Since the dawn of the 21st century, prognosticators have been looking ahead to the year 2020 and predicting what life might be like for various industries, markets, and professions. As that target year quickly approaches (14 months out), it’s worth taking a look at key supply chain initiatives and how they are currently trending. 

Key 2020 topics have been extensively discussed, examined with vigor and intensity, and shared with supply chain professionals. Some of the more interesting predictions for the sector include:

• Supply chain professionals becoming more valued and consequently gaining more expertise, and perhaps even certifications
• Supply chains becoming global in nature
• The importance of segmenting regionally and globally for macro sales success
• The need for companies’ external supply chains to be fully transparent
• Sustainability becoming a matter of practice (not aspiration)
• Supply chain management through the Cloud
• AI’s key role in supply chain management
• Managing supply chain cost efficiency and delivery through robotics
• Blockchain technology playing a more significant role in supply chains

Let’s examine these topics on an individual basis.

Supply Chain Professionals
As the 20th century faded into the new millennium, it was clear the occupation of the supply chain executive had forever changed from a tactical purchasing role to that of a strategic professional. That observation has never been more true than it is now, in 2018. The supply chain executive role has been elevated in most organizations, with strategic purchasing decisions in many cases significantly impacting corporate profitability. These decisions can help facilitate market entry or create obstacles in various geographies and/or industries. As a result, there has been an increase in educational programs (both inside and outside the academic setting) dedicated to supply chain management and the success of supply chain professionals.

Global Supply Chains
In the medtech industry, the idea of global supply chains sprouted from the need for lower-cost products due to increasing pricing pressure during the past 20 years. It began with the production of less expensive components such as circuit boards, widgets, and other items in lower-cost (oftentimes developing) countries. Today, however, the practice has evolved into a much broader spectrum.

Ability to Segment Regionally and Globally
The “spaghetti string” of the early global supply chains became problematic. What an organization saved in component cost was often counteracted by increases in logistical (i.e., shipping) expenses. Therefore, the benefits of the initial creation of global supply chains has allowed for continuous improvement through segmentation of the supply chain on a regional basis. Additionally, many companies have realized the importance of manufacturing closer to the customer. In Europe, this idea of “local-for-local manufacturing” has created an increase in Eastern European production to serve the European Union markets. Across the Atlantic, Puerto Rico, Costa Rica, and Mexico have driven cost efficiencies in the Americas through free trade zones, while China has reaped the biggest benefits of this trend in the Asian market. Considered merely a lower-cost component manufacturing country at the turn of the century, China is now a fully capable “finished device” manufacturer for the emerging markets. Companies are finally realizing the competitive advantage that comes with designing and manufacturing their products locally, for local sale.

External Supply Chain Transparency
The need for additional supply chain transparency in the medical technology industry has been driven by regulatory factors and social media/cultural pressures. The regulatory environment used to be far less complicated than it is today. Around the turn of the century, a company only needed to manage its own manufacturing processes from the time it received a supplier’s product (assuming it performed an incoming inspection, etc.). But that is no longer an acceptable practice. The U.S. Food and Drug Administration now requires device manufacturers to manage their supply chains the same way they manage their own internal processes. Consequently, medical manufacturers now require their supply chains to conform to requirements such as ISO 13485; standards like ISO 9001 are no longer enough for most OEMs.

Thanks to social media, large medical technology companies (J&J, Medtronic plc, Stryker Corp., Baxter, Boston Scientific, etc.) are now more visible (and exposed) to the public than ever before. This creates an opportunity for the consumer to expect—and in some cases, demand—that these major companies engage in social responsibility in their supply chain practices. While initially a “pain” for some of these companies, most organizations have now embraced this issue as an opportunity to differentiate themselves and create an additional value proposition for their end customers.

Sustainability
Although it used to be an aspirational topic for many companies, most organizations have constructively engaged in sustainability in recent years. In doing so, they have moved from sustainability as an aspiration to a core value. Thus, sustainability goals are now set—and even measured. An MPO Supply Chain column in October 2017 (“Sustainable Procurement—What is Your Target?”) identifies key medtech OEMs that are heavily investing (and measuring) their sustainability results. These companies include industry giants like Cardinal Health, Edwards Lifesciences, Varian Medical Systems, and 3M.

Cloud Impact on Supply Chain
There are numerous white papers and articles addressing the positive impact of the Cloud on supply chain management and performance. Many of these documents (largely, white papers and articles) are written (or supported) by Cloud vendors that benefit from such references. These documents, however, are “directionally correct.” The Cloud is a positive influence on supply chain management performance in key areas like global access and the removal of regional boundaries;  the capacity for worldwide scalability; the integration of multiple IT platforms (i.e., due to M&A many organizations do not have a unified IT platform throughout their various regions and/or business units); and the ability to increase analytical tools on a transparent basis for key executives throughout the organization.

AI as a Key Factor
Outside the medical technology industry, it’s clear that companies like Walmart, Target, and Amazon are utilizing artificial intelligence as predictive analytics for demand forecasting and warehouse management. Within the industry, companies like Deloitte and Optum are marketing solutions for OEMs to improve their performance. As this is a recent trend, we look forward to more future documentation of the results of these efforts. This is likely to be a trend far beyond 2020.

Robotics in the Supply Chain
Moving to a low-cost country used to give supply chain executives enough confidence to justify the decision based on the labor savings alone. However, these markets are now experiencing wage inflation and have assumed increased cost pressures (excluding the potential tariff issues, which is a separate topic to address). With this escalating employee cost metric and the need for improved productivity on a global basis, robotics is increasingly being utilized in both developed and emerging markets. As robotics becomes more commonplace, the technology will likely increase the potential value of manufacturing jobs worldwide.

Blockchain Technology
Trendy, trendy, trendy—just referencing “blockchain” is instantly topical and edgy. However, blockchain is yet to be proven as a viable efficient technology (outside of bitcoin and initial coin offerings). It certainly has potential to have a tremendous impact across industries and market segments. It will be interesting to witness some of the actual utilizations and impacts of blockchain technology in supply chain management and specifically in medtech supply chain efficiency.

Conclusion
Overall, the prognosticators have been fairly accurate with their predictions. Some of these trends have occurred quickly while others are taking time to develop. Clearly, there will be additional key “trendy” items to discuss as the year 2020 looms larger on the horizon. In the meantime, be flexible and stay abreast of the trends affecting the supply chain. The future will be here in no time. v

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Florence Joffroy-Black, CM&AA, is a long-time marketing and M&A expert with significant experience in the medical technology industry, including working for multi-national corporations based in the United States, Germany, and Israel. She can be reached at florencejblack@medworldadvisors.com

Dave Sheppard is a former Fortune 500 MedTech executive and is now a principal at MedWorld Advisors. He can be reached at davesheppard@medworldadvisors.com