Managing supply chain crises calls for elementary equation
Since early 2020, the healthcare supply chain seemed to recoil from the just-in-time (JIT), modified stockless and stockless distribution methods that defined advanced, forward-thinking operations until they were tested by global supply chain challenges ignited by the COVID-19 pandemic.
From there, providers and suppliers alike shifted into pandemic (some say “panic”) mode, scrambling to source and deliver product amid mounting backorders, delays and shortages, overordering and overstocking to protect themselves.
By mid-2022, sensing – if not hoping for – an end to the pandemic and accepting COVID-19 as more endemic as influenza, the industry yearned to pivot to some kind of recovery mode, translating lessons learned to reshape how to handle future crises.
Arguably, the building blocks of any supply chain, regardless of industry, centers on three elements of an equation: People, processes and technology.
Back in August at the annual conference of the Association for Healthcare Resource and Materials Management (AHRMM) in Anaheim, there were plenty of educational sessions heavy conversations promoting people as key value providers in new roles, promoting technology as options to explore and promoting process improvements that involve both people and tech.
To optimally prepare to handle future crises for minimal impact on supply chain operations the question remains as to how to order the equation for the desired results. Do you:
- Invest in people to plan process improvements and use tech to ensure progress (People, Process, Tech)
- Invest in process (including improvement planning), assembling the tech for people to use (Process, Tech, People)
- Invest in tech and then train people to use it so that they improve processes (Tech, People, Process)
Supply chain experts among providers, suppliers and technology companies offer mixed and varying perspectives on how to order the equation. Among the noteworthy observations: Not every tech company executive encouraged starting the equation with tech and not every supplier encouraged starting with process.
People process
Pundits may point to ongoing labor challenges, regardless of industry segment or type, but in healthcare experts emphasize that people should be priority one to prepare for whatever looms ahead.
While Jeff Jochims, Executive Vice President, COO and President, Products Healthcare Service, Owens & Minor, thinks at first glance the overarching perspective may be obvious, the fundamental indicator becomes resoundingly clear.
“It is of course correct to say that all three matter, but in our view at Owens & Minor, people remain at the heart of strong operations,” Jochims insisted. “The past several years have demonstrated over and over again that supply chain management is incredibly dynamic. While technology and processes are vital, people are the part of the equation that cannot be overlooked or undervalued. Empowering teammates with a framework for making decisions with technology tools allows for the optimal balance between tech and touch, whether we’re operating under normal business conditions or responding to something unexpected. After all, it is people that perform scenario planning, that exercise subjective judgment, that balance availability with options, that identify potential failure points, that identify countermeasures and so much more.
“At a most basic level, we can remove technology and processes, and still run supply chains,” Jochims continued. “We cannot remove people. I think that the pandemic demonstrated this beyond our wildest expectations.”
For Cory Turner, CMRP, Senior Director, Healthcare Strategy, Tecsys, with a background in provider-based supply chain at an award-winning healthcare system, a particular order makes the most sense.
“It reminds me of a conversation we had recently with Dr. Randy Bradley, in which he said, ‘the healthcare supply chain is not broken, it is performing as it was designed, we are just trying to use it in a way it wasn’t designed to be used and I think that has caused both supply chain leaders and other healthcare administrators to really rethink and try to reimagine what should our supply chain operations look like,’” he recalled.
People can represent a positive and a negative, according to Turner.
“Something to be cognizant of is that people – whether in attitude or aptitude – may unwittingly become a roadblock to navigating supply chain crises. On the flip side, it’s also people that make effective processes work. Investing in people is such an important priority,” he continued. “Ultimately, it’s a three-legged table. Each component is critical and relies on the other two. While there is an effective order of operations, it should not be conflated with an order of importance. Only when a supply chain organization builds its strategy around all three elements will they be best equipped to hug the curves of disruption.”
Angie Haggard, CEO, RDA, emphasizes the inherent connections between people, processes and technology.
“People are and will always be needed,” she indicated. “Even though fewer people are required with technology, people are still needed to operate and/or manage the technology. In addition, when you invest in people with training and career growth plans, the probability of employment retention increases. Retention is further increased when employees connect to the cause that supply chain impacts patient’s lives, and their actions can make a difference in that patient’s life – positively or negatively.”
But those connections must be precise and concentrated on accuracy, Haggard maintains.
“Technology is wonderful and helps to automate manual processes; however, if technology is automating bad processes, the technology has just automated and magnified the problems … faster,” she noted. “Process improvements need to be streamlined and standardized prior to a major technology implementation, especially if it’s a technology automation of cross-functional processes. Granted, some technologies limit flexibility and extensive custom design, which is a good thing as you don’t want your organization’s implementation to be so customized that technical support cannot be provided.
Haggard supports an order of events, too, beyond people.
“When organizations do not optimize or evaluate processes first, the end result is higher costs with little improvements,” she said. “Utopia is to optimize processes first and then automate those processes, while fostering a culture of continuous improvement. In our current state of traveling and remote clinicians, high turnover rates and doing more with less, the more processes are standardized within a department, within a facility and across facilities, the better patient outcomes will be. Once people are in place and processes are optimized, it’s time for technology to be utilized to automate and monitor progress and performance.”
“The first step is understanding if the organization has the right people with the right skills in the right job to adapt and drive the supply chain forward,” Redding said. “Investing in people is a critical factor to handle the ever-changing requirements for healthcare supply chain leaders.
“Secondarily, supply chain leaders need to have a clear understanding of their primary processes and all of their supporting processes that may impact their ability to function effectively and efficiently,” he continued. “Too often, upstream process changes are made in a vacuum by other stakeholders and unfortunately impact the downstream process(es) of others. Once a supply chain leader is confident in their team and processes, then they should explore options for technology and systems. We have all seen health systems purchase new technology and systems, and fast forward a couple years, are worse off than when they started. Don’t be a statistic.”
Investing in people to plan process improvements and use technology to ensure progress is the most optimal strategy for crisis management in supply chain, according to Bonnie Lai, General Manager, GHX Lumere.
“As a leader at a company that builds technology solutions for health systems, I very much recognize technology’s power and limitations,” she said. “Technology is great for automating well-defined and repeatable processes. However, we’re not yet at the point where technology can replace the critical thinking and problem solving you get from your best team members. For example, the COVID-19 pandemic was such a new and unpredictable problem that expecting technology to have solved all the related supply chain issues would have been foolish and misguided. Technology is also good at enabling efficient and repeatable processes that allow supply chains, clinicians and other key stakeholders to spend more of their time collaborating and problem solving to address patient needs.
“Despite advancements in artificial intelligence (AI) and machine learning (ML) in healthcare, I still believe these technologies are best deployed on more operational challenges than in clinical decision making at present,” Lai added.
“People are the optimal place to start,” he insisted. “Identifying the key skills and capabilities needed – analytical, adaptiveness, creative thinking, and ability to execute – and putting in place the right people is a critical first step. With the right team, even if processes put in place do not work, the supply chain organization can pivot and adjust more easily. So, with people and processes in place, the right technology can be implemented. But like with investing in people, it is critical to select technology that can adapt with the unique consideration of each crisis or change in the industry.”
