Importance of Digital Interventions in the Global Supply Chain for Medicines and Healthcare

October 21, 2021 | by Julia Masselos

Half the world’s population does not have access to basic healthcare. The primary reason? They simply cannot afford it. Nearly 1 billion people spend 10% of their household income on healthcare expenses for themselves or a loved one. For some, this expenditure is enough to push them below the threshold of extreme poverty – living on less than $1.90 per day.

Speaking in 2017, World Bank President Dr. Jim Yong Kim stated, “the system is broken: we need a fundamental shift in the way we mobilize resources for health and human capital, especially at the country level.”

Enter – the digital supply chain. Of course, the issue of equitable medical access for all is complex, and certainly will require a multifaceted solution if we are to bring over 3 billion people out of a world lacking in adequate healthcare. However, digitizing the supply chain can help medical device manufacturers, healthcare workers, medicines, and more vital supplies reach these vulnerable populations more quickly, reliably, and affordably than ever before. 

What is a digital supply chain?

Supply chains are variable and multifaceted networks of people, organizations, and activities that facilitate the transport of materials and goods from raw materials to end users, and everywhere in-between.

In the context of medical equipment, devices, and medicines, efficient supply chains can be the difference between life and death for certain populations. Ensuring that enough of the necessary equipment can be transported from manufacturer to those who need it most is of vital importance for building a resilient and equitable global health system.

The digital supply chain refers to the elements of the traditional supply chain that are managed by digital technologies, such as GPS, or radio frequency identification (RFI). And the evidence shows that investing in digitization is a wise strategy for companies across industries.

According to a study by McKinsey, companies that aggressively digitize their supply chains boost their annual revenue growth by 2.3%. The same research showed that digitizing the supply chain specifically, over any other business area, led to the biggest gains in earnings before interest and taxes.

However, despite this promising ROI, only 2% of businesses surveyed said their supply chains were a key focus of their digitization strategies.  

Applied to a healthcare context, it seems that digitizing supply chains of medical devices and medicines could significantly reduce the cost of transporting these healthcare around the world to the areas that need it most. 

Why is digital technology important in medical supply chains? 

The main goal of digital supply chains is to highlight where gains in efficiency can be made. Aside from delivering higher profits to the organization, digital supply chains also automate and improve decision-making.

Digitization of the supply chain can help streamline processes, and free up the time of supply chain managers to focus on higher-value tasks. For example, digital solutions can be configured to automatically process real-time information, eliminating the manual effort of gathering, scrubbing, and entering data.

In the healthcare and medical industry, a range of recent challenges has been driving the push for a digitized supply chain.  

  • Optimizing costs: Healthcare reform has led to changes in payment models. Coupled with rising costs, shrinking margins, and a transition from a volume to a value mindset, providers are looking for new ways to manage resources and reduce enterprise-wide costs. 
  • Increasing reliability and consistency of services: Digitizing common processes allows hospitals to improve outcomes by reducing error and discrepancies across different healthcare locations. For example, being able to get ventilators to all hospitals within a given radius with equal ease is critical to building and maintaining regional health equity in the face of the COVID-19 pandemic. 
  • Improving patient experience and outcomes: In addition to optimizing costs, digitizing the supply chain can lead to greater patient satisfaction. Automating manual processes allows staff to redirect their time to patient care – reducing waiting times, and lowering the number of rescheduled appointments as well. 

A more efficient supply chain means bigger profit margins, which in turn lead to more effective R&D and end products that are cheaper to produce and/or deliver. Investment into digital supply chains is an important part of building a more resilient and equitable global health system. 

The Future of Digital in Medical Supply Chains 

Last Mile Logistics

Last-mile delivery is a hot topic in the world of global health. Volansi is a drone delivery startup whose goal is simply to “allow anyone to deliver anything, anywhere”. Part of the Merck Global Innovation Fund portfolio, Volansi’s drones are revolutionizing supply chains for every industry by delivering critical parts, essential supplies, and life-saving medicines to regions all around the world that were once inaccessible.   

Indeed, this sort of last-mile delivery is also heavy on the minds of the UN Department of Operational Support. Speaking with HITLAB, Alex Puutio, Expert at the Office of the Assistant of the Secretary-General at the UN, shares that UNICEF are funding startups solving last-mile delivery challenges, and that he also sees drones playing a huge role in this logistics issue in the future. 

Diversifying Transportation Partners

Another thing to be noted is the importance of diversifying the routes and partners companies use to transport their supplies across the world. Like with most things, putting all your eggs in one basket can expose you to considerable risk.  

Similarly, relying only on a handful of logistics partners to distribute medicines and medical devices across the globe means that singular events like a natural disaster or a malfunction at a manufacturing plant can lead to a disastrous domino effect further down the supply chain, ultimately affecting end users – in this case vulnerable patients in rural environments. 

Having access to a wide range of partners, providers, and logistics companies can help stabilize the global supply chain and build a more resilient world wide web of medical couriers bringing medicines to all corners at all times. 

Wrapping Up

Transporting medicines and medical devices across the world is no small feat. UNICEF, the UN, and private companies like Merck are all investing in improving the medical and healthcare supply chain through digital interventions and innovations.  

Optimizing the efficiency of supply chains is a critical part of providing accessible and affordable healthcare to the world’s most under-resourced people. Health is a fundamental human right, and providing equal and affordable access to it is a key part of building a fairer future for societies around the world. 

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