Innovation in Home Health and Medical Care Logistics

The world’s growing elderly population and the general interest of the world’s population in health and medical care represents a major new market for entrepreneurial transportation and logistics managers as policy makers look to expand home care solutions.

On 22 February 2013, I have published in the Journal of Commerce covering the same topic with the title Medical Logistics Offers Opportunities for 3PLs.


Logistics companies have huge opportunities to benefit from home care, from the results of the rising age of the world’s population and the increasing needs and interest in the matter as a whole. The strain health treatment will place on public services in the years ahead will see both developed and developing countries increasingly turn to home care options as they seek ways of coping with accelerating demand for health and medical care.

Holistic approaches to home health and medical care with logistics services at their core will give governments and citizens a whole new and more convenient and cost effective way of managing demand for health and medical care in the future. Processes and services can be tailored to specific customer segments to make them as smart as possible through the use of technology.

Working together, transportation, technology, security companies and logistics businesses can partner with nurse networks, pharmacies and hospitals to provide viable methods of caring for the citizens. The opportunities for logistics companies to make themselves critical to the delivery and monitoring of such services are immense and already being developed.

Over 80 percent of the world’s elderly population will live in developing countries by 2050, according to a new report by UNFPA, the United Nations Population Fund, and HelpAge International.

Ageing in the Twenty-first Century: A Celebration and a Challenge found that the number of elderly persons is growing faster than any other age group. The report said the trend represented a huge challenge and would require completely new approaches to health care, retirement, living arrangements and intergenerational relations.

In 2000, for the first time in history, there were more people over 60 than children below the age of 5. By 2050, the elderly generation will be larger than the under-15 population. In just 10 years, the number of elderly persons will surpass 1 billion people—an increase of close to 200 million people over the decade. Today two out of three people aged 60 or over live in developing countries. By 2050, this will rise to nearly four in five.

“If not addressed promptly, the consequences of these issues are likely to take unprepared countries by surprise,” said the report. “In many developing countries with large populations of young people, for example, the challenge is that governments have not put policies and practices in place to support their current older populations or made enough preparations for 2050.”

However, the opportunity in the health and medical care sector goes far beyond the segment of the elderly and expands into the way we monitor the health conditions of the entire population. General health checks in adults for reducing morbidity and mortality from disease (Review) published by The Cochrane Collaboration states that “General health checks did not reduce morbidity or mortality, neither overall nor for cardiovascular or cancer causes, although the number of new diagnoses was increased. Important harmful outcomes, such as the number of follow-up diagnostic procedures or short term psychological effects, were often not studied or reported and many trials had methodological problems. With the large number of participants and deaths included, the long follow-up periods used, and considering that cardiovascular and cancer mortality were not reduced, general health checks are unlikely to be beneficial.”

What this report indicates is that comparison with the national or international average relative to the health care parameters, for example blood pressure, doesn’t mean anything to anyone and what matters most is the comparison with the health care tracking data of each individual against the own record.

Therefore, the market should not be segmented along age-brackets. We need to understand the needs in respect to health and medical care across the entire population and segment accordingly.

Home health and medical care solutions can be divided into three components – Monitoring and Examination, Vital Sign Check and Medical Treatment.

The ‘Monitoring and Examination’ process such as providing a sample for analysis would take in a number of stages with a logistics component such as delivery of test kits from agencies to the citizen and the return of the sample to the agency. Having obtained the sample analysis, this data would then need to be delivered to medical institutions and follow-up could involve the delivery of a suitable treatment to the individual.

Taking a ‘Vital Sign Check’ of a person could mean delivering medical equipment and software from manufacturers to individuals and managing the data received from home and its online delivery and analysis.

‘Medical Treatment’ services might incorporate diagnosis, treatment, medication and food delivery. This process could see diagnosis and some treatment by remote communication systems, with wholesalers or retailers requiring the delivery of drugs or food directly to individuals at home.

Although such treatments would involve a whole range of companies – from equipment and pharmaceutical suppliers to telecommunications and catering experts – transportation and logistics will be crucial to the whole value chain.

Best practices for the potential roll-out of home care solutions have already been identified with a major logistics component for Japanese distributors looking at their provision in Japan and in emerging markets. The model developed sees logistics companies take responsibility for the home delivery of equipment needed for vital sign checks, various other test kits, home security devices and a range of medical and communication equipment.

The handling of samples such as blood and sensitive drugs, for example, must be carefully managed with guaranteed temperature control. Logistics companies can also offer security monitoring services, including a face-to-face check of individuals and patients at the time of delivery of kits, medicine and food.

