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Hospital Supply Chain Survey Points to Needs for Broader Education and Alignment Across Healthcare Delivery Support Supply Chains

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Global integrated healthcare services and products distribution company Cardinal Health has released findings of a recent Hospital Supply Chain Survey and the results once again reinforce the need for far more supply chain management focused efficiencies among hospitals, along with broader stakeholder alignment across healthcare delivery supply chains.  DSC0083 300x245 Hospital Supply Chain Survey Points to Needs for Broader Education and Alignment Across Healthcare Delivery Support Supply Chains

The survey, conducted in late October 2016 included responses from slightly over 400 doctors, nurses, service line leaders or supply chain administrators. What especially caught our Supply Chain Matters interest were the findings indicating that 57 percent of physicians did not have the right products needed during a planned procedure. The study highlighted that one in four hospital staff have observed or heard of an expired product being used on a patient and 18 percent have observed or heard of a patient being harmed due to a lack of necessary supplies at the right time. The responses further indicate that nearly 20 percent of front-line caregiver time is consumed by supply chain management expediting or follow-up which then amplifies further to service line and other administrators.

A fundamental tenet of our community is that the supply chain exists to serve the needs of the end-customer, and in the case of healthcare, patients and frontline caregivers. Ladies and gentlemen of the healthcare focused supply chain community- these findings point to continuing systemic issues in your supply chain processes and they well should be garnering added calls-to-action.

Then again, from our lens, it is yet another indicator of the current stakeholder misalignments across healthcare supply chains. While most care givers, those on the front lines for delivering quality patient care and managing healthcare delivery costs, believe that the seamless operation of the supply chain is critically important, the other supply chain participants seemed aligned to other conflicting interests.

For the first time, we included pharmaceutical and drug supply chains in our industry-specific predictions for 2017. The principal reasons were twofold and somewhat inter-related. The increasingly global reach of the industry’s various supply chains is adding continued possibilities for risk and disruption. According to the U.S. Department of Commerce, the United States is now the biggest importer of pharmaceuticals from other countries. Pharmaceutical and drug production is now global in scope. Incidents of counterfeit drugs and medicines have been a constant challenge and lately, conformance to generally accepted production practices have become troublesome. Second, within the U.S. especially, there remains an enormous groundswell of political and social backlash directed at what is perceived as artificially high and inflated pricing stemming from conflicting buyer self-interests across the industry’s extended supply chain. Pharmacy Benefit Managers (PBM’s) negotiate pharmaceutical and drug prices on behalf of heath insurance plans and de-facto now include a far higher share of control over the supply network. The latter challenge alone is beyond explanation in a single blog commentary.

Latest Survey Responses

Survey responses from this latest Cardinal sponsored survey indicate a fair to poor rating among 52 percent of respondents for having the right product when needed, 53 percent indicate a fair to poor rating for the ability to keep track of recalled products or tracking product expirations, and 56 percent a fair to poor rating for the ability to manage inventory volumes. The full details of this hospital supply chain survey report can be downloaded at this Cardinal Health web link.

Let us be blunt and to the point. Processes for supporting timely supply of right product with the ability to manage updated and timely product information have proven business process solutions that have been acquired both in healthcare process pilots and from many other industries. Likewise, the technology needed to support accurate and timely product data is available today in either new product labeling, active item-level chip or other Internet of Things (IoT) enabling technology.  The missing element seems to always come back to the alignment of stakeholders across the extended supply chain and to leveraging process and technology investments consistently across the healthcare supply chain. Buying influence is a big determinant as well, especially when state and federal government are factored as buyer influences.

Frontline care givers should not be having to constantly manage supply and inventory tasks and similarly, hospital supply chain administrators should be allocating time to occasional supply and demand alignment exceptions. As the survey responses and the Cardinal report findings reinforce, such time is better freed-up for patient time.  Once more, today’s integrated supply chain planning and customer fulfillment systems are up to the task for planning healthcare supply needs.

We agree completely with the conclusion that improvements are long overdue and they are centered on the current conflicting stake holding interests. However, supply chain inventory management is basic and has proven solutions.

