When hallowed heroes pull from halls of hollowed shelves

Amid all the debate and discourse about how exponentially increasing pandemic-motivated product demand siphoned supply chains as healthcare clinicians treated COVID-19 patients, one lingering conceptual question looms large.

If we can’t handle this, what happens when something twice as bad erupts on society?

Sobering thought. Take a swig of coffee or tea, knowing that top-flight Supply Chain leaders and professionals neither are panicking nor waving the white flag.

In fact, when it comes to maintaining and buttressing inventory levels, tracking what you store where and when it’s used and then predicting what’s needed to satisfy demand, award-winning Supply Chain leaders and pros are plowing full speed ahead.

Controlling and reducing costs remains one of the hallmarks of managed care, and Supply Chain’s contribution to that strategy, by and large, involves five core elements:

• Manage/oversee consumption/usage patterns of products and services
• Store less in smaller areas (versus storing way more in larger warehouses)
• Have products delivered in lower units of measure more frequently (e.g., just-in-time, stockless, modified stockless distribution)
• Keep online, open-ended communications with suppliers flexible and fluid so that when something happens, Supply Chain can pick up the Batphone and tap into the vast array of emergency stock the suppliers miraculously store in their big warehouses (akin to cost shifting, this is storage shifting)
• Rely on computer software algorithms to predict what happens to demand when a crisis or disaster hits

When a crisis or disaster strikes – like an ongoing pandemic – these five core elements may bend but they’re not expected – nor accepted – to break.

As COVID-19 has maintained a fairly tight viral grip on the global community, it also has destabilized and disrupted human health, lifestyle choices and business operations, including the general and specialized supply chains.

In recognition of the pandemic-punctured healthcare supply chain, Healthcare Purchasing News reached out to all 17 of those organizations that have earned Supply Chain Department of the Year honors since 2004. After all, who but those on award-winning teams may have some actionable, tangible and useful ideas on how to parry with and outpace the spread of spiking demand for products during the roller-coaster ride of a pandemic?

Comprehensive convergence

Being prepared represents more than just a passing mindset or a panic program button to punch at a moment’s notice, setting into motion a series of decisions and events. For Danville, PA-based Geisinger Health, which earned HPN’s Supply Chain Department of the Year award in 2008, planning for potential supply disruption and crisis response has been ongoing for years. In fact, it’s ingrained in the infrastructure.

“We have had weather-related disruptions that challenged us to be prepared, but certainly not to the extent that COVID-19 presented,” said Joe Goyne, Senior Director, Logistics, Supply Chain Services, Geisinger, Wilkes-Barre, PA. “We have been fortunate to have invested in many foundational Supply Chain strategies to prepare us for this challenging situation, such as the establishment of a large central distribution center, an integrated logistics delivery network, an experienced team of Supply Chain experts managing inventories at our hospitals, etc. Providing inventory oversight to our acute care locations is something the Geisinger Supply Chain team has done for decades, and it is a strategy for us to continue to expand this value to the organization in the future.”

Goyne admits to one exception to their rule: supporting the non-acute clinic network. “We have traditionally serviced these locations directly through a distributor, but have recognized this service model as a potential area for re-assessment,” he added.

Because Geisinger’s Supply Chain distribution model heavily depends on “allocations,” “we recognized early in the crisis response that we needed to use the experience and strength of the centralized Supply Chain team to manage the end-to-end supply chain for everyone,” Goyne said. “We worked with our distributor, consolidated all allocations and drove distribution through our centralized logistics and materials (CLAM) self-distribution center. We needed to quickly integrate and optimize the processes taking place within the mini-warehouses that were beginning to develop throughout our system as each site began planning for potential disruptions.”

Geisinger’s CLAM distribution center embarked on a demand-and-control mode for product access.

“To increase physical controls to protect critical supplies, new processes were implemented to reduce the risk of product being removed from the hospital inappropriately,” Goyne noted. “To aid in limiting the order disruption experienced in response to the allocation process, we transitioned to a very manual, paper-request process for those items experiencing allocation restrictions. It meant a lot of extra work at the distribution center, but the team took on this challenge with a positive attitude and were phenomenal in meeting the new demands. The additional workload was worth the burden as our caregivers had what they needed, when they needed it.”

Geisinger also revamped analytics tools, such as standard usage dashboards that the team had developed, according to Goyne. “These were refined to make informed inventory decisions, to be able to home in on who was using what, how fast we were using it, and how long we would survive with what we had,” he said. “This data-driven view of consumption allowed us to monitor the effectiveness of protocols and conservation strategies, as well as anticipate future needs to proactively begin to source alternative products in categories that experienced extremely high demand.”

With their boots on the ground, Supply Chain kept senior-level executives in the C-suite informed and up-to-date on capabilities. 

