Third-party logistics providers can make all the difference in cost, service
How to overcome common barriers to outsourcing your cold chain

A health care company with temperature-sensitive shipping needs can reap major benefits by working with a third-party logistics provider (3PL) that offers existing infrastructure, transportation, dedicated health care experts and solutions. But if the 3PL doesn’t deliver, the company may be turned off from even considering outsourcing again in the future.

Finding the right high-quality logistics provider that will help ship your products safely and cost-effectively isn’t always easy, but the potential rewards are simply too great to ignore.

Consider these five perspectives to help overcome doubts about outsourcing your temperature-sensitive supply chain:

 

Misconception #1: “They don’t understand our operations”

You understand your health care products, but is your team up to speed on optimizing your packaging and shipping requirements? Does your company have monitoring and intervention capabilities that can help minimize product losses and delays?  Among health care logistics executives surveyed in the most recent UPS “Pain in the Chain” survey, 46 percent said regulatory requirements involving temperature-sensitive packaging are driving costs.

“Logistics executives can choose to provide their own company’s infrastructure at the expense of capital,” said Tom Heavrin, health care QA manager at UPS, “or they can simply plug and play with a 3PL that already has all assets and expertise in place.”

For many companies, it’s more cost-effective to engage a 3PL that already knows the ins and outs of the industry. Health care logistics experts like UPS have transportation assets, fully compliant cold-chain infrastructure and solutions in place worldwide that can help health-care companies lower expenses.

 

Misconception #2: “I need to maintain control over my products”

No one can control all the variables. When weather goes wild, or infrastructure in some distant market lets you down, well-made plans can go astray. Are you prepared for the cold-chain complexities that often pop up in distant, emerging markets?

“The more diversity you have in a network, the harder it is,” said Wanis Kabbaj, director of health care strategy at UPS. “Supply chains that work perfectly well in the U.S. can’t be expected to work as well in markets that have different characteristics.” In addition, as supply chains have grown longer and more complex, maintaining control has become more difficult. And impractical: 48 percent of health care logistics executives surveyed said new market expansion has driven up costs.

Partnering with a world-class 3PL makes competitive sense because it accesses experts who know how to efficiently move goods across suppliers, vendors and customers. It also offers a level of control that previously may have been lacking. Using a 3PL like UPS, for instance, lets health care customers leverage a global network of storage, transportation and strategically-located warehouse and distribution facilities to help preserve product quality end-to-end.

 

Misconception #3: “3PLs over-promise and under-deliver”

You may know of colleagues who used logistics providers that claimed to have cold chain infrastructure but suffered significant failures. It’s important to rigorously vet prospective transportation partners to be sure you are working with a quality service provider. Among companies that use 3PLs, 73 percent say their logistics provider provides innovative ways to improve supply chain effectiveness.

“The truth is, the combination of both an integrated network (that is owned by the logistics provider), combined with the ability to develop solutions from a virtual network is better than either option by itself,” said UPS’s Kabbaj. “Plus, you can utilize a single point of contact at that 3PL to make all of these things happen, which is significantly more effective than managing multiple vendors.”

 

Misconception #4: “Outsourcing is expensive”

Providing services that maintain quality has associated costs, to be sure. But when quality improves in other areas through the efforts of your 3PL, total costs may be lowered. Fewer products are spoiled, supply chains operate more efficiently and overall the investment can translate into savings. In the latest UPS “Pain in the Chain” survey, nearly seven in 10 North American health care logistics executives identify “logistics and distribution partnerships” as a way to successfully manage costs.

 

Misconception #5: “Vendors don’t really understand cold chain QA requirements”

If you have recurring problems along your cold chain, it’s likely either that the vendor is not the right one for the job, or the challenges are so complex that the vendor’s capabilities and limitations can’t be accurately assessed. Either way, the experience may leave you unwilling to embrace a 3PL—despite the benefits.

The best approach is first to understand your needs and then identify who can work with you to deliver better results. It’s worth it: 73 percent of North American health care executives surveyed cited “partnered with a higher quality carrier” as a strategy that reduced product damage and spoilage, meaning lower costs.

“UPS has a health care-dedicated QA team that can identify risks, collaborate on documented training, standard operating procedures and contingency plans—upgrading requirements and auditing shipments as needed,” Heavrins said. “By establishing an independent health care-dedicated QA group at UPS, we have, in effect, provided our clients with a system they don’t have to create for themselves.”

 

Choose your partners carefully

At least 25 percent of all health care products today are temperature-sensitive. Cold chains are growing at twice the rate of other shipping. The rewards of seeking expert, outside help far outweigh any potential risks. Start with an analysis of your cold chain, and then choose carefully.

See why it makes sense to outsource your healthcare cold chain to UPS.