The pandemic of 2020-22 has sped the revolution of the diagnostic testing industry as a whole. The strategic questions organizations in this space must answer go well beyond just outsourcing.
Whether a company runs its own assembly and distribution operations or outsources these functions, it still has to make improvements and align them based on changing industry needs.
Factors such as tightening global regulations, increased global competition, and new market opportunities have prompted manufacturers to outsource a range of critical operations.
Today, the rapid advances in science combined with the explosion of new diagnostic tests has created competitive challenges that require new ways of doing business. Companies are facing tougher competitive and regulatory challenges, which make outsourcing an increasingly attractive option.
The increasing consumer demand globally for genetic and diagnostic tests creates far more options for companies to create business value by tying together new production geographies and foreign customers.
Where should test kits be produced to derive the best combination of efficiency and effectiveness? Which markets are best served from which supply points? And what distribution and transportation models link them together to achieve the best outcome?
Genetic and Diagnostic testing organizations have realized many benefits from working with a provider that can be the single-point-of-contact supplier able to reach anywhere in the world, including:
- Jumpstart growth or become more competitive by tapping international markets
- Reduce capital commitment to the supply chain and redirect these resources to core expertise
- Ensure uninterrupted supply in a range of international markets and do so reliably and cost-effectively
- Guarantee compliance in a heterogeneous, rapidly changing regulatory environment
- Streamline customs processing to reduce delays, fees and fines
- Improve customer relations through better information about where shipments are and when delivery is expected
- Maintain control over product integrity through real-time monitoring and the ability to address problems while in transit
In an excerpt from their book, Fundamentals of Supply Chain Management: An Essential Guide for the 21st Century, the authors, Kenneth B. Ackerman and Art Van Bodegraven, describe some of the relationships that play an important role in achieving supply chain success with outsourced companies they work with.
"In an ideal supply chain relationship, both customers and suppliers get connected in ways that allow them to easily exchange information, demand data, and the visibility of status. What does this mean? For openers, it means communicating demand events and the direction of strategic plans."
It also means linking information systems and jointly leveraging the potential for Internet and other electronic communications. It means working together to reduce costs and improve quality, and understanding capacities and capabilities. And don't overlook your responsibility to teach your partners the techniques needed to be successful in the 21st century."
On the customer side, it means many of the same things, only working in another direction. You need to know about their strategies and directions, their event plans, and their needs for flexibility and resilience. The collaborative planning, forecasting, and replenishment (CPFR) process works both ways.
Your customers need to know about your capacities and capabilities, just as you need to know about theirs. And remember, it's your responsibility to educate them about ways in which you can help them succeed in their markets.