Japanese company Yamato Holdings for example is offering many of these services in Japan. These services include refrigerated delivery of samples and medicine between individuals, manufacturers and wholesalers. The company is also in partnership with a supermarket to offer shopping support services for the elderly, handicapped and sick in the shape of daily food deliveries, while trials of face-to-face health checks at the time of food delivery are ongoing.

Another Japanese company, Suzuken, offers delivery services from pharmaceutical companies to wholesalers, retailers and medical institutions and end customers using normal and refrigerated transport options.

By working with other key suppliers such as regulators of health quality, electronics, medical equipment and pharmaceutical suppliers, as well as telecommunication and security providers, logistics companies and managers have global opportunities to stake new ground in the rapidly growing home health and medical care market.

Collaboration in the World of Transportation Networks

In the today’s world of global commerce and supply chains, reliable and efficient delivery services are essential. The transportation networks that provide these services are cornerstones of successful economies and nations. Transportation networks at their most fundamental level are made up of people and policies, products and processes. For a network to provide consistent and optimized delivery services, its policies and processes must ensure precision and excellence and elicit a passion to perform amongst the people underpinning the network. Additionally, the components of the network need to work together efficiently and smoothly ensuring that goods are delivered within the promised timeframe, while at the same time providing a seamless and coherent experience to customers.


With countries and markets around the world becoming more interconnected and interdependent, transportation networks face major challenges. The volatile environment, in which businesses operate, requires resilience from logistics solutions. At the same time the needs of customers are becoming broader, and in particular the precision in service delivery is becoming more critical for the increasingly complex supply chains. Few players today have the reach and coverage to satisfy these demands, using traditional sole ownership-based network models. Ownership networks are limited by the financial resources to establish the assets and structures these networks are built upon. Furthermore, building ownership networks takes time.

The more flexible model of a transportation network that can meet these challenges and cope with the demands of the modern world is a network based around collaboration – that is a network where the assets are not owned by one company, but instead belong to multiple owners. Such a network is about sharing – sharing of vision, sharing of investments, and sharing of risks and gains. It is also about frameworks, about flexibility and about focus. The collaborative model allows companies to offer services and reach beyond their own borders and means. At the same time, each partner can focus all efforts on the specifics and dynamics of its market, while the network or lead entity and partner is ensuring network coherence. The result is a network that responds very well to local requirements and rapidly adapts to changing demand patterns.

In order to better understand the collaborative model, it is best to contrast it against the traditional model for network businesses – the sole ownership model. At a conceptual level, the difference between the sole ownership model and the collaborative model can be described as integration across the value chain versus value added.


How does the collaborative network differ from the traditional sole ownership model?

Sole ownership networks are built around a single asset base, whilst collaborative networks are built around a shared vision. Sole ownership networks seek differentiation predominantly through “hardware” (e.g. trucks, planes, buildings…), whilst collaborative networks do so predominantly through “software” (e.g. processes and relationships…). Consequently, sole ownership networks seek advantage through controlled own assets and sometimes feel constrained by a shortage of “hardware” in the form of capacity. Collaborative networks, on the other hand, seek advantage through combined knowledge and capabilities and sometimes feel constrained by a shortage of “software” in form of partners.

Looking at it in more detail, sole ownership networks are built on the underlying belief that quality and an efficient operation can best be ensured by owning in one hand as many network components as possible. The key integrating factor here is total control and clear direction through the sole ownership of assets. The ownership network is focusing on harmonizing through standardization and training. Collaborative models are built on a different paradigm. They are driven and differentiated by design and efficiency of process rather than the assets that underpin the network. The network or lead entity and partner in a collaborative network taps into the capacity and capabilities, talent and knowledge of various players and needs to manage diversity in an inclusive way.

In practice, most transportation networks are a mixture of ownership and collaboration, though they do have tendency towards one particular model. Consequently, there are predominantly sole ownership networks, with most assets on a single balance sheet, and there are predominantly multiple owner networks, with assets spread across several balance sheets.

The approach to product offerings and meeting customer demands varies across the two types of network. The needs of customers vary from market to market, as a result of local geography, culture, infrastructure etc. These variations need to be factored somehow into the product offering of the network. Sole ownership models tend to adopt a single centrally developed offering in all markets across the world. This ensures a high level of coherence globally, at the detriment of showing less adaptation to the intricacies of local customer demand. Collaborative models tend to set a broad global product concept and a minimum set of global operating standards, and then allow the local entrepreneurs within the network to respond to specific customer needs within this framework. This enables tailoring of product offerings to local market needs, but may sacrifice on the global harmonization of the offering. Both models have their own strengths and weaknesses and each appeals to different types of needs and customers.