“They are the ones who think, continuously learn and innovate – identifying and framing the challenges, root causes, as well as the design of optimal solutions,” he said. “These experts should work alongside stakeholders to define the ideal business process (desired state), at which point the appropriate technology solution should be decided upon and used to effectively enable and streamline that process. Once the model is deployed, it continuously improves through innovation in all 3 areas (people, process, technology) based on needs of the organization and customer. Over time, the efficiencies gained with technology can free up workforce capacity, allowing your organization to deploy people in other value-added areas.
Process for people
Even though some contend that with people in place the process can be improved, others highlight on process improvement with optimal technology to fortify people.
“The best strategy would be to start investing in process improvement planning, assembling the tech for people to use,” said Marlin Doner, Vice President, Data Analytics and Product Strategy, Prodigo Solutions. “Strategic responses should start by asking why, then investigate the how? As we look back at lessons learned, we can see that surge demand was driving product shortages in the early chaos of the pandemic. Now, as we have moved into recovery phase, labor disruption is still impacting availability in the supply chain. As supply chain practitioners, these are things we do not control; however, as leaders we can control our ability to respond and align supply with demand based on real-time data we are collecting.
“Better transparency into what is happening across our supply channels will help us manage our response,” Doner continued. “Process re-engineering from the point of demand to the source of supply will help an organization identify and eliminate weaknesses in their business processes. Tracking vendor performance data, such as fill rates, backorders and substitutions as well as operational metrics such as inventory turns and days of supply coverage, should let us benchmark and forecast demand based on variables such as patient caseloads and community infection rates.”
“There is an order that I recommend, and that is investing in process improvement, then people and finally assembling the technology for people to use,” he said. “It is important to scope out what you’re trying to accomplish first. From there, you can create a team to fulfill your identified needs. Then that team can identify the technology needed.”
If anything, the pandemic taught the supply chain industry two key lessons, according to Atul Vashistha, CEO and Founder, Supply Wisdom.
1. The supply chain models we have relied on inherently underestimated risks of disruption in the demand planning and fulfillment process.
2. Our reliance on periodic assessments to understand the health of our suppliers and supply chains leave us in the dark and unable to support proactive disruption avoidance.
“Take for instance, the just-in-time inventory model built on the assumption that there will be no disruptions in the supply chain,” Vashistha explained. “Even beyond the pandemic with the war in Ukraine and now escalating tensions between China and Taiwan, this assumption appears increasingly unreasonable as supply chain disruptions increase exponentially in terms of frequency and severity – with no end in sight.
“Furthermore, building our risk programs around periodic assessments, incorrectly assumed that the risk landscape doesn’t change much between assessments,” he continued. “The pandemic proved this assumption to be false and demonstrated that data from a single point in time was quickly stale in the rapidly evolving crisis. During the early days of the pandemic crisis, decision makers were forced to respond reactively without a clear or current view of the true health of their suppliers or supply chains.”
Vashistha recommends the first step to address these shortcomings should involve identifying what in the process needs to change.
“I believe it would be a mistake to consider today’s dynamic risk environment as a temporary crisis that will pass, and risk and inventory models should be adjusted accordingly,” he noted. “Today and going forward, proactive disruption avoidance requires access to current intelligence; therefore, we need to modernize processes away from legacy assessments with a point-in-time view of the supply chain to continuous monitoring and real-time risk intelligence.”
From that point, supply chain leaders should search for technology that will enable what Vashistha calls “radical transparency” and “proactive vigilance.
“The good news is that technology exists today that can enable this ‘always-on’ continuous monitoring with accurate real-time supply chain and risk intelligence,” he said. “The right solution enables proactive vigilance through radical supply chain transparency across all potential sources of disruption including financial, cyber, location, operations, ESG, compliance, and Nth parties. Better yet, now it’s possible to operationalize this intelligence and automate mitigation actions based on preprogrammed triggers or thresholds that align with an organization’s supply chain disruption mitigation strategy. In this way, organizations can realize significant improvements in risk management efficiency and effectiveness to better secure supply chains all while reducing costs.”
Vashistha emphasizes the need for “agile intervention,” whereby “people need to be trained not to reactively respond to disruptions but instead proactively respond before a disruption occurs for an agile intervention that minimizes the impact or even avoids the disruption altogether.”
“To prepare for the next disruption, organizations should ensure they have the appropriate processes in place, the technology to assist in early notification and rapid deployment of resources,” Steele continued. “These are critical to ensuring that people can not only manage through a disruption, but that staff do not burn out in the process.
Steele adds that high-performing organizations will focus first on process, but with an eye toward what can be enabled by technology and then ensure they have the right people. “Focusing on technology first often results in automating a bad process,” she reflected.
Tech drives process, enables people
“Given the present-day economic downturn and staffing shortages following the pandemic caused by burnout, turnover, and increasing labor costs, health systems may need to invest in technology solutions that unlock value across an enterprise,” McBride observed.
“While implementing technology, health systems are smart to hire supply chain and clinical leads with diverse experience who possess skills like curiosity, critical reasoning and interdisciplinary thinking,” he continued. “These leaders can build out teams to own, operate and extract value from the technology. Finally, having a process in place for department-level leads to come together to draw insights and act based on the information extracted from the technology is key.”
But McBride remains realistic within a less-than-ideal marketplace.
“Motivation meets purpose when staff understand how, despite the initial pain of change, technology improves the efficiency of their jobs over the long term,” he said. “It’s important to underscore that technology is not a replacement for people; it augments the jobs of people to make them more efficient. Eventually, the industry will shift back to where people are driving the processes to evaluate new technological needs for the healthcare ecosystem to navigate future crises that have yet to occur, be it extreme weather events, security threats, or future pandemics.”
“There is a significant portion of the health systems – mainly small and mid-size – [that] conduct their business in a manual or semi-automatic manner,” he indicated. “Yesterday I saw an assistant director of supply chain manually creating a PPE estimate report for their management. He manually takes the data from multiple systems, puts them into an Excel spreadsheet, and prepares this report. Investing in technology that automates these processes will yield a significant amount of productivity gains. This is especially true in the current environment where there is a significant shortage of people in the market. A significant percent of the current supply chain leadership is retiring in the next 1 to 3 years.”
“It used to be taboo to talk about investing in technology first, but much of the new technology coming to the supply chain requires a degree of experimenting and learning by doing,” he said. “I would propose start investing in tech and training people to use it so they can improve processes. From autonomous mobile robots (AMRs) to machine vision, to RFID and temperature-sensing devices, the industry is teeming with new technologies that will prove to be disruptive to longstanding supply chain practices. Those who try new things, learn fast and will have a significant early advantage in understanding how these new technologies can be profitably applied to unique business operations to drive value.
Read on:
Post-pandemic, what’s wrong with the status quo anyway?
Products, technology can augment supply chain crisis management response
Healthcare supply chain executives, leaders and professionals can research, source, trial and eventually procure and implement a vast array and wide variety of products and technologies on the market today to help improve performance and manage day-to-day operations.
Healthcare Purchasing News identified nearly 20 specific products/technologies currently available and surveyed a small group of supply chain experts working among providers, suppliers and technology companies, asking them to select which should become standard strategies and tactics for supply chain crisis management post-pandemic. Then HPN asked them to rank their top three choices by priority. Here’s what they shared.
