drugs and other healthcare products to patients. Online pharmacy and healthcare companies have been making their mark in this space with rapidity. A big reason for this is the growing popularity of online healthcare services and telemedicine in a post-pandemic world.

Healthcare logistics: From past to the present
Up until the ’80s, healthcare supply chains were largely decentralized, and its operations were manually run. Each hospital or healthcare center would periodically compute its supply needs and meet them by individually reaching out to vendors. In essence, every healthcare center was an island that was operating and maintaining its supply chain. However, this meant that hospitals had little leverage against suppliers, leading to increased costs, which also reflected as high healthcare costs for patients. The manual process of taking inventory also had greater scope for making errors, often leading to oversupply and eventual wastage. The reverse is also true, where clinicians would often not have their desired products at hand. Since then, supply chains have evolved to become more centralized. Concepts such as integrated delivery systems (IDSs) have helped hospitals’ supply chain managers gain greater inventory visibility. IDSs are essentially a conglomerate of healthcare companies owned by a single parent company. They enable a flow of data and necessary resources, and also allow healthcare companies to enlist the help of group purchasing organizations (GPOs). These are third-party organizations that often pool the procurement needs of multiple hospitals to gather collective bargaining power from suppliers. Thus, GPOs help reduce the expenditure on supplies and make healthcare more accessible.

Challenges shaping healthcare supply chain optimization
Supply-demand mismatches
While the motivations behind the various stakeholders in the supply chain might differ, they all operate on a fundamental principle: to facilitate the best possible healthcare, both patients and clinicians must have access to the relevant healthcare products in a timely manner. This is a task easier said than done. Given the diverse spectrum of ailments and equipment needed to treat them, hospitals on average stock up an average of 6,000 to 8,000 stock keeping units (SKUs). They are estimated to have close to 35,000 products on their formulary, which is the list of drugs and medicines that they can count on to buy at any time. Estimated percentage of total hospital budget earmarked for supplies in 2019.Product choice of clinicians is also one of the major factors affecting supplies at hospitals. If there is a lack of communication over stocking these products, hoarding becomes commonplace. On the other hand, catering to the diverse choices of all clinicians could mean overstocking of supplies and eventual wastage. Ex: A US-based hospital managed to save $30,000 a year by reducing the number of sanitizers it stocked in its healthcare system from 30 types to three.

Technologies affecting supply chain visibility

Aside from the business imperatives, well-functioning healthcare supply chains are foundational to improving the access and quality of healthcare. In a post-pandemic world, this means maximizing supply chain resilience alongside efficiency. Total number of respondents who agree that supply chain management is crucial to solving key challenges

The benefits of having a Transport Management System

It simplifies all stages of the supply chain by automating most processes.

In other words, a transport management system is responsible for a well-functioning supply chain. There is an array of applications and information systems for transport logistics and motor transport in today’s age. The variety is so overwhelming that it is easy to assume that we live in a digital era of welfare, where sustainability and prosperity of a business go hand in hand. The reality is far from this, though, as the deployment of such solutions is slow and a change in strategies in the transport service market is no easy task. While most businesses understand the importance of a transport management system, many still stick with the traditional solutions that are not adept at dealing with modern supply chain challenges. Add to this the pandemic, and the need for greater speed, efficiency, and visibility has increased exponentially. Customer reigns supreme, and businesses are devoted to pleasing, and this trend is not changing anytime soon. As customers flock online to make purchases, enterprises need to up their game to keep up with the rising market competition. TMS is not just a standalone internal piece of software anymore, but a complex system that connects both internal and external databases, that ensures smooth flow of a product from its nascent stages till the time it reaches the customer. The need of the hour is a modern Software-as-a-Service TMS that not just plans, executes, and manages supply chain processes better, but also makes the supply chain resilient in the long term.

Fleet Dispatch Management Platform (DMP) enables organizations to drive real-world efficiency across all fulfillment channels, be it improved SLA adherence, resource utilization, and unit economics across most major fleet types. The platform’s AI-based RO solution, the Vehicle Routing and Scheduling Engine, provides supply chain enterprises with an automated route planning and optimization solution that considers multiple real-life constraints and distribution models. It is a comprehensive solution in logistics that enhances fulfillment operations and increases consistency in transport planning, with nearly no human intervention. The cloud-based tool also facilitates GPS tracking for monitoring vehicles and providing clients with accurate and real-time ETAs.
Dynamic or Reactive Routing
Supply chains turned more global and complex around the year 2005. Satellites and cell phones came into the picture, and dynamic routes helped businesses come up with more flexible logistics models. The planner and the driver could now communicate with each other, and the Global Positioning Technology (GPS) system was newly introduced. CRVS were still pretty expensive with long implementation cycles, and not everyone could afford them. Traffic, demand fluctuations, and operational constraints would often render static routes obsolete. There was a need for routing systems to be less predictive and more reactive when handling business constraints. Around this time, Software-as-a-Service (SaaS) based models started emerging that provided vehicle routing solutions even for small fleet owners.
End-to-End Visibility, Real-time Tracking, and Dispatch Execution
Close to 2010, the mandate about the Electronic Logging Device (ELD) fell into place, and electronic devices for trucks were in demand. Real-time tracking and telematics took over, and GPS-based live tracking, proof of deliveries, idle-time recorder, and real-time data transfer came into play. Live dashboards helped view real-time Expected Times of Arrival (ETA), any traffic deviations, and the weather conditions. This was also the time when TMS came into existence which changed the route planning process forever. Artificial intelligence
As the e-commerce boom happened, the consumer turned king. Omnichannel fulfillment came into the picture, direct-to-consumer distribution and crowdsourced logistics changed the last-mile distribution game. Transport modeling capabilities were brought about by AI-based algorithms, 3D load building, and packing engines. Dynamic rerouting, automatic correction of delivery addresses, more accurate calculation of transportation lead times, and ETA are all a result of sophisticated AI-based algorithms.