For both network types, local operations and their offerings are connected by a common network architecture. Ultimately both, the local operation and the network operator are responsible for ensuring that goods are delivered on time and in good condition. In order to achieve this, both models require IT systems that can manage massive information to support the steering and monitoring of cross-partner processes. Due to their standardized product offerings and the fact that only a single party accesses the systems, one can imagine that the IT architecture for sole ownership networks are relatively simple. However, they are often heavy systems as they have to cover all needs of all entities – a closed shop and system approach. In contrast, collaborative networks require a more complex core element, which can support greater interfacing capabilities, the flexibility to integrate the various partner systems, and the ability to adjust to tailored local product offerings. While the smaller core is a rigid module, the interfaced partner systems remain flexible and can be well tuned towards varying local market needs – a more open system approach.

The most significant difference between the sole ownership and collaborative models is their management culture and philosophies. Sole ownership models have a general tendency towards top down shaping and a “command and control” culture. For collaborative networks, no partner, not even the network or lead entity has total control over the network assets. This makes this “command and control” approach unfeasible. With this type of model, only strategic vision and operating frameworks are introduced top down, ensuring a coherent business model and that all partners are moving in the same direction. Beyond this, operational decisions are generally taken bottom up, though this is within the common framework developed by the network or lead entity and partner. This ensures consistency, while enabling effective adaptation to local markets. Thus rather than a “command and control” approach, the leadership approach in collaborative networks can be characterized by “teamwork and entrepreneurship”.


What are the key factors that ensure the success of collaborative networks?

The key factors that are essential to the success of the collaborative model can be described on three levels: the “leadership and strategic” level (why), the “operating” level (what) and the “management” level (how).


In respect to leadership and strategy, integration and alignment are key factors. Integration in collaborative networks starts with alignment between partners, which in turn comes through shared visions, beliefs and concepts – the jointly accepted strategy. This alignment within collaborated networks can only be achieved, when the leaders and often owners of the participating companies are willing and able to align themselves with each other. Leadership is crucial for ensuring a collaborative network is well integrated, which drives the success of the business community and the success of each individual partner.

In respect to network operations, common references are needed. These can be provided for example by a franchise concept. A franchise provides common frameworks, standards and common and individual targets. It outlines the rights and obligations of parties involved and fosters an entrepreneurial drive amongst franchisees. Consequently, the franchise concept is an effective tool to integrate collaborative networks and ensure that seamless processes exist across the network. This ensures a coherent and consistent customer experience, while the entrepreneurial spirit of the largely autonomous franchisees ensures the most commercial approach to the business and different markets.

Making a collaborative network work in day-to-day life and requires a management style that supports “teamwork and entrepreneurship”. The contracts and cultures of the different network members have to support this approach and spirit. At the beginning and more importantly as the collaboration progresses, a constant dialog between partners is essential to prevent and address concerns and tensions that may emerge. Effective communication skills and an ability to understand and adapt to different cultures (whether that be a corporate culture or the culture of a country) is key to enabling this dialog and bridging the gaps between the different partners.

The warrants of success in any kind of collaborative model are first of all strong leadership and a clearly defined strategy. Successful collaborations are built around shared vision and ambitions and a common set of value shared by all partners involved. They can be sustained over time by mutual benefits and joint prosperity. Achieving this requires clarity and alignment in terms of the respective strategies of the individual partners. Collaborations should be a core element of the strategy, endorsed and announced by the top management of each partner organization. This canon of aligned messages needs to filter down through all levels of the collaborating organizations. In their early stages, collaborative partnerships need to focus on realizing “quick wins”. This can be about ensuring agreed financial and operational milestones are reached, as well realizing softer achievements such as rapid knowledge transfer and sharing of best practices. This allows all partners to see the benefits of the collaboration early on, thus cement the partnership. In collaborative transportation networks, brand is also an important strategic factor. While its brand is often the core value that the network or lead entity and partner of a collaborated network brings to individual partners, this does not mean the network or lead entity brand becomes the common brand, or that local brands should be replaced. The network may well wish to respect the existing local partner brand and leverage the goodwill it has built up in its community. However, some sort of commonality is helpful as the reference for customers, for example co-branding with a shared alliance and network brand. The brand functions as a common signature for customers and the network and business community, standing for the coherent customer experience that is provided.