Top Tech Strategies and Tactics
Ranked by popular vote
1. Demand management/predictive analytics software
2. Tracking and tracing – bar coding, RTLS (e.g., RFID, infrared, ultraviolet), Bluetooth, Near-field communication, etc.) and smart labels (e.g., QR codes)
3. Cloud-based software for virtual ERP to virtual MMIS to virtual item masters to virtual physician/surgeon preference cards, etc.
4. Artificial intelligence (AI)
5. Cybersecurity (e.g., hardware, software)
6. Robotic Process Automation (RPA) (including advanced dashboards, using “bots” to accomplish basic, mundane and routine tasks and automatic reorder points)
7. Mobile devices/technology (e.g., multifunctional smartphones for clinical, operational tasks)
8. Internet of Things (IoT)/Machine-to-machine (M2M) interoperability
9. Augmented reality (AR) (e.g., for directions, instructions, locating, mapping, teaching, training, etc.)
10. Automated product dispensaries (e.g., closed cabinetry, open/weight-based cabinetry/carts)
11. Automated guided vehicles (AGVs) (including "Mother-daughter" and remote-control tugs)
12. Robotics (including “co”botic arms, exoskeletons, etc.)
13. Wayfinding (e.g., digital flatscreens/interactive touchscreen or voice-activated signage and kiosks, etc.)
14. Virtual reality (VR) (e.g., for demonstrations, designing, inservice training and education, etc.)
15. Wearable computing/sensors (e.g., wearable and wireless sensors, watches, wristbands, pins, neckware)
16. Clinical decision support tools powered by AI (Machine Learning and Natural Language Processing) and healthcare technologies/tools with user interfaces (UIs) and workflows that mimic consumer technology
17. Digital location labels
18. Continuous monitoring for real-time operational risk intelligence and automated risk actions
What didn’t garner votes from among the choices offered: 3-D printing, drones, self-driving vehicles (e.g., cars, trucks)
Top 3 Priorities
Shawn McBride, Vice President and General Manager, WaveMark Solutions, Cardinal Health
1. Tracking and tracing. Guided by the mission of protecting patient lives, I would rank implementing track and trace technology as the first step in a supply chain crisis management strategy because it can provide visibility into what product you have on shelves and where it’s located to ensure you have enough to meet the needs of patient care. In addition, tracking and tracing can help health systems identify when/where a product is used on a patient, and connect that usage back to a patient record to support downstream billing and reimbursement processes. All of this translates into effectively managing inventory, improving workflows and driving efficiency that that support staff morale while realizing savings and improving operating margins.
2. Demand management and predictive analytics software. The best demand management or predictive analytics software is one that helps you understand where inventory is located across an end-to-end supply chain. Using tracking and tracing technology, you can optimize your supply chain’s demand management processes by ensuring that the usage data (from a patient) informs the downstream procurement and restocking processes in your hospital. In addition, I believe we’ll start to see more health systems working with vendors and suppliers to better understand inventory statuses outside the four walls of the hospital, which will help them better understand when/if a supply shortage is expected. With this proactive approach, they can make substitution decisions for products before they are out of stock.
3. Artificial intelligence (AI). AI technologies and software can support both demand planning and tracking and tracing, streamlining the processes with prescriptive insights and actions.
Marlin Doner, Vice President, Data Analytics and Product Strategy, Prodigo Solutions
1. Cloud-based software integration between the ERP and virtual item masters for formulary management and physician/surgeon preference card maintenance, etc. The item master contains key information that supports purchasing and supply chain inventory planning activities. It has proven difficult to maintain the accuracy and completeness of this item master. Improving the item master will help the health system experience the benefits of clean data through every step of the supply chain. The quality [completeness and accuracy] of item master has a significant impact on supply chain operations in areas of spend under management, contract utilization and compliance.
2. Demand management/predictive analytics software. Having an accurate demand forecast aids in maintaining an efficient supply chain and is critical to ensure the availability of essential and high-demand health products.
3. Tracking and tracing – bar coding, RTLS (e.g., RFID, infrared, ultraviolet), Bluetooth, Near-field communication, etc.) and smart labels (e.g., QR codes). Tracking and tracing from the point of care allows the supply chain to identify items and track movement through each location in your supply chain. Other benefits include product identification and case documentation to ensure costs are accurately recorded in system of record.
Cory Turner, CMRP, Senior Director, Healthcare Strategy, Tecsys
One health system’s approach to crisis management may require a decidedly different technology mix than the next. My advice would be to keep an open mind and consider the “full menu” of technologies available, and then prioritize those that cater to your use case.
No two health systems are exactly alike, and thus no two-supply chain crisis management approaches will look the same, either. A drone delivery strategy and 3-D printing may sound space-age to an urban network but could be a top priority for a network of hard-to-reach outpatient facilities across a more rugged terrain. The common theme should be figuring out how a network’s data can be used more effectively to guide the conversations around strategies and tactics.
1. Demand management/predictive analytics software. While there is a proliferation of technology around data capture capabilities, all that data needs to roll into a powerful analytics engine that can provide meaningful insights around demand signals and planning. This piece of software should be integrated and optimized, as it will deliver value in times of crisis and for routine demand patterns alike. There are many roads leading to a mature demand planning practice. At the end of the day, it is going to take the right people and the right processes supported by the right tools.
2. Cybersecurity (e.g., hardware, software). The threat of cyberattack is real, and the healthcare environment is not immune. As an overarching priority, cybersecurity should be a top priority both as a standalone and as a consideration for all enterprise software a health system is considering. In 2021, cyberattacks in healthcare hit an all-time high, and healthcare leaders cannot sit idly by while bad players take advantage of our resources and most importantly, our patients.
3. Cloud-based software for virtual ERP to virtual MMIS to virtual item masters to virtual physician/surgeon preference cards, etc. End-to-end data visibility is a fundamental prerequisite to reliable data insights. Any gap or blind spot not only breeds inefficiency, but it also short-circuits crisis management operations. A customer of ours approached us early into the pandemic and shared with us that they could actually locate all of their stock on hand in the facilities operating our software, and that made the difference in effectively allocating PPE where needed. The visibility gaps in other facilities made implementing their emergency preparedness plan more challenging.
Bonnie Lai, General Manager, GHX Lumere
1. Cloud-based software for virtual ERP to virtual MMIS to virtual item masters to virtual physician/surgeon preference cards, etc. A cloud ERP is foundational for any successful supply chain operation. Cloud ERP systems provide hospitals with better access to real-time data, and they can integrate with other business processes and critical systems like the EHR to help ensure data is no longer siloed.
Beyond supporting operational tasks like supply purchasing, a cloud ERP creates a strong data foundation that helps organizations identify opportunities for continuous improvement. If an organization wants to reduce care variation in healthcare, a cloud ERP can help them make more data-driven decisions regarding medical products used in patient care. If they are looking to reduce unnecessary spending, a cloud ERP system can help automate key business operations, saving time and freeing up staff to focus on more value-added tasks.
2. Tracking and tracing – bar coding, RTLS (e.g., RFID, infrared, ultraviolet), Bluetooth, Near-field communication, etc.) and smart labels (e.g., QR codes). The challenge with a cloud ERP is that the data feeding it is only as good as an organization’s documentation system. Tracking and tracing, along with other approaches like automated product dispensaries, help organizations understand where supplies are physically located, along with when and how they are used. This ultimately helps ensure that more accurate, robust data is fed into the cloud ERP system. The more data systems accurately reflect a health system’s physical inventory situation within its hospitals, the more control the organization has over its supply chain. This also helps organizations that might need to pivot if another challenging situation like COVID-19 arises, helping to avoid future backorders or product shortages.
