- DHL seeks to spur LSH industry into action on supply chain management
- Opportunities in direct-to-market channel distribution for LSH companies to adapt to market shifts
- Direct to market approach can extend value add by 50% for life science manufacturers and allow to capture margin according to DHL
Mumbai, April 22, 2015: DHL, the world’s leading logistics company, today launched its latest white paper showing 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’ looks at how newmarket 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 controlof 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 awhole has been slow to respond to market dynamics and adjust accordingly.
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 realize 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.
“In India,companies would need to consider what kind of direct channels they would like to adopt. Depending on their need, they could either execute a full direct model or a blended one in which wholesalers continue to play an important role, but in a modified manner.” said Vikas Anand, Managing Director, DHL Supply Chain India.
DHL Supply Chain business is taking a leading industry position to ensure companies do not miss the D2M opportunity, but are also informed about addressing questions such as the above for successful execution.
You can download the‘Going Direct: Bold strategy for healthcare supply chains’ white paper here: http://supplychain.dhl.com/LP=603
CCI Newswire