At the operating level, integration is driven by product concepts and standards, aligned processes, and interfaced IT systems. Customers demand a coherent offering, which requires the same broad product concepts and standards to be used across the common platform. Aligned processes and flexible reliable IT interfaces enable this by making effective and efficient network management possible. While local processes have to be tailored to support local offerings, common standards across the network ensure the seamless flow of goods.

At the management level, alignment of governance mechanisms is a key enabler of successful integrations. Contracts with collaboration partners underpin the network and are undoubtedly the most critical governance mechanism as they summarize all critical factors. A prudent approach to forming a collaborative network is to gradually upgrade contracts as partnerships evolve and strengthen. Beginning with a “lighter” collaboration agreement (for example some sort of agency or service arrangement), and then eventually progressing through to a fully-fledged franchise contract minimizes risks and ensures, the suitability of partners can be thoroughly assessed before they become fully entrenched in the network. Participations cement the relationship. Road maps attached to the contracts serve as useful reference points for the discussion amongst the partners.


Which is the better model: collaboration or sole ownership?

The case can be made for either of the two network models.

The sole ownership model clearly has the advantage of robustness, as well maximizing profits since they do not need to be shared between various partners. While the model is very rigid, it allows for a clear global standard – one company, one brand, one offer – suiting those who believe in a high level of standardization. Through its tendency towards central command and control, the ownership model usually provides greater confidence to shareholders, management and employees and enables the faster implementation of new ideas and concepts, policies and procedures, processes and systems. However, this often comes at the cost of high investments in assets and ramp-up phases.

The collaborative model, on the other hand, enables each partner to focus on their core activities and strengths. Although profits are split amongst numerous partners, collaborative models enable expansion beyond financial and knowledge barriers of individual companies, through shared investments, expertise and risks. While decision making and implementation of new ideas may be slower, due to the numerous partners involved, this is offset by the natural tendency for collaborative networks to allow for greater operating flexibly and tailoring to the needs of local markets and customers. Instant reach is possible when fully-fledged operations are connected. However, this comes at the cost of less cohesion.


In summary, while the sole ownership model is a very effective and coherent way of running a business, applying the collaborative partnership concept to a supply chain eco-system and logistics value chain is a smart and responsible way to run a business as existing capacity is combined and used – in fact, the collaborative culture promotes the creation of value beyond the organization, for partners and customers alike.

China: Yesterday, Today and Tomorrow


Over the last three decades, the relentless rise of China’s export-driven economy has changed the face of world commerce. But China is now in flux as its economy transitions into a new stage of development, rendering the assumptions of yester-year obsolete. Tomorrow’s China will be a very different place, creating new opportunities, with new risks for manufacturers, traders, banks as well as supply chain and other service providers.

This whitepaper has been published at Transport Intelligence on 20 September 2013.



CVA – Corporate Value Associates, a global strategy boutique, tracks critical trends in consumer and customer behaviour, companies, capital markets, infrastructure investment, government and social policy. CVA uses this information to help evaluate and forecast economic growth, and identify and capture opportunities by designing strategies and implementation plans that create value for companies around the globe.

Bruno Salle, Managing Director (Asia-Pacific) at CVA, believes the current slowing of GDP growth is part of a natural, needed rebalancing of China’s economy. “China is moving from an economy where growth was overly reliant on investment and exports to one where internal, private consumption is becoming one of the key drivers of growth,” he says. “This is a major structural transformation. Exports are – and will remain – an important contributor to China‘s economy. But the focus of growth is shifting from construction and manufacturing to more services, innovation and consumerism”.

First and foremost, China’s next stage of economic evolution will mean slower GDP growth rates. Reliance on exports and foreign investment will decline and the economy will be rebalanced to reflect the spiralling number of middle class consumers. These buyers will continue to grow in confidence and sophistication, driven by quality of living rather than just price. “The current slowdown isn’t the end of Chinese growth,” explains Salle. “It’s the start of growth that is not primarily bound to exports and heavy industry. But this is a process still in its infancy and it is important it is viewed in this context. It will take some time until a clear picture of China emerges, but there are clear trends evident already.”
Certainly, government policy makers are already leaving more and more decisions to the market. We also expect to see the rise of large private enterprises, the quality of suppliers of most products and services to broaden, and more determined steps taken to tackle corruption. The winning state-owned enterprises will need to learn to be more market driven as competition becomes increasingly fierce and government more transparent. Logistics value chains will largely be shaped by China’s inland development, the embrace of e-commerce and evolving international trade flows, particularly on intra-Asia lanes as China’s trade with neighbouring emerging markets continues to grow. Together, these three trends will bolster the logistics and supply chain business in China.