3. Demand management/predictive analytics software. While demand management and predictive analytics is still fairly nascent within healthcare, I believe there is a lot of potential for predictive analytics to help health systems anticipate where they will have supply challenges. These capabilities will be instrumental for supply chain teams to be more proactive with demand management instead of scrambling like they so often were during the height of the pandemic.
Angie Haggard, CEO, RDA
1. Cybersecurity (e.g., hardware, software). The organization, its patients and suppliers need to be protected. Cybersecurity is an unfortunate must as priority one to proactively protect sensitive data. Without cyber security, organizations risk:
· Paying millions to retroactively recover from a data breach
· Reduced market share as a result of a perceived “unsecure” facility
· Higher supplier costs from breach penalties and/or reduced suppliers who refuse to do business with a facility that has had a data breach
2. Mobile devices/technology (e.g., multifunctional smartphones for clinical, operational tasks). In our mobile world, most individuals have a mobile device of some type. In addition, most are at ease in operating their device. The more organizations can utilize and leverage these existing devices, it minimizes the number of various technologies and tools that end users must learn. As a result, it minimizes the stress on end users to learn how to use a new piece of hardware and software. Any opportunity to reduce stress for employees in a labor shortage crisis, the better. In addition, it increases the likelihood of end users to use the technology.
3. Demand management/predictive analytics software. Failing to plan is planning to fail. Demand management and planning is no different. Utilizing demand management and planning can enable organizations to proactively plan for needed resources, supplies and contingencies. The more upstream and downstream in the supply chain information can be shared, the better. Predictive analytics should cover all aspects that impact a hospital or healthcare organization where feasible: weather, people, inventory, treatments, outcomes, etc. There are various systems that provide elements for demand planning. If it's not feasible for your facility to have all of the demand planning systems, prioritize purchase of those that are most important for your facility needs.
Ashok Muttin, Founder & CEO, SupplyCopia
1. Cloud-based software for virtual ERP and MMIS, Item master. This is the most critical foundation for any organization. While other industries have a solid grip on this issue, healthcare continues to lag behind other industries. This problem is very acute in small and mid-sized health systems where they don’t even have an item master in the cloud! Newer technologies allow this cloud infrastructure to be created much faster, safely and at significantly lower costs.
2. Demand management and predictive analytics software. As the pandemic showed, most health systems were caught flat-footed to understand their demand for PPE as cases were fluctuating on an hourly basis. If they had a system that was connected to the number of cases on a real-time basis, then they would have been in a considerably better state. All of the health systems were caught flat-footed again when the elective procedures came back. They were unable to schedule them in an optimal way because the existing systems didn’t have the functionality to take in the new constraints that were associated with the pandemic (availability of the OR, availability of anesthesiologist, PPE availability etc.)
3. Robotic process automation. This is likely to improve the productivity levels of the supply chain. Having said that, unless and until there is a significant investment in the cloud-based ERP, MMIS and other data foundations, this effort would be a waste.
Brandon Reeder, Vice President, Operations, Supply Chain Optimization, Medline
1. Demand Management. Understanding product demand (type of products needed, quantities needed and at which locations) is important to position inventory in the right place at the right time, and when hospitals have facilities in different geographical locations, inventory needs may vary. For example, understanding the triage situation triggers the demand signal to tell hospitals where to send supplies.
2. RPA (Robotic process automation). When healthcare providers enter crisis mode, labor is usually one of the most constrained resources. RPA can help automate basic tasks so teams can spend more time on strategic tasks when a crisis arises. As RPA helps stabilize everyday tasks, automation creates more visibility and enhances the strategic partnership between the provider and their vendors. For example, enhancing the process for placing orders with vendors makes it easier for providers to follow up with vendors on orders.
3. Tracking and tracing, specifically smart labels. The ability to easily change and manage re-ordering for substitutions, recalls, etc., has become increasingly important. Providers face routine product backorders and recalls, and as a vendor, Medline often receives requests to change fixed labels on bins. Smart labels are fully integrated into ERP for automatic item updates when there are product substitutes, item conversions and par level adjustments to eliminate the need for a team member to check for recalls manually.
Jeff Jochims, Executive Vice President, COO and President, Products Healthcare Service, Owens & Minor
1. Demand management/predictive analytics software.
2. Tracking and tracing.
3. Artificial Intelligence.
Supply chain management is about reliability. While many items on this list may be exciting considerations for the future, or may enhance specific elements of supply chain, our job is to perform the basics and to do so in a manner that establishes reliability for our stakeholders. Demand planning is at the heart of any healthy supply chain. Without demand planning, success will be difficult to find and coincidental, at best. From there, visibility into the supply chain with tracking and tracing is vital for planning and for identifying chokepoints. Finally, at the scale at which we all operate, it is impossible to manage the vast spectrum of data coming at us without healthy AI assistance and support.
Kyle MacKinnon, Senior Director, Operational Excellence, Premier
1. Demand management/predictive analytics software will allow supply chains to recognize, optimize and improve demand signals across healthcare.
2. Tracking and tracing is important so that health systems and suppliers can have end-to-end supply chain visibility. Today we lack information on the location, production process and inventory status for critical medical products and drugs. We must better understand product availability and risk – from raw materials to production and distribution, to state and national stockpiles, to hospital inventory.
3. Robotic Process Automation can help improve, for example, revenue cycle operations and free up hospital resources that can be deployed back into the system under needed staff (nurses, supply chain, other).
Tom Redding, Senior Managing Director, Healthcare, St. Onge
1. Cloud-based software for virtual ERP to virtual MMIS to virtual item masters to virtual physician/surgeon preference cards, etc. Implementing cloud-based software is an enabler for the supply chain. It creates an environment to view, share and access information remotely (e.g., mobile) in real time while providing the foundation for data-based decision making. The legacy on-premises systems have their limitations to access information in real time and aren’t geared to the ever-changing requirements. When changes were required to better support the business, it was a significant event and could impact many stakeholders across the organization. At the speed of change in healthcare and the increased complexity, supply chain leaders need to be more agile and leverage more integrated solutions.
2. Robotic Process Automation (RPA) (including advanced dashboards, using “bots” to accomplish basic, mundane and routine tasks and automatic reorder points). Speed to execution is imperative to stay ahead of the organizational needs and not become the bottleneck to progress. There are many tasks and processes (purchase order generation, invoice processing, etc.) that historically were manual processes that continually created bottlenecks for operations. With advancements in RPA, many health systems are exploring ways to either process information faster, make decisions faster and/or reduce the lag time of processes to improve service to its customers. Supply chain leaders will need to continue to challenge their operations to remove “non-value-added time” and focus on tasks and processes that add value to the organization.
3. Demand management/predictive analytics software. Health systems will seek to leverage their cloud-based ERP systems and supporting technology to access replenishment data to assist in better demand management. It is a nature evolution of building the infrastructure to capture information real-time and allow supply chain leaders to make decisions using more advanced software and analytical tools and models. Demand management software will allow supply chain leaders to focus on speed-to-execution for their operations.