“The data we had put together, with a lens for data visualization to ease understanding, also helped with our communication channels engaging senior leadership in being fully transparent with supply on hand and demand forecasting,” Goyne said. “This transparency through visualization of the data allowed us to effectively communicate how well we were doing day-to-day, and drive action when additional support was needed from those who could help influence the required changes, such as adherence to conservation protocols.”

Geisinger also relied on its team of experienced sourcing professionals to vet alternate sourcing channels, exploring both non-traditional suppliers, as well as direct-to-manufacturer opportunities to obtain quality product, according to Goyne. “This sourcing process required significant attention to thorough vetting to mitigate any potential risk to the organization, as the market presented significant threat of fraudulent activity,” he said. “Once a potential supplier was vetted for legitimacy, we were able to freely have conversations regarding availability, pricing, terms, turnaround, etc., to help supplement the additional supply demand our system was experiencing.”

Pursue innovation

Regardless of crisis or disaster type, focusing on the “5 rights” – right product, right time, right place, right quantity and right price – will continue to be important well into the future, insists LeAnn Born, Vice President, Supply Chain, M Health Fairview, Minneapolis. M Health Fairview earned HPN’s Supply Chain Department of the Year award in 2017.

“We knew this before the pandemic and we know more about it today,” Born declared. “About the product, we need to know what is being used, how it is being used, what the acceptable alternatives are and how we can access those alternative products. Related to right time and place, we need to know when and where the product is available – this can either mean moving it around our own health system or by sharing data and plans with distributors and manufacturers to understand when it will be available on-site. It can even mean partnering with other health systems to borrow or share products.”

Born points to consumption as driving quantity decisions.

“For the right quantity, it has been important to ensure appropriate use and look for ways to conserve,” she continued. “There were many moments when price was not even a consideration because there was a real or perceived lack of product available. Yet it was still important to understand price in order to report it as the incremental cost of the pandemic, which has been important to understand for government support and grant purposes. After the initial urgency that created a willingness to pay outrageous prices, came a reality that financial resources were even tighter than they were before the pandemic.”

Born challenges her industry colleagues not to lose sight of innovation, but focus on it.

“We have experienced situations when what we knew was right for care before the pandemic was no longer available,” she said. “We had to discover, figure out and seek approval for alternative products and alternative ways of using traditional products. We also need to define ways to conserve, even though, according to previous requirements and regulations, [it] was not appropriate.

“Awareness to all of this is supported by talented people using their knowledge of policies and standard procedures supported by reliable technology,” she added. “A lot of really well-intended people helped in such a variety of ways that the supply chain lost a lot of its control, effectiveness and efficiency. Finding the right balance of understanding and staying true to standard purchasing rules have been very important.”

Embrace suppliers

Sometimes, effective Supply Chain leaders can embrace the good but acknowledge – and even accept – the bad as they play the long game, according to Joe Colonna, Chief Supply Chain and Project Management Officer, Piedmont Health, Atlanta. Piedmont Health earned HPN’s Supply Chain Department of the Year award in 2018.

“We must understand that we may need to pay more for some items to ensure that there is a stable supply closer to home,” Colonna admitted. “Perhaps form co-ops. Several regional health systems invested in local manufacturing for a short run of needed PPE supplies. Purchase time on the line, supply the raw material.”

Rather than blame suppliers for any product shortages, providers instead should work with them.

“We need to help these companies be more efficient and help them with demand planning,” Colonna insisted. “Perhaps work with manufactures to ‘rotate’ crops. Many of the same materials are used to make similar items. There may not be enough business/profit for a company to just make gowns, but if enough of us committ to annual bulk buys, the company could do a run of gowns one month, masks the next, shoe covers the next and so on. [Sign] longer-term commitments so companies can drive down their raw material costs with longer-term projections. I could see 10-year, price-controlled contracts with guaranteed supply. Since the surge of patients can come quickly, all of us either need to have extra storage or buy storage capacity from third parties.

Bottom line, the game of give-and-take must be played more effectively to care for patients.

“We need to find out what they need from us in terms of information and partnership,” Colonna concluded.

Pivot with data

Kathleen Gathers, Director, Supply Chain, Terrebonne General Medical Center, Houma, LA, recommends understanding your capabilities and being flexible and nimble enough to pivot when necessary.

Terrebonne General earned HPN’s inaugural Supply Chain Department of the Year award in 2004.

“Most [of the five core elements listed are] acceptable strategies to have, and each hospital needs to decide what works best for them based on size and storage space,” Gathers said. “Just-in-time and stockless distribution are risky because they [assumes] that the distributor is going to have enough products on hand to supply. Communication between distributor and hospital is vital. Managing the PAR levels to accommodate changing needs is in the responsibility of supply chain, and solely relying on computer algorithms can be dangerous if that’s all that‘s being factored into the equation.”