Again, by our lens, hospital teams should be viewing these challenges as both local supply chain management education and in external supply chain network-wide process alignment perspectives. Seek out supply chain management business process and technology experts for education. Work with your major supply distributors and PBM’s on the most efficient and cost affordable means to align with existing automated supply response management processes that link both manufacturers, distributors, and your local facilities in extended supply chain inventory supply visibility.  As we have noted in a prior Supply Chain Matters commentary, Cardinal Health supports its own supply chain innovation laboratory. Likewise, other distributors and manufacturers are willing to collaborate on overall supply chain visibility and addressing more automated local supply chain processes and decision-making needs.

This blog and this Editor is willing to do our part in broadening industry education and in visibility to new, more cost affordable technology or business practices. However, we as healthcare consumers, along with frontline healthcare providers need to be far more vocal in influencing the broader industry that local supply chain management supply and decision-making needs need to be far more intelligent and far more simplified for hospitals and services providers.

Bob Ferrari

© Copyright 2016. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.

 


When is Parmesan Cheese Really Parmesan Cheese and the Need for Global Brand Protections

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Earlier this week, Bloomberg Business published what could be described as a very eye catching report: The Parmesan Cheese You Sprinkle on Your Penne Could be Wood.  Obviously, such a byline can immediately pique the interest levels of general and social media, and indeed it has. Sometimes, reporters can get carried away with their prose.

The report essentially observes that U.S. grated cheese brands labeled as 100 percent Parmesan cheese purity contained little or no evidence of the cheese.  It traces the history of a U.S. Food and Drug Administration (FDA) 2012 investigation of a cheese factory in rural Pennsylvania that utilized cut-rate substitutes for Parmesan cheese, while also adding fillers such as wood pulp.  While the producer in question, Castle Cheese Inc. filed for bankruptcy in 2014, it reportedly produced and sold mainly imitation cheeses for nearly 30 years. After the FDA probe, Castle ceased production of  the problematic cheeses and now its president is expected to plead guilty to criminal charges that could amount to up to a year of jail time and a $100,000 fine.

Bloomberg contracted an independent laboratory to test currently offered Grated Parmesan cheese brands sold at major grocery and supermarket chains.  The report cites findings from identified brands from Jewel-Osco, Wal-Mart and Kraft that either just met an acceptable two to four percent recommended threshold for cellulose additive, or exceeded that threshold.

The article further observes that producers who doctor their Parmesan grated cheese products are undercutting by as much as 30 percent in price, producers who actually adhere to utilizing the pure ingredient.

Obviously this news report will get lots of media, Facebook and Twitter air time. However, there is more at-play from the lens of food and other industry supply chains.

Within our 2016 Predictions for Industry and Global Supply Chains (Available for complimentary downloading in our Supply Chain Matters Research Center), Prediction Eight declares that geopolitical developments centered on global trade agreements will present concerns and added challenges for specific industry supply chains including those related to food and food products.

The Transatlantic Trade and Investment Partnership (T-TIP) is a proposed trade agreement among the 28 European Union member countries and the United States. The measure calls for singular approval processes for products, standardized customs and border forms and fees. The agreement further addresses increased access to both member markets for goods and services but it comes with certain definitions as to product branding, labeling and country of origin among member regions.  For instance, Parmesan cheese can only originate from certain regions of Italy, and other products of a similar nature have to be labeled or termed differently. The Parmigiano Reggiano Consortium of Italy requested the European Union in December to protect its Italian producers against U.S. companies that were using names such as Parmesan cheese on packaging. The consortium’s head takes the position that “deceit” is being practiced with producer’s use of Italian names and symbols on products that do not originate or conform to EU and Italian brand standards.

We all love our Parmesan cheese, whether sprinkled on pasta or served in appetizers and cheese dishes.  However, expanded global trade agreements come with adequate protections for branded or origin labeled products that protect original producers that have built their reputations for quality and taste from producers who may elect to exploit such brands.  In essence, Parmesan cheese is no different than branded extra virgin olive oil, French wine, premium Swiss watches, branded pharmaceuticals, American bourbon or German beers.

As the world becomes more of a universal shopping offering with online shopping, authentic brands and countries of origin become very important for economic considerations and for consumers themselves in their buying and quality preferences. Producers need to respect such protections if they choose to compete nationally and globally.

The world is becoming a universal market and suppliers will need to adhere to international standards and protections.

Bob Ferrari


Advanced Technology Introduced to Combat Counterfeit Products in the Supply Chain

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In our continuing efforts to provide broader market education, Supply Chain Matters provides broader awareness to advanced technology approaches that are making their way to industry settings. In this commentary, we focus on a rather unique software-centric approach to product authentication across various tiers of the finished product supply chain.

