Chapter 1: Navigating the Evolving Logistics Landscape
Summary
The pharmaceutical logistics sector is rapidly evolving, driven by technological advancements and cost pressures. Part one of our report reveals the key trends shaping the industry's future.
Technology and automation emerged as the primary focus, with 27% of respondents anticipating the largest spending increase in this area over the next three years. This is closely followed by packaging (23%) and warehousing (21%), reflecting the industry's priorities in ensuring product integrity and optimising distribution.
Perhaps surprisingly, traditional cost factors such as fuel (1%), CO2e compensation (3%), and regulatory compliance (12%) are not expected to significantly impact spending increases. Additional areas identified for potential investment include automating pharmaceutical sorting in warehouses, digitising documentation, expanding logistics teams, and maintaining vehicles.
The industry demonstrates a strong commitment to cost reduction, with 81% of respondents adopting strategies to decrease long-term logistics expenses. When asked about initiatives with the most significant impact on their goals, 62% highlighted improving inventory management, while 59% emphasised optimising route and transport modes.
Interestingly, implementing sustainable practices (23%) and reducing packaging materials (33%) scored lower as impactful initiatives, suggesting these areas are not currently top priorities for cost reduction.
In conclusion, the pharmaceutical logistics landscape is shifting towards digitalisation and automation, with a focus on inventory management and transport optimisation to reduce costs and improve efficiency.
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Question 1: Rank these logistics spends in order of anticipated increase in the next 3 years
Question 2: Outline any other areas set for a spend increase in your own words.
Question 3: Have you adopted any strategies to reduce long-term logistics costs?
Question 4: Which initiatives have the most impact on your organisation’s goals?
"From a Kuehne+Nagel perspective, I agree with the report's findings that the biggest impact on logistics spend will come from technology and automation, packaging, and warehousing. The prioritization of these factors will depend on the speed of our customers' development and change programs, as well as the scale of their operations. From our perspective, the most significant contribution will be in the area of technology and automation. This includes real-time, piece-level visibility end-to-end (E2E) in the supply chain and optimization through data-driven decision support. Furthermore, our HealthChain Quality label and carrier relationships will facilitate packaging optimization and drive sustainability gains through the use of our temperature-controlled corridor solution."
Jon Chapman, Vice President Healthcare Services, Kuehne + Nagel
Question 1: Rank the following logistics spends in order of anticipated increase in the next 3 years (1 being the highest and 7 the lowest)
"CO2e compensation will likely have a significantly bigger impact than outlined here, influencing other aspects as well. I would probably rate it at number 2, as the compensation aspect will undoubtedly be incorporated into packaging and warehousing, both of which contribute to increased logistics spending."
Eric ten Kate, Global Sector Leader – Healthcare, Ceva Logistics
Question 1: Rank the following logistics spends in order of anticipated increase in the next 3 years, 1 being the highest and 7 the lowest (Average score shown)
Technology & automation
Warehousing
Packaging
Regulatory compliance
CO2e compensation
Medicine loss & excursions
Fuel costs
Question 3: Have you adopted any strategies to reduce long-term logistics costs?
Yes
No
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Question 4: Which initiatives have the most impact on your organisation’s goals? (Respondents were asked to select all that apply)
Improving inventory management
Optimising route and transport modes
Implementing technology/automation
Outsourcing to third-party logistics providers
Improving supply chain visibility
Negotiating better rates with suppliers
Reducing packaging materials
Implementing sustainable practices
“Global pharmaceutical supply chains are poised for change. In recent years, the industry has navigated the impact of geopolitical disruption, the growing demand for sustainable solutions and the near-limitless potential of technology. As we gear up to facilitate the movement of next-generation healthcare, which includes more complex, personalised medicines and highly sensitive radioactive treatments, the need for robust, resilient supply chains is critical. As the cargo arm of the world’s largest international airline, we pride ourselves on solving the transportation challenges of our customers. But we know we can’t do it alone. The need for collaboration, with all stakeholders across the logistics ecosystem, underpins every trend outlined in this report. From greater data accessibility and visibility to coordination on processes and packaging, we will be better able to address challenges in our industry collectively, for the ultimate good of the patient.”
Julian Sutch, Head of Cool Chain Products, Emirates SkyCargo
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