Supply chain leaders call on outsourcing partners to increase speed to market, reduce costs.

For many consumers, routine COVID testing has paved the way for increased comfortability with at-home self-testing, e.g., food sensitivity, fertility, sexually transmitted infections (STIs).

Through this survey, RRD sought to understand how organizations are navigating this increase in demand from a supply chain perspective. The data uncovered four key themes:

  • Consumer comfort with at-home testing drives market growth
  • Economic downturn offers opportunity to realign supply chains
  • “Amazon Effect” influences supply chain decisions
  • Outsourcing partners key to meeting customer expectations

Close-up of a man's eye surrounded by heart rate icons representing technology and virtual healthcare.

Report vitals

What we did:Surveyed 200 supply chain professionals located in the U.S. across a variety of industry sectors. The survey is weighted to be nationally representative.

When we did it:December 2022

Why we did it:To provide insight into the decision making process and understand trends in diagnostic testing, with a focus on the supply chain involved with bringing these types of products to consumer homes.

Four factors to fuel decisions

1. Consumer comfort with at-home testing drives market growth

Nearly three-quarters (74%) of respondents are involved in the manufacturing, purchasing, sales, or distribution of at-home medical diagnostic tests. For this cohort, the top three factors impacting growth in at-home diagnostic testing are rise in awareness of early diagnosis, increase in routine diagnosis, and movement toward preventive care. We see this as confirmation that consumers are more open to its benefits.

While COVID-19 has contributed to ease of testing within the home, emerging diagnostic categories — and combination tests, which can diagnose for more than one thing such as COVID and the flu — show promise for growth this year.

Top five market opportunities for at-home testing in 2023

Pregnancy
STI
Combination tests
Food sensitivity
Fertility
95%

of respondents are at least fairly-confident about meeting the increased demand, but also recognize the importance of selecting the right partners/outsource to help meet that demand.

According to respondents with direct knowledge of diagnostic testing, the growth in demand for at-home testing is primarily driven by increased interest among health plans that wish to offer:

  • An at-home testing option to members (25%)
  • Consumer convenience (21%)
  • Consumer privacy (20%)
John Marrow

Expert take: "As consumers continue to gain more control over their own health, an accelerated acceptance for at-home testing has created new levels of complexity in fulfillment. Direct from the manufacturer, an insurer, or the pharmacy down the street — channel coverage must be a top consideration as manufacturers aim to get their product into the hands of the end user safely, securely, and efficiently."

– John Marrow, President of Supply Chain Solutions, RRD

2. Economic downturn offers opportunity to realign supply chains

Following two years of extreme supply chain volatility, less than half (42%) identified supply chain disruptions and transportation delays as current challenges. However, risk posed by inflation and economic downturn may emerge as key challenges supply chain leaders face this year.

In fact, when asked to rank the top potential impacts to their supply chain, 58% of respondents ranked inflation and cost control in the top three, while 48% ranked an economic recession.

Top three potential impacts to supply chains

1
Inflation and cost control
2
Economic recession
3
Material shortages
79%

79% view a potential economic downturn as an opportunity to gain market share through the realignment of their supply chain activities.

66%

Two-thirds are moving sourcing, manufacturing, and fulfillment physically closer to customers and end markets.

John Marrow

Expert take: "Wild volatility through the pandemic has left, in many cases, an abundance of inventory in the face of lessening demand. On the life sciences side, we know the majority of that inventory will have expiry dates. We see this leading to a number of significant rework opportunities, but this will require a regulated environment to turn excess into market-share gains and bottom-line growth."

– John Marrow, President of Supply Chain Solutions, RRD

3. “Amazon Effect” influences supply chain decisions

While supply chain disruptions are easing, decision makers are still concerned about their ability to meet customer demands for delivery timelines.

Nearly all of our respondents identified on-time delivery as an important supply chain risk. And when it comes to consumer expectations, roughly a third of respondents agree that delivery timelines have the most impact on supply chain decisions.

The demand for faster delivery (aka the “Amazon Effect”) is part of a broader nearshoring (and reshoring) trend playing out across the supply chain space.

9/10 identified on-time delivery as an important supply chain risk.

2/3 are moving sourcing, manufacturing, and fulfillment physically closer to customers.

0%

Roughly a third of respondents agree that delivery timelines have the most impact on supply chain decisions.

John Marrow

Expert take: "It wasn’t that long ago when offshoring the bulk of your operations was the smartest, most cost-effective decision you could make. Today, however, as the market shows gradual improvement and supply chains get up to speed — particularly in the area of logistics — a number of our clients have expressed a readiness to explore reshoring or nearshoring as a way to increase the resiliency and agility of their supply chains, minimizing disruptions and improving total cost."

– John Marrow, President of Supply Chain Solutions, RRD

4. Outsourcing partners key to meeting customer expectations

Manufacturers view an economic recession or downturn as a strategic opportunity. More than three quarters aim to gain market share through competitive pricing and/or a realignment of their supply chain activities. This suggests that manufacturers are looking to claw back savings after more than two years of being pummeled by high shipping rates.

As adoption for at-home testing increases, nearly all of the relevant supply chain decision makers surveyed are looking for the right outsourcing partners to help them meet this demand. What’s driving these organizations to outsource? Reducing cost and increasing speed-to-market are two top pressures.

Top needs being outsourced:

1
2
3
4
92%

92% of supply chain decision makers are looking for the right outsourcing partners to meet consumer demand for at-home tests.

79%

79% of respondents currently outsource more than a quarter of their production processes, while nearly a third outsource more than half. Roughly the same amount (77%) plan to outsource more of their production this year.

Are you part of the 97% with increased demand for at-home testing?

RRD recently announced the expansion of its portfolio of end-to-end services to support at-home testing through the production and kitting of diagnostic and medical kits.

These services enable diagnostic device, at-home healthcare, health insurance, and point-of-care testing companies in their efforts to keep pace with the evolution of healthcare.

Learn More

Connect with an expert today.

New product introductions, regulations, working capital costs, off-shore vs. on-shore, end-of-life operations — you have so much to consider.

Don't let it compromise your momentum. Find the support you need.

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