China‘s relatively strong road, rail, air and communication networks, large and flexible labour force and manufacturing know-how, particularly in the area of mass production, will remain major draws for producers of all shades. But the high cost of land and rising cost of labour on the coast, allied to growing domestic demand, will accelerate the shift inland of non-premium manufacturing. “The government is promoting the development of middle and western China, so foreign investors will face diminishing preferential policies in coastal areas,” expects Jian Lou, Partner (China) at CVA. “As businesses adapt to higher costs, new innovative business models will emerge.” China will transfer best practices to hinterlands, take more control of its own production standards and make greater efforts to protect intellectual property rights. However, Chinese refinements of western researched, designed and manufactured products will remain a concern.

China’s restructuring will have a major impact on logistics needs and demands. The market will, for example, become more specialised by industry sector and mode. Consolidation can also be expected, and logistics companies will be forced to continue expanding networks as markets move to Northern and Western China. The more balanced manufacturing landscape in China will bring more balanced flows and should therefore result in better capacity utilisation and lower costs for carriers, logistics companies, shippers, as well as buyers and consumers in China and worldwide. But extracting the full benefits and value of making this transition will require new skills and ways of operating transportation businesses and networks.

E-tailing is a standout Chinese success story. Massive investments in e-commerce businesses and IT has opened new markets beyond the tier one and two cities in China. E-commerce has also driven demand for Chinese products in other parts of the world, such as Russia and Brazil. This is creating vast new internal and international distribution requirements and is having a major impact on the logistics value chain. Backing up this success within China will require higher delivery standards and more efficiency. In international markets, e-commerce companies and logistics providers are facing major challenges in customs clearance and finding the appropriate delivery platform. These trade and business obstacles also need to be overcome. “The transfer and adaptation of best practises from the West will be as important as bridging the gap in business practises and culture between the different markets,” says Lou. “Leveraging the knowledge of experts and companies experienced in this field will be critical to success.”

The renminbi (RMB) is gradually being internationalised, paving the way for even more efficient commerce, particularly between Asian countries. Indeed, intra-Asian travel and trade is expected to prosper, not least as ASEAN member countries create a new free trade area from 2015. China will not only seek to bolster its regional influence, but look as well to emerging markets in Africa, South America and the Middle East, where it has already forged relationships through its huge consumption of commodities and investment in infrastructure. Logistics players focusing on intra-Asian flows and emerging markets will benefit from these developments.

A paradigm ‘thought’ shift in China among citizens and policy makers will be a key driver in a gradually growing embrace of environmentalism and Corporate Social Responsibility by individuals and State. This, in conjunction with the increasing enforcement of laws and operating standards, will impact the choice of equipment and the way logistics players operate. Companies need to be aware of all the trends and changes and need to assess the relevance of these developments for the future operating requirements and business plans.

All participants in the logistics value chain need to adjust to the changing landscape. The attractiveness of the logistics offer to shippers and supply chain customers is a function of all components of the logistics value chain, including information, security and inland transport to, for example, ports in respect of price, time and quality. Logistics companies will look for the optimal value proposition at river ports, seaports and airports and will go where they can make the best margins when serving their customers in an increasingly competitive market. While larger logistics players will act strategically to serve their more sophisticated buyers, smaller transportation and logistics companies will go wherever they get the best offers from brokers and consolidators.

Overall, increasing sophistication in the logistics value chain can be expected, which represents a major opportunity for those players which prepare best, and a major risk for those who do not. It will be a challenging journey for all participants and much of the path remains unclear. What is clear, however, is that companies wishing to win and grow in China need to deeply understand China’s international economic dependencies and interdependencies of internal markets, including government views and plans. For example, expanding business or moving production into China’s interior requires a deep knowledge of different cities, verticals, customers and competitors – local and foreign – if all options are to be properly assessed and the no regrets and best value option moves identified and successfully executed.

China will remain an opportunity to diversify business portfolios and overtake even larger competitors for companies which have the necessary insights. For those who do not, it will be a harsh proving ground.

“It might take time for China‘s economic output to shift from growth in manufacturing and construction to economic growth built on services and innovation and domestic consumption,” says Salle. “What should be remembered is that China has been able to weather and overcome huge economic, social and political challenges and manage far reaching reforms throughout its history, including over the last three decades.” There is no reason to think it will not be able to do so again and again.