Atul Vashistha, CEO and Founder, Supply Wisdom
1. Continuous monitoring for real-time operational risk intelligence and automated risk actions. The most critical technology to implement correctly is continuous monitoring for real-time operational risk intelligence and automated risk actions. In today’s dynamic risk environment, the sheer volume of risk findings is beyond human capabilities to handle. Unlike humans, risk never sleeps, and fortunately, technology doesn’t either. Today’s technology enables supply chain risk management to move away from overly human-dependent and inadequate processes to “always-on” continuous monitoring across a full spectrum of risk events (not limited by language constraints).
2. AI. AI can be leveraged to ensure this real-time risk intelligence is accurate without noise and false positives. This frees up human teams from spending any time on risk identification. This risk intelligence can then be operationalized to automate many routine risk actions. Such technology further frees up risk teams and enables them to focus on only the most critical risk actions that require human involvement for resolution.
3. Demand management/predictive analytics. Data science can be leveraged for demand management and predictive analytics to further increase efficiencies. These technologies provide the radical transparency needed for proactive vigilance and agile intervention. Incorporating these technologies is the key to building and maintaining resilient supply chains.
Margaret Steele, Senior Vice President, Med/Surg, Vizient
These three strategies – demand management/predictive analytics software, digital supply chain and cybersecurity – can be implemented now without having to depend on technology enhancements, adoption or underdeveloped integration within the health system. Further, these will lay the foundation for many other types of technology.
1. Demand management/predictive analytics software. This provides a holistic view of the supply chain. One chief supply chain officer recently told us how valuable time is when managing a disruption – each day of advance notice can save hospital leaders as much as a week of extra work and predictive analytics can provide that.
2. Robotic process automation. Robotic process automation (RPA), while having been around for many years, has taken on a new level of importance in supply chain due to the combination of optical character recognition and machine learning. While typically focused on efficiency by automating routine tasks, RPA can provide early warnings of supply constraints and execute contingencies. Furthermore, the data capture made possible by automation can be leveraged downstream by AI and machine-learning processes to support predictive models that support resiliency strategies.
3. Cybersecurity (e.g., hardware, software). The supply chain is now tasked with risk management. This includes partnering with the IT team to be sure all purchases with a cybersecurity risk are understood, addressed and mitigated. Most capital equipment and of course all applications and SaaS [software-as-a-service] solutions come with such risk and the contract terms are incredibly complicated. Supply chain teams also need to develop a process in the event of a breach with any of their contracted suppliers or a disruption within their own organization. It is part of disaster planning and should be addressed alongside their IT teams.
Keith Lohkamp, Senior Director, Industry Strategy, Workday
1. Cloud-based software for virtual ERP to virtual MMIS to virtual item masters to virtual physician/surgeon preference cards, etc. As the last few years have shown, the healthcare industry continuously changes and evolves as it faces changes in regulation, reimbursement, technology and conditions. For supply chain, we saw disruptions with shortages and backorders that continue today. At the same time, providers are trying to adapt and innovate to respond to changing patient expectations and evolving reimbursement models. We found that organizations using modern, cloud supply chain management systems like Workday were able to better manage and monitor inventory, track backorders, source more effectively and adapt quickly as conditions changed from month to month. What we have also seen is that is difficult to take old, legacy processes and lift and shift to the cloud. Process designs need to also take into account the best use of technology.
2. Tracking and tracing – bar coding, RTLS (e.g., RFID, infrared, ultraviolet), Bluetooth, Near-field communication, etc.) and smart labels (e.g., QR codes). Coming out of the pandemic, real-time visibility into stock on hand has become even more critical. At a minimum, health systems need to leverage mobile devices and bar-code scanning to capture what products are being used or are on the shelves. Bar codes allow positive identification of products while streamlining inventory processes. Workday provides this functionality natively in our solution, with a majority of our customers leveraging to manage inventory. Historically, high costs have slowed adoption of RTLS, RFID and other active technologies. However, technology has advanced (and costs reduced) enough to evaluate these technologies for real time sensing of inventory or equipment, providing visibility in an automated, real-time fashion.
3. Demand management/predictive analytics software. With products often in short supply and ongoing disruptions in the supply chain, it is more important than ever to have a baseline understanding of predicted demand to be able to anticipate potential shortfalls in inventory and adjust sourcing strategies according. Healthcare providers should identify what they want to model and invest in tools that aggregate data from multiple sources to manage multiple planning scenarios. For example, one of our customers is using our Demand Planning Accelerator, built in partnership with Huron Consulting, to bring in scheduled procedures from their clinical system, extrapolating product demand and compare against inventory from within Workday. They are using this information, along with on-hand data from their prime distributor, to identify risk and potential for delayed surgeries and adjust sourcing plans accordingly.
Note: investing in Cloud will bring along cybersecurity benefits and tracking and tracing will bring mobile devices to bear.
Mark Wheeler, Director, Vertical Marketing Practice Lead, Zebra Technologies
1. Wearable Computing / Sensors. We have learned the critical nature of operational visibility and having accurate and timely information to deal with the unexpected events that transcend institutional knowledge, assumptions and patterns of behavior. Data capturing at the edge increases effectiveness and efficiency.
2. Tracking and Tracing. The expanding capabilities for identifying and tracking products at the edge often require adherence to standards and an investment at the production line level so that visibility can extend all the way through the supply chain to the point of use.
3. Mobile Devices. Today’s purpose-built enterprise-class devices are designed with front-line users, workplaces and workflows in mind, building in ease of use, reliability, ergonomics and ruggedness in keeping everyone connected and informed.
Process planning can facilitate people using products, technology
Healthcare supply chain executives, leaders and professionals create, develop, improve and refine a plethora of processes within their organizations that can change performance and workflow regularly and routinely.
Healthcare Purchasing News identified nearly 20 specific processes currently available and surveyed a small group of supply chain experts working among providers, suppliers and technology companies, asking them to select which should become standard strategies and tactics for supply chain crisis management post-pandemic. Then HPN asked them to rank their top three choices by priority. Here’s what they shared.
Top Process Strategies and Tactics
Ranked by popular vote
1. Enable more visibility into distributor stock-on-hand and, if possible, visibility into production and raw materials access
2. Establish, maintain clinical integration with operations/physician relationships through value analysis and management
3. Work with primary suppliers and vendors to manage local/nearby centralized service centers to maintain “safety”/segmented stock
4. Rely more on local suppliers and vendors
5. Adopt and implement supply data standards on all product packaging from bulk down to the each
6. Control/eliminate non-contract/off-contract/shadow purchasing
7. Set up a customized color-coded “priority” list for products based on clinician demand/usage cross-referenced by access/availability
8. Sustainable projects/programs, eco-friendly sourcing, contracting, purchasing, recycling and disposal
9. Develop your own centralized service center (CSC)
10. Set up a category assessment list for product requests based on general and specialty product attributes compared to contract and formulary access
11. Partner with a nearby “competitor”
12. Maintain remote management aligned with telehealth capabilities (e.g., linking clinical and operational services for “hospital-at-home” and remote care options)
13. Internally designed/packaged products (e.g., custom kits, packs and trays; surgical supply bundles)
14. Data sharing between trading partners and other providers to support supply chain management and evidence-based protocols
15. Continuous monitoring across a full spectrum of supplier and location risks
16. Develop a supplier/category risk assessment to understand where you need supplemental suppliers
What didn’t garner votes from among the choices offered: Create a mobile delivery system by outfitting and stocking a van with supplies or set up local supply marts for community access
Top 3 Priorities
Shawn McBride, Vice President and General Manager, WaveMark Solutions, Cardinal Health
1. Establish, maintain clinical integration with operations/physician relationships through value analysis and management. The value analysis role is one that communicates clinicians’ needs to materials management by making recommendations on new products to reduce clinical variation and ultimately, drive better quality and outcomes. The focus is on standardization, utilization, reduced clinical variation and the elimination of waste.
