Medical Device Supply Chain Management Industry in Europe

These are the latest findings of Frost and Sullivan (Palo Alto, CA, USA), an international consulting firm.

Europe's healthcare technologies are growing significantly, with industry and medical profession-driven developments revolutionizing the delivery of healthcare. In most healthcare organizations, the supply chain is treated purely as a role player that is insignificant in the overall strategy of the organization; supply chain-related decisions are tactical at best and focus primarily on supporting or delivering organizational performance objectives. Thus, supply chains suffer from a high complexity, due to customer tailored and elaborate products, global procurement and distribution, and technological innovations, turning into a major task of today's business management because of the direct link between the efficiency and the complexity of a supply chain.

However, if the role of supply chain is elevated and incorporated in the overall strategy, then it can be used to enhance the overall performance of the organization, since financial and information flow in the healthcare sector play a critical role in supply chain design decisions. In some segments of the healthcare sector, it is important for the manufacturer to be in direct contact with the clinician when he requires critical knowledge for the optimal use of product. Manufacturers thus sell directly to providers, avoiding distributors, which in turn affects the structure of the underlying supply chain.

As a result, supply chain rationalization has resulted in a severe downsizing of the supply base, and a preference on the part of corporations to rely on a few preferred suppliers. Additionally, average contract sizes are increasing, as companies are buying from fewer suppliers, making it difficult for smaller groups to compete. Frost and Sullivan therefore recommend that these companies should be more proactive and systematic in their supply chain operations, improve on-time delivery, and reduce lead-time as well as lead-time variability to succeed in maintaining market presence.

"In order to facilitate success, suppliers must develop the capabilities and competencies necessary to leverage their relationships with large corporations for profit,” said SreeVidhya Praveen, a research analyst at Frost & Sullivan. "Visibility to suppliers' production rates and shipment lead times, in-house inventory, historical data, and customer sales projections can drive benefits in efficiency, lower inventories, and improve fulfillment rates.”

Medical device supply chain and the medical device supply-chain management market are divided into three main regions. The United States accounted for the highest revenue share with approximately 45%, followed by the EU countries with 30%, and the rest-of-world (ROW) with 25%.

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