The challenges for overcoming fraudulent and counterfeit products that exist across the global supply chain remains significant. This is especially of-concern for manufacturers and/or distributors whose supply chains reside in a regulated industry or whose products are of high brand or product value.  There have been many attempts to address such challenges, often resulting in added expense for marginal mitigation. Counterfeiters themselves have become far more sophisticated in their methods and in their presence.

Systech International, a long-established technology provider addressing brand protection needs, recently launched its UniSecure application.  We were somewhat intrigued by this application and underlying technology and subsequently conducted a product briefing with Systech executives.

This provider has been in existence for decades, with a prior focus on manufacturing automation and vision systems that evolved into support for manufacturing item-level product serialization needs. Much of this support was focused in support of pharmaceutical, life sciences, and food and beverage manufacturers in their needs for unique product identification. Beyond these efforts, Systech began to recognize that counterfeiters have become far more sophisticated in their methods, and there was growing a need for a less infrastructure-intensive approach to supporting product authentication needs for products flowing across global supply chains.

Scientists recognized that every printed label or barcode has character and signature-unique characteristics that vary with the make and model of the specific printer at the time of printing. According to this vendor, no two labels or printed data carriers are identical and are affected by environmental factors that produce small-scale variations. The UniSecure approach is to capture these unique character elements of the printed identifier signature and store this in the Cloud, for future authentication in subsequent movements through the supply chain. Further along the supply chain, a mobile or smartphone based reader can read the existing barcode utilizing the UniScan mobile app, which sends the image to the Cloud for authentication to the original label signature to determine if that product is authentic. This unique scanning capability can also be utilized by clients to enable point-of-sale, consumer engagement or loyalty as well as product security focused processes.

Supply Chain Matters has previously highlighted newer smart labeling technology just coming to market that opens opportunities to address both supply chain authentication and consumer engagement processes by leveraging existing near-field cellular (NFC) and other internal Wi-Fi communication networks

Thus far, pilots involve scanning of products by wholesalers and distributors, but some customers have plans to deploy the technology further into fulfillment channels. We probed whether existing high-speed label readers could be leveraged for volume scanning but that seems to be a work-in-progress at this point, subject to customer and vendor investment needs.

A further promising use of this technology is described in product recall situations where products can be scanned to determine if specific products are subject to withdrawal from the supply chain.

Industry pilots of the UniSecure technology are underway across multiple industry verticals to including pharmaceutical, animal health, precious metals and consumer goods focused supply chain settings.

UniSecure is a unique approach, one that bears watching for broader deployment use cases and overall scalability.  The uniqueness stems from its software-centric emphasis along with its leveraging of existing item-level identification processes across the supply chain.

Stay tuned.

Bob Ferrari


Xerox Launches New Application of Potentially More Cost Affordable Smart Labeling Technology

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Supply Chain Matters continues with our market education series, in particular, citing next generation technology involving smart item-level labeling technology that can open the door to further integration of physical and digital information needs.  Evolving next-generation labeling utilizes printed electronics and near-field communications (NFC-enabled) smart labels to track products and their various states.

Today, Xerox announced the availability of two printed electronic labels that can collect and store information about either the authenticity or condition of products flowing across the supply chain. From our lens, the availability of such advanced labeling technology will foster new, more affordable dimensions of item level tracking, security and authenticity specifically related to products. This author would add that this is the dawning of the application of item-level technology that industry supply chain teams have versioned for quite some time.

Xerox Printed Memory is label that is printed on a thin, flexible substrate (see photo) upon which 36 bits of data can be added, stored, or re-written to non-volatile memory. Xerox product teams describe this product as a low cost method for adding intelligence to objects.    The label can be manufactured with tamper-evident adhesives and available in a number of physical formats.  Data affixed to the label can be pre or post Xerox Thinfilm 20 bit memory label 300x207 Xerox Launches New Application of Potentially More Cost Affordable Smart Labeling Technologyprogrammed, depending on business process or product need.

The label licenses printed labeling technology developed by Thin Film Electronics ASA, which Supply Chain Matters has previously brought to the attention of readers in various other application areas. Thin Film and Xerox have been collaborating on joint product research for the past few years, and we were alerted earlier this year of a pending product release.