2. Adopt and implement supply data standards on all product packaging from bulk down to the each. Enable processes and technologies that capture the UDI standard to ensure they are consistent across hospital locations. This will ensure that things like product recall, expiry and cost are consistently measured throughout the system using the same standards and tracked so patient safety is not impacted. This also helps the flow of data between IT systems, as each will use the data standard as the “source of truth” to enable data software or data teams to easily combine product data and derive insights.
3. Enable more visibility into distributor stock-on-hand and, if possible, visibility into production and raw materials access. Having partnerships with vendors or distributors that give access will allow you to make effective sourcing decisions – to avoid a position where products are out of stock.
Marlin Doner, Vice President, Data Analytics and Product Strategy, Prodigo Solutions
1. Control/eliminate non-contract/off-contract/shadow purchasing. Tracking off-contract purchases is important because this bucket of spend is a significant driver of increased supply chain costs. Pricing errors and overpayments from off-contract spend erode projected savings and add overhead costs to manage, fix, and reverse.
2. Enable more visibility into distributor stock-on-hand and, if possible, visibility into production and raw materials access. Benefits of increasing inventory visibility include increasing process efficiency, maintaining solid inventory levels, supporting demand forecasting, improving the patient experience, boosting internal communication between supply chain and operations and reducing supply chain costs.
3. Develop your own centralized service center (CSC). Having its own CSC can enable the health system to reduce overall logistics and handling costs because the delivery/pickup/routing network can reduce small order premiums and freight carrier handling charges. [In addition], orders can be aggregated across purchasing locations and served from a single source.
Cory Turner, CMRP, Senior Director, Healthcare Strategy, Tecsys
In the same vein as technologies, processes should reflect respective needs; I would be hard-pressed to universally rule out any of the processes listed because I can imagine a use case where any one of them could be the most effective strategy.
1. Develop your own centralized service center (CSC). I am a strong proponent for the CSC methodology. Being able to effectively control your own supply chain destiny is something that most health systems lack when they rely completely on distributors. Having the resources and the means to bulk buy critical items, source directly from manufacturers and have the space for more clinical support services to take advantage of the same efficiencies is a key to supply chain success.
2. Enable more visibility into distributor stock-on-hand and, if possible, visibility into production and raw materials access. This is a prime example of where the healthcare industry could learn some valuable lessons from the manufacturing world. For decades, the automotive industry has controlled, and in a lot of cases owned the manufacturing arm of their business. This gives them to power to flex and adapt to ever changing cycles in their demand.
3. Rely more on local suppliers and vendors. COVID forced the adoption of local suppliers from healthcare, and this is a trend that must continue with a true supply chain crisis management plan. Having these resources effectively in the IDN’s backyard is a strategic value that the next crisis will have a hard time breaking down.
Bonnie Lai, General Manager, GHX Lumere
1. Establish, maintain clinical integration with operations/physician relationships through value analysis and management. At the start of the pandemic, it quickly became essential for supply chain teams to collaborate with clinicians more closely. In doing so, clinicians realized the impact strong supply chain partnerships had on their ability to provide outstanding care, get the supplies they needed and support their own safety through the procurement of PPE that they so desperately needed. These relationships were formed through crisis, but as we emerge from the pandemic, maintaining and continuing to leverage a clinically integrated supply chain to deliver higher quality care will be key. During COVID-19, supply chain and clinicians aligned around a set of shared goals. That mentality can, and should, be applied to tackling other big problems within both hospitals and health systems and the healthcare industry as a whole.
2. Set up a category assessment list for product requests based on general and specialty product attributes compared to contract and formulary access. Category assessment lists for product requests and priority lists are incredibly helpful resources for health systems as supply chains continue to navigate a large volume of backorders and shortages.
3. Set up a customized color-coded “priority” list for products based on clinician demand/usage cross-referenced by access/availability. At GHX, we have a deep knowledge of products and medical devices and the evidence behind them, as well as expertise in how they can be interchanged. Our customers frequently seek our support in understanding what product alternatives exist. Building out these lists help supply chain teams quickly and easily understand potential clinically appropriate substitutes as well areas which products are essential to continuing to provide high-quality care.
Angie Haggard, CEO, RDA
1. Rely more on local suppliers and vendors. Relying on local suppliers and vendors should be at the top of our priority list. The more we can rely on U.S. suppliers and vendors, the better for our country, our economy, our employees, our patients and our sustainability. Local suppliers and vendors include any U.S. company. It doesn’t always mean a supplier or vendor that is in your same city or state. The more we can utilize local manufacturers and companies that are in the U.S. enables us as a country to be more self-reliant and less dependent on other countries. When we rely on someone to provide what we need, they control our outcomes and our choices are limited to what they can provide. Relying solely on other countries for our supplies is no different than a child relying on a parent. Parents make decisions for their children – some good, some bad. As decision makers, and wherever possible, we need to rely more on local suppliers and vendors.
2. Establish, maintain clinical integration with operations/physician relationships through value analysis and management. The more alignment with physicians and stakeholders, the more likelihood that products and services will be purchased that are needed, effective and do not pose a financial, legal or regulatory risk to the organization. Value analysis is not just a committee that approves all requests. Value analysis is multiple committees that are led by physicians/stakeholders and facilitated by supply chain to govern purchasing decisions for supplies and services that align with the organization’s revenue, quality, outcomes and financial goals. When value analysis has the right structure, processes, tools, and has aligned physician/stakeholder incentives, the outcome is unbelievable. With COVID funding going away, increasing revenues and decreasing expenses will be even more critical in the upcoming year. Repeatedly, when executives invest and see the outcomes of a solid value analysis management, they are pleasantly shocked at the positive change and double-digit impact in quality, outcomes and finances (double digit percentage reductions and double digit percentage revenue increases).
3. Control/eliminate non-contract/off-contract/shadow purchasing. Simply put, you can’t control what you don’t see. In addition, this is low-hanging fruit for savings. Off-contract/non-contract purchases pose a higher regulatory risk and potentially higher cost to the organization. When items or services are purchased without a contract, volumes aren’t leveraged, risk isn’t evaluated, suppliers may not have been vetted and costs are typically higher. The challenge of eliminating this is there must be a purchasing and contracting infrastructure in place to support the needs of the end users and stakeholders purchasing off-contract. If there is not a team and tools to manage this, it is difficult to accomplish. However, it can be achieved by developing a streamlined process flow of contract review and approval as well as thresholds that expedite the review and approval process. A contract management system will help to facilitate this process and will minimize the labor needed to eliminate non-contract purchases. In addition, establishing system authorizations in the MMIS will aid in compliance and enforce purchasing controls.
