Ensuring success with medical reverse logistics.
Reverse logistics may seem commonplace in today's global medical equipment and technology marketplace, but the challenges and strategies are anything but routine. With worldwide demand for medical equipment soaring, reverse logistic programs are also rising in importance and complexity.
Leading-edge medical equipment and technology companies must take the time to understand the answers to key questions when selecting reverse logistics plans and partners. The right choice will give them greater capability to move ahead of the competition, reduce costs, and ship medical equipment safely, timely, and in concert with their customers' requirements and expectations.
What Is Reverse Logistics?
Quite simply, reverse logistics is the management of products after they have been sold or delivered to a customer and then must be returned to the point of origin. Put another way, it is the movement of items from their typical final destination for the purpose of capturing some value, reintroduction into the supply chain, or proper disposal.
Approximately 30% of the logistics business is reverse. While all business sectors utilize reverse logistics, the medical equipment/technology sector ranks in the top three industries, along with communications and technology.
The list of organizations using reverse logistics in the medical field is long and varied. It includes hospitals, clinics, bio-tech companies, medical labs, leasing companies, resellers, out-patient clinics, healthcare agencies, and doctors' offices. A medical reverse logistics program can be local, national, or international and potentially involve hundreds of locations under one program.
Reverse logistics does not just involve returns and exchanges. In the medical industry, this is especially true. Applications include asset recovery, repair, remanufacturing and refurbishing, remarketing, and final disposition of equipment. Sometimes it can even involve excess inventory and recalls. Products include everything from MRI machines to blood analyzers. Today, some of the most sought after equipment items are for cosmetic purposes including Botox and micro abrasion machines.
It is common to see reverse logistics implemented when medical equipment becomes outdated or is nearing the end of its lifecycle and needs to be positioned in another location or even another country. In fact, gently-used medical machines are sometimes compared to fine classic automobiles. They might not have all the bells and whistles of new cars, but they have all the functionality and will work perfectly somewhere in the world.
Due to the complexity of reverse logistics, most medical equipment and technology companies don't have the resources or the time to administer their own logistics programs. It has become standard practice to outsource the process. Outsourcing requires the medical organization's care and attention to detail when selecting a provider who can safely manage and transport its products back through the supply chain.
Outsourcing reverse logistics starts with the selection of a provider that offers complete end-to-end solutions including built-in contingencies. Medical reverse logistics often include high-value, time-critical, and multiple pickup and delivery requirements. Some national and international reverse logistics involve 50 or more medical machines in one operation. These deliverables require a solution that covers pick-up, crating, shipping, real-time tracking, insurance, delivery, and unpacking. A complete accounting of a reverse logistics provider's capabilities and associated costs should be included in any logistics proposal or Request for Qualifications (RFQ).
Elements for Success
A project manager is one of the most important components of a reverse logistics provider's solution. A single point of contact understands the total project, has the authority to implement changes, and keep everyone involved and informed real-time. When finances and resources permit, the medical organization should also delegate its own single point of contact to maintain open and accurate communication channels.
Open communication is important to any reverse logistics project and can profoundly affect the costs, timeframes, and customer service. Many projects may require CAD drawings and a walk-through before the actual day of the move. It is not unusual to find that many hospital and clinic treatment rooms are built around a piece of equipment. That equipment must be dismantled by the medical or the logistics staff before the item can fit through the door. An agreement must include a clear understanding stating who the responsible party is.
Open communication and site inspections determines the need for additional resources that could include a rigging team, skids, pallets, custom wood crates, a crane, or a flat bed truck. Many medical machines weigh in excess of 1,000 pounds. In fact, MRI machines topping 10,000 pounds are often housed on upper floors or in a basement of a medical facility with the only passageway up or down a stairwell or small freight elevator. Don't forget to also check the final destination point for any surprises. Upon arrival, one customer learned the only access on the reverse end required hoisting the medical instrument over a balcony. Another customer had to wait for a frozen shipping channel to thaw out the following spring.
Medical companies should keep in mind that others are impacted by reverse logistics moves. Incorporate internal communication into any reverse logistics plan. The technical staff, doctors, and sales must communicate. It is not unknown to have patients still scheduled to use a medical apparatus the day of a reverse logistics move.
Decontamination is an important part in all reverse logistics planning. Medical machines often contain blood and other body fluids. Before any move, time must be allowed for decontamination to eliminate a biohazard danger. A signed document confirming decontamination should then be part of the reverse logistics documentation.
Medical equipment is very fragile and reverse logistics providers should offer a product and transportation analysis that takes into account the size, the weight, and the weight distribution, along with susceptibility to abrasion and corrosions, the effects of compression and vibrations, and the mode of transportation. Each individual situation is different and a provider must offer all potential shipping options, including land, air, or ocean, and their associated timeframes and costs.
Medical hardware going out of the country should be crated in packages and packing fillers that are moisture-resistant. The reverse logistics company should be certified in International Standards for Phytosanitary measures No. 15 (ISPM-15) which requires that all solid wood packing material for international shipments are heat treated and stamped with an official mark.
A great number of medical machines are being sent to secondary markets in Europe, South America, and Asia through reverse logistics programs. Avoid potential issues by asking for detail upfront. Be clear on the geographic regions a potential provider covers. Even if they say they have worldwide coverage, it may not be totally accurate. They may only provide services to certain cities, states, or countries.
Don't overlook the paperwork in reverse logistics. Be sure any medical equipment is "free and clear" of any ownership ties or leasing contracts before moving it off site. Once it is shipped to another country, it is usually too late to "right the ship."
Check to see if the medical facility or company is self-insured and for how much before buying more coverage from the reverse logistics provider. Always inquire if the reverse logistics provider has a certificate of insurance. Know the limits and what damages are covered. Some insurance companies will only pay out so much per pound regardless of the value of the medical equipment. Look for bodily injury provisions and coverage limits for complete losses. If a policy is filled with exclusions, ask for the exclusions to be put in the declaration to avoid misunderstandings.
Reverse logistics may not be part of a medical equipment and technology company's core business, but by understanding the challenges and being able to answer key logistical questions, medical personnel can move ahead in today's global marketplace. Clear understanding and open communication with a reverse logistics provider can turn daily logistical demands into a positive experience and result in improved customer service, reduced inventory risk, extended equipment lifecycles, and lower costs for all participating medical industry members.
For additional information on the products and technologies discussed in this article, see MDT online at www.mdtmag.com or Craters & Freighters at www.cratersandfreighters.com.
Diane Gibson is president and CEO of Craters & Freighters, a leader in the specialty freight industry. As president, she is responsible for the operation and strategic direction of the company, its locations across the U.S., and its global logistics sector. Gibson can be reached at 303-399-8190 or firstname.lastname@example.org.
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|Title Annotation:||Emphasis On Packaging|
|Publication:||Medical Design Technology|
|Date:||Feb 1, 2008|
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