We had the opportunity to speak with Xerox product management and learned that initial application of this labeling technology can apply to needs to authenticate refill of products such as dispensing machines with consumable products. Think of air or water filters, pharmaceutical products or ink jet print cartridges. A further and most interesting application area is product authentication where label based memory can store product identification or distribution codes while supporting needs for controlling product authentication, tracking and monitoring across the entire physical supply chain. The label is thus utilized to verify if the product is genuine and can track handling during distribution.

The Xerox label passes through a two-part verification, one being the reading of physical memory on the label, and one being a hand-held or smartphone based reading device utilized to authenticate the product.

Consider for a moment prior commentaries where sophisticated counterfeiters were able to accurately replicate product labels and distribute counterfeit goods.

Xerox Printed Memory with Cryptographic Security adds a unique, encrypted code developed by the Xerox Palo Alto Research Center (PARC). Essentially a manufacturer can pre-print a QR type item level identification that conforms to GS1 standard serialization or product tracking standards at time of printing along with encrypted metadata with a unique cryptographic “seed” value that is authenticated by designated authorized parties with the proprietary algorithm. An inspector with a secure smartphone reader can capture the encrypted authentication code, along with the QR code, compares the two values and generate a further proprietary authentication code. The reader can optionally add additional time/location or intended destination information that can be fed to a track and trace application.

The attractive part of Xerox’s approach is that verification by reader or smartphone device can be accomplished both online of offline. In the case of offline, the authentication occurs and later can be uploaded when connected to the Internet. Another added feature is that new codes can be re-written to the memory label as the product transcends the value-chain.

Xerox is initially targeting this smart labeling technology for brand protection, anti-counterfeiting or tax or duty stamp conformance needs. Products could include expensive pharmaceuticals, liquor, tobacco or high fashion branded products. A potential use can be the use of rewriteable data within each label to identify if the product is authorized, a shipping tax has been paid, or whether the product passed through an authorized supply chain node.

Previous advanced item tracking technology utilizing RFID enabled technologies proved expensive to implement on a wide scale basis. Xerox believes that its new smart labeling technology can provide high security as well more attractive cost affordability.

Xerox plans to produce these new labels in volume at its Webster New York facility.

As noted in our prior market education commentaries, this is the dawning of a new era for item-level tracking. It is one that will harness the potential of the Internet of Things as well as the abilities to bring together the physical and digital aspects of supply chain information integration applied to important product and business challenges and opportunities.

Bob Ferrari


Counterfeit Apparel and Other Unauthorized Products in China Draws Added Actions: Welcome Taylor Swift

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After years of what is described as unproductive conversations, The American Apparel & Footwear Association recently publically called  for major changes to Alibaba Group’s anti-counterfeiting procedures. AAFA represents more than 1,000 clothing, shoe, and lifestyle brands, and over the last four years, has been engaged in on-going conversations with Alibaba representatives on the problem of counterfeits on Alibaba’s Taobao online shopping site.  According to the trade association, counterfeits across China cost clothing and shoe brands millions in lost sales, cause damage to reputation, and incur legal costs and an immense toll on internal resources.

In an open letter to Alibaba Executive Chairman Jack Ma, AAFA President and CEO Juanita Duggan called for a plan to address counterfeits that is more transparent and driven by certified brand owners. The proposed AAFA plan outlines four elements:

  • Easy brand certification
  • Brand-controlled “take-downs”
  • Brand approved sales
  • A transparent verification process

To add even more emphasis and probably more attention to ongoing apparel counterfeiting, singer Taylor Swift has taken up the cause. Readers will likely recall that Ms. Swift recently successfully confronted Apple with the issue of proper royalties within Apple’s  new music streaming service during a subscribers free three-month trial.

According to a published report by The Wall Street Journal, the American pop star’s popularity in China has exploded and so has the availability of unauthorized products of all dimensions. In an attempt to control this surge of counterfeits, Ms. Swift is launching her own branded clothing line in early August among China’s two largest online players, JD.com and Alibaba. According to the report, the strategy is to leverage Swift’s star status to stem the selling of products that do not have proper rights to utilize the Taylor Swift name.

The availability of unauthorized counterfeit goods across China obviously continues. While industry associations such as the AAFA, along with respective brand owners themselves provide due-diligence, continued visibility and calls for action, the efforts of Taylor Swift might prove to be more meaningful.  Alibaba, with enormous online fulfillment influence,  perhaps now has an added incentive to stem the availability of unauthorized products.

Industry supply chain teams should applaud and support Taylor Swift’s entrance and response to this challenge.


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