Ashok Muttin, Founder & CEO, SupplyCopia
1. Establish and maintain clinical integration with operations/physician relationships through value analysis and management. Establishing a common framework for all stakeholders to act upon will speed up the “product and procedure” standardization. Each stake holder is looking at the same set of data and insights and deciding a future course of action for them.
2. Set up a customized color-coded “priority” list for products based on clinician demand/usage cross-referenced by access/availability. This simple solution will eliminate waste and over-usage and provide insights into the stocking and warehousing.
3. Adopt and implement supply data standards on all product packaging from bulk down to the each. Again, this is a simple solution that will improve the order management process, stockouts, over- and under-supply issues.
Brandon Reeder, Vice President, Operations, Supply Chain Optimization, Medline
1. Work with primary suppliers and vendors to manage local/nearby centralized service centers to maintain “safety”/segmented stock. To help provide inventory management services to customers, Medline created CERT (Customer Emergency Response Tools) program – a subscription-based service to store and manage critical emergency inventory. The company monitors inventory levels, allocation quantities and expiration dates, and rotates stock for customers.
2. Partner with a nearby competitor. The ability to have visibility and share inventory, especially during a pandemic, is critical when planning for disasters. As demand varies for facilities, sharing products with other healthcare providers can help reduce the chance of a shortage. This should not be limited to only nearby competitors.
3. Setup a customized priority list. Health systems should think about products that are acceptable product substitutions. Vendors like Medline can help review clinically preferred products and create a list of approved substitution products. Medline has seen tremendous success working with our customers and utilizing auto sub functionality – working with clinicians and understanding products that can be substituted.
Jeff Jochims, Executive Vice President, COO and President, Products Healthcare Service, Owens & Minor
It is hard to leave any of these options off of any list for strong supply chain management, but here is my sense of priority:
1. Rely more on local suppliers and vendors. The pandemic proved that we need to reduce our dependance on foreign supply chains, primarily Asia-based, that can unilaterally cut off our product availability. There is value in supporting and investing in domestic manufacturing and as well as qualified small-, woman-, minority-, veteran- and disabled-owned manufacturing and service organizations.
2. Establish, maintain clinical integration with operations/physician relationships through value analysis and management. When supply chain crises happen, clinical support for alternatives and quick decisioning is paramount. Open, transparent partnership and collaboration is key to managing through a supply chain crisis. In addition, leveraging technology and tools that enable actionable data and insights helps speed decision making and drive efficiencies in operations.
3. Work with primary suppliers and vendors to manage local/nearby centralized service centers to maintain “safety”/segmented stock. The ability for distribution partners to work with customers on segmented/separate, even customer owned inventory has become an effective tool during the pandemic. The right distribution partner can consolidate provider, manufacturer and distributor inventory, giving hospitals supply chain leaders end-to-end visibility and control of their supply chain from a single source.
4. Control and eliminate shadow purchasing. Although this is a fourth priority, we cannot avoid speaking to the need to eliminate shadow purchasing. We’re all dealing with the effects of uncontrolled purchasing of “whatever is available,” often resulting in the procurement of products that our professional staffs don’t trust or won’t use. If we get the three priorities above right, this should not be a factor, but it is a risk to which we must remain vigilant in the event of a future crisis.
Kyle MacKinnon, Senior Director, Operational Excellence, Premier
1. Enable more visibility into distributor stock-on-hand and, if possible, visibility into production and raw materials access. Supplier/distributor visibility into the supply chain is critical. Unlike the retail industry, hospital staff, GPOs and other supply chain stakeholders rely on the ability to analyze the impact of potential disruptive events. With this enhanced visibility, organizations can better mitigate risk and improve patient safety.
2. Establish, maintain clinical integration with operations/physician relationships through value analysis and management. Value analysis teams are a critical component in prioritizing categories, products, alternatives and formularies for a variety of “product disruption scenarios” that can and do occur.
3. Set up a category assessment list for product requests based on general and specialty product attributes compared to contract and formulary access. This will help ID clinically acceptable alternatives.
Tom Redding, Senior Managing Director, Healthcare, St. Onge
1. Establish, maintain clinical integration with operations/physician relationships through value analysis and management. There has been a strong push over many years to standardize supplies and equipment across service lines to drive financial performance for the organization. Unfortunately, the “one-track mind” to save money has created tunnel vision and has increased risk for organizations. Going forward, supply chain leaders will need to think through the optimal use of their suppliers to ensure product availability. This includes identifying primary, secondary and potentially additional supply channels through close integration and collaboration with operations, clinical and physician leadership.
2. Enable more visibility into distributor stock-on-hand and, if possible, visibility into production and raw materials access. Supply chain leaders have learned that “service” isn’t always a given and that focusing on price of product is only part of the equation. As supply chain leaders take a step back from the pandemic, they will re-purpose their time to aligning to a service-based model and delivering value to organization, not simply taking every ounce of cost out of the system. Suppliers will also need to take a more advanced approach to managing relationships and building trust through transparency. Transparency is critical to any successful relationship.
3. Develop your own centralized service center (CSC). The pandemic was the perfect storm for supply chain leaders – it exposed how fragile and unprepared the healthcare supply chain was but also created the opportunity for supply chain leaders to rise to the occasion and demonstrate the importance of supply chain. With the newfound support from senior leaders, many of the leading supply chain leaders are leveraging this opportunity to build the necessary infrastructure through investments in people, systems and physical infrastructure, which includes a centralized service center. Supply chain leaders are also leveraging this opportunity to build a shared service model with other departments like sterile processing, pharmacy and lab operations. In other cases, a centralized service center may add unnecessary complexity for smaller organizations and is not justifiable. Health systems will need to evaluate their operations for shared services opportunities and not just copy what another heath system is doing because it seems like the right thing to do.
Atul Vashistha, CEO and Founder, Supply Wisdom
1. Continuous monitoring across a full spectrum of supplier and location risks
2. Enable more visibility into distributor stock-on-hand and, if possible, visibility into production and raw materials access
3. Rely more on local suppliers and vendors
Ensuring you have the capability to continuously monitor a full spectrum of supplier and location risks is critical to securing supply chains in today’s dynamic risk environment. But beyond knowing the health of your suppliers and possible risks of disruption, you need to make sure you have visibility into what’s available and where shortages may occur. This includes not only finished products but also their component parts and materials. For this, you need deep visibility into your supply chain beyond your suppliers to your suppliers’ suppliers (i.e., Nth parties) and also into the locations from which they operate and source component materials.
Agile intervention may necessitate the need to quickly switch to alternate sources of supply. Local suppliers and vendors can play a critical role in that strategy. With the increasingly volatile global geopolitical environment – the war in Ukraine and increasing tensions between China and Taiwan – added to the increased occurrence of extreme climate-related weather events including droughts, flooding and fires, it makes sense to source closer to home when possible. Proactively identifying these alternate suppliers ahead of disruptions is critical for agile intervention.
Margaret Steele, Senior Vice President, Med/Surg, Vizient
1. Develop a supplier/category risk assessment to understand where you need supplemental suppliers. Understand your risk on all critical items: Understand product pedigree, usage and critical items for your organization.
