Is It Time to Hire a 3PL Provider? Here’s How You Know.Jillian Yang
Third party logistics providers (3PLs) store, handle, and deliver products for their partners, providing the manufacturers more time to focus on their area of expertise. As a pure logistics company, they can often negotiate better delivery or storage rates and find solutions from their networks that might not be available to the manufacturer. In the specialty pharmaceutical industry, 3PLs provide additional capabilities specific to the industry to ensure compliance and optimal care for the patient.
In healthcare and specialty pharmaceuticals, the role of a 3PL isn’t just to store products and deliver them when someone places an online order. The general public got their first look at the vital role they play during the COVID-19 pandemic. As the vaccines were produced, news coverage referenced the cold storage needs and there were several stories of vaccines being thrown away or spoiling.
While the COVID-19 pandemic certainly shone a spotlight on the special handling and storage needs for certain drugs and the critical importance of a responsive medical supply chain to move them safely, we know this doesn’t tell the full story of the vital role logistics companies can play in getting drugs to patients when they need them the most.
Global 3PL Industry
The 3PL industry as a whole has been consistently growing at a rapid pace. According to Statista, the 3PL industry generated $231.5 billion in the US alone in 2020 and that number is expected to grow to nearly $300 Billion by 2023. A study by Blue Weave Consulting shows the global 3PL market at $957 Billion in 2020 and it is projected to hit $1.57 Trillion in 2027.
The growth in the 3PL industry has been driven by several factors, including the increase in e-commerce, a spike in global exports, and new technologies enabling more international trading.
Questions to Ask When Considering a 3PL Partner
So, how does a company know when they need a 3PL partner? If any of the following (or all) are causing you headaches, it may be time to consider finding a 3PL.
- Labor Shortages: Do you have the right people in-house to support logistics now and as you grow? If you don’t have the people you need to serve this function or if you were never planning to hire a logistics team in the first place, growth may mean you need to start looking to partner with a 3PL sooner rather than later.
- Cost: Are you spending too much on storage, delivery, or transportation? With 63% of companies indicating that managing their transportation costs is a top priority, one of the most common reasons companies hire a 3PL is to reduce costs. Because 3PLs work with carriers, they provide economies of scale and are able to negotiate lower rates than the company could negotiate on their own.
- Time: Is your staff spending more time on logistics and less on their core competencies? If it isn’t what your company is best at and it isn’t in your peoples’ skill sets, bringing on a partner to handle the logistics for you may provide a huge advantage because it allows your staff to get back to doing what they do best.
- Lack of Capabilities: Do you have the cold storage, special handling capabilities, or the space needed for your products? These are
- New Regulations: Are you prepared for any regulatory and compliance changes coming from the FDA or other governing bodies? These take significant time and resources to monitor and respond to. 3PLs are not only well-equipped to stay on top of any changes, but have the experience and know-how to ensure they are implemented correctly.
Regulatory Changes Impacting the Medical Supply Chain
The Drug Quality and Security Act (DSCSA) is a law that amended the Federal Food, Drug, and Cosmetic Act to grant the Food and Drug Administration more authority to regulate and monitor the manufacturing of compounded drugs. It primarily impacts requirements for manufacturers, repackagers, wholesale distributors, dispensers, and third-party logistics providers (trading partners).
The DSCSA will go into effect in 2023 and with that the FDA has published guidelines requiring healthcare supply chain trading partners to exchange transaction data. The Healthcare Distribution Alliance conducted an EPCIS Implementation Benchmarking Survey which found that more than 2/3 of manufacturers (69%) are now connecting with providers by using a 3PL or a solution provider.
So You’ve Decided to Hire a 3PL … Now What?
If it is time for you to hire a 3PL provider for your company – how do you pick the right one to ensure success?
- Before talking to a 3PL, be sure you know exactly what you want and need from the partner and then make sure that they provide each of those services.
- Ask about their experience handling specialty pharmaceuticals and products.
- Do you have any products that will need to be kept at specific temperatures? If so, make sure your 3PL partner has cold chain capabilities?
- How do they ensure they are compliant with all federal and state regulations? Are they FDA registered? cGMP compliant?
- Do they have 24/7 live customer service?
- Find out how they create a delivery plan. And what about contingency plans if something goes wrong?
- Do they have any case studies you can see?
- Most importantly, once you have met with them, do you trust them? Together you will be providing life-saving care to patients and it’s important that you are all putting the patient and their care first. If you can’t trust your 3PL partner, the rest of their capabilities don’t matter.
An Innovative 3PL Model
Once you’ve selected your 3PL partner, discuss which model is right for your needs. It could be beneficial to use the 3PL Title Model, a program where the 3PL provider takes title of the product from the manufacturer. This model can be especially beneficial for a manufacturer looking to bring a new product to market in a short timeframe.
If you’re considering the Title Model, you’ll want a 3PL partner who has strong experience on the regulatory and compliance side of the industry.
When It’s Time for a 3PL Partner
When working with specialty pharmaceuticals, safe and timely delivery of your product truly can be a matter of life and death. This is just one reason choosing the right 3PL partner is so important. Consider the savings, in time and money, among the other benefits for your company. Then find a 3PL who can handle the needs for your team and your products. Most importantly, a partner you can trust and who shares your company values.
LogiCare3PL, a BioCare company, delivers customized third-party logistics solutions for specialty pharmaceutical drug makers. We are committed to providing our partners with the most customized solutions. To learn more about partnering with LogiCare3PL, please contact us here.