Maintaining balance

Rita White, Vice President, Supply Chain, Tower Health, West Reading, PA, points to the “very delicate balance between ensuring sufficient “safety stock” of critical supplies to be used where and when needed on one hand, and creating stockpiles to cover the “what-if” scenario at the risk of generating waste through unneeded expense and product expiration on the other.

“With the COVID-19 pandemic, management of these critical supply inventories has become even more essential, as we’ve faced unprecedented supply disruptions for commodity supplies like hand sanitizer and cleaning wipes and, of course, personal protective equipment (PPE),” White indicated. “Unlike other disaster-related supply disruptions experienced in the past, health systems have had to compete against national governments, the business community, and personal consumers for these high-demand items.”

Tower Health earned HPN’s Supply Chain Department of the Year award in 2019.

White acknowledged that throughout the pandemic, manufacturers have modified existing production lines to focus on high-run supplies.

“Though some have adapted more quickly than others, major manufacturers stand to gain by adopting a nimble and agile manufacturing approach, one that responds quickly to extreme demand volatility, such as that experienced during the pandemic,” she said. “Additionally, identifying functionally equivalent products has become much more critical to ensuring [the] steady flow of supplies. Manufacturers historically have been somewhat guarded in identifying functionally equivalent products produced by competitors, but greater transparency in the future will help to ensure quick, informed decision making should healthcare continue to be faced with shortages.

“Likewise, the role of category management will play an even greater role in an adaptive healthcare Supply Chain strategy to facilitate easier identification of sourcing opportunities and support inventory management of product alternatives and substitutes,” White continued. “Existing vendor relationships may need to adjust, allowing for secondary relationships across a greater number of vendors/manufacturers.”

Clear channels

Pittsburgh-based UPMC, which earned HPN’s Supply Chain Department of the Year award in 2012, embraces all five of these elements, according to Jim Szilagy, Vice President and Chief Supply Chain Officer, but more is needed.

“We feel keeping an open line of communication with key critical-to-operations suppliers is the most important element in times of product crisis,” Szilagy urged. “Creating strategic business relationships with suppliers provides us the ability to align variable operational needs with production capacity. Having multi-sourcing relationships across commodity categories is also an important strategy as it enables the system to move quickly to activate secondary supplier relationships and secure additional critical inventory and capacity.”

Teresa Dail, R.N., CMRP, Chief Supply Chain Officer, Vanderbilt University Medical Center, Nashville, TN, agrees that open channels with suppliers, regulatory officials and clinicians are paramount.

“Demand transparency from the vendors into the origin of product or raw materials to better understand the risk associated with purchasing as it relates to ability to procure in a situation like COVID 19 where other countries can essentially shut off the supply to the United States, Dail said. “Work with liaisons to the state and federal government to open up the dialogue around how to incent manufacturers to look at production in the U.S. or, at the minimum, the continent. Work with clinical colleagues to establish an alternative, clinically acceptable product pipeline that can be utilized in the event traditional, and recommended, products cannot be procured. For example, if N95s are no longer available, what is the next level of protection that would be utilized?”

Dail also encourages establishing and maintaining an internal emergency stockpile to reduce reliance on state or federal assistance.

“Think broader than a viral pandemic as work is done to shore up the supply chain within the U.S.,” she noted. “Meaning, what supplies would be necessary in the event we had another type of catastrophic event that may have a global or continental impact?

Vanderbilt earned HPN’s Supply Chain Department of the Year award in 2011.

Anticipate demand

Dartmouth-Hitchcock Health, Lebanon, NH, urges supply chain leaders and professionals to pursue demand-planning capabilities and skills, particularly during the prospect of a crisis or disaster like a pandemic, according to Curtis Lancaster, Vice President, Supply Chain Division, Dartmouth-Hitchcock Health.

After all, that’s where they’ve done and continue to do.

“Enhance Demand Planning so that we incorporate surge planning based on needs driven by emergent events like the pandemic,” Lancaster indicated. “We are getting better at this and incorporate recovery – or normal times – emergency planning models.”

Lancaster acknowledges that supplier communications and qualifications matter, too.

“Evaluate supplier relationships based on manufacturing locations and even raw material sources,” he advised. “This will help us monitor disruptions for global events like the pandemic, but also singular disruptions like work stoppages and political unrest.”

Dartmouth-Hitchcock also expanded capacity to receive more bulk deliveries by acquiring additional warehouse space and redesigned its logistics model to incorporate the new space into overall operations, according to Lancaster.

“While managed care drives us to reduce costs it also makes us mindful that being effective saves money, too,” he added. “That is, we need to enhance, invest, in our capabilities in order to be more resourceful in the long-term.” 

Read also: Making do with much ado by award-winning Supply Chain teams