2. Enable more visibility into distributor stock-on-hand and, if possible, visibility into production and raw materials access. Know what your plan B is for all these items. Demand transparency from your suppliers and distributors – the ability to understand where the products your system purchases are produced, the raw materials that the products are made from and the location of assembly and sterilization. Then you will be able to better determine your risk factors to implement risk mitigation strategies (“plan B”) and prepare a backup plan for all critical items within your organization.
3. Establish, maintain clinical integration with operations/physician relationships through value analysis and management. During the time of significant supply disruption, it’s important to stay close to these groups to develop conservation strategies, standardization and to understand the impact of a necessary change or adaptation.
Keith Lohkamp, Senior Director, Industry Strategy, Workday
1. Enable more visibility into distributor stock-on-hand and, if possible, visibility into production and raw materials access. A key part of planning for a crisis is understanding what is happening upstream in the supply chain and plan for alternatives in case of disruptions.
2. Establish, maintain clinical integration with operations/physician relationships through value analysis and management. Given ongoing pressures on margins, a strong integrated process to identify opportunities to optimize clinical supply chain processes will ultimately lead to reduced costs, less variability, and higher quality.
3. Work with primary suppliers and vendors to manage local/nearby centralized service centers to maintain “safety”/segmented stock. Part of developing a resilient supply chain is to either create or plan for “safety” or committed stock. This includes potentially contracting with a 3PL to lease space to store owned inventory.
Mark Wheeler, Director, Vertical Marketing Practice Lead, Zebra Technologies
1. Adopting GS1 standards allows for accurate data capture and tracking across SKUs, pack levels and lot numbers, enabling automated first in first out (FIFO), expiry date management and recall management without employee training dependencies.
2. Using your own or a partner’s service center, enables you to establish real-time access to inventory visibility.
3. For larger operations, developing and maintaining your own supply center will give you control over inventory policy, purchasing options and data standard compliance, and elevate your service levels for customers.
People employing tech, working through processes, make crisis management difference
Healthcare supply chain executives, leaders and professionals recognize that processes and procedures drive much of an organization’s productivity and performance improvement from administrative, clinical, financial and operational perspectives.
Healthcare Purchasing News identified nearly 10 specific people-oriented and related strategies and tactics currently available and surveyed a small group of supply chain experts working among providers, suppliers and technology companies, asking them to select which should become standard strategies and tactics for supply chain crisis management post-pandemic. Then HPN asked them to rank their top three choices by priority. Here’s what they shared.
Top Process Strategies and Tactics
Ranked by popular vote
1. Data/readiness/systems analysts and/or scientists
2. Clinical connections through value analysis/management by having clinicians actively serving on supply chain staff, including a physician as Medical Director of Supply Chain
3. Dedicated demand planning specialists
4. Crisis/Critical Action Team(s) that specialize in selected areas with senior-level support and ad hoc/multifunctional members akin to military models
5. Dedicated sourcing managers per clinical service line or product category
6. Internal liaison(s) with distributor, GPO and/or manufacturer to track inventory access, consumption, levels and locations
Top 3 Priorities
Shawn McBride, Vice President and General Manager, WaveMark Solutions, Cardinal Health
1. Clinical connections through value analysis/management by having clinicians actively serving on supply chain staff. A clinically integrated supply chain requires clinicians and supply chain teams to work together with alignment to the same goals. There is a clear connection between the efficiency and maturity of one’s supply chain and the effectiveness of clinicians to be able to provide the best care.
2. Data/readiness/systems analysts and/or scientists. Health systems are data rich, but insight poor. We are seeing some of the most cutting-edge supply chains hire teams whose sole responsibility is ensuring that data can be turned into actional insights. Many systems are relying on their vendor partnerships to ensure they have actionable data (and prescriptive next steps) for their staff to take action upon.
Marlin Doner, Vice President, Data Analytics and Product Strategy, Prodigo Solutions
1. Clinical connections through value analysis/management by having clinicians actively serving on supply chain staff, including a physician as Medical Director of Supply Chain. Engaging clinical staff is the number 1 priority for healthcare supply chain to add value. It is important for the supply chain to understand what frontline workers and clinicians need to practice medicine and care for their patients. Understanding those needs can help the supply chain negotiate the best value to support the clinical activities. Incorporating clinicians in the supply chain process supports a value-based supply chain that is focused on patient outcomes with less effort going to error resolution and match exceptions.
2. Dedicated sourcing managers per clinical service line or product category. Clinical purchase categories are the most leveraged for revenue cycle and cost management. These categories need to consider the total cost of ownership and clinical outcomes not just price.
3. Internal liaison(s) with distributor, GPO, and/or manufacturer to track inventory access, consumption, levels, and locations. There is no such thing as too much transparency. Many health systems are highly dependent on the distributor for regional stock, low volume logistics and warehousing and in some cases supply management technology. The distributor must be managed as a key link in the chain of custody.
Cory Turner, CMRP, Senior Director, Healthcare Strategy, Tecsys
All must be considered and most have to be a priority, if not already.
1. Crisis/Critical Action Team(s) that specialize in selected areas with senior-level support and ad hoc/multifunctional members akin to military models. Multidisciplinary teams are valuable for any operational transformation, and a crisis demands transformative thinking at all levels of an organization. We have had the unique opportunity to work with a number of health systems in their deployment of emergency preparedness plans, and we found those that invested the time and resources to carve out critical action teams were well served when the pandemic came along.
2. Dedicated sourcing managers per clinical service line or product category. I may sound like a broken record, but we need to get better at diversifying our sourcing strategy so that a crisis in one country or one port doesn’t shutter the whole system. Empowering sourcing managers to manage a clinical service line or product category to be more strategic in their approach, with suitable data insights to support them, is a great start.
3. Dedicated demand planning specialists. I’ll point to our white paper (“5 Steps to Achieving Higher Performance with Demand Planning, (https://infohub.tecsys.com/white-paper-5-steps-to-achieving-higher-performance-with-demand-planning) for a deep dive on this subject, but in it we highlight the advantages of dedicated demand planners. A seasoned demand planning professional will implement well-structured processes, ensure the right tools are in place and will harness the knowledge and experience of your inventory planners as well as the valuable business intelligence contained within the sales/services team. Doing nothing is not an option. It’s time to lay that cornerstone.
Bonnie Lai, General Manager, GHX Lumere
1. Dedicated sourcing managers per clinical service line or product category. Health systems are facing increased financial pressure as they rebound from pandemic-induced revenue loss and increased labor and supply costs. Sourcing managers can support financial recovery by identifying opportunities for standardization and partnering with service lines to execute ongoing savings opportunities. These functions can ultimately support efforts to reduce clinical variation and provide more cost-effective care.
2. Clinical connections through value analysis/management by having clinicians actively serving on supply chain staff, including a physician as Medical Director of Supply Chain. Clinical connections between supply chain and service lines are important because these clinical supply chain champions can help align fellow clinicians around the standard of care clinicians should be using. This strategy is also critical for reducing costly clinical variation in both practice and in the supplies that are used with a patient.
3. Dedicated demand planning specialists. Dedicated demand planning specialists are an interesting and emerging role in healthcare, particularly when the role includes some clinical expertise. These specialists can then partner with clinicians to help them understand factors such as category assessment and priority lists so they know what products make acceptable alternatives. This is good work for demand planning specialists to undertake beyond the narrower approach of just looking at inventory levels and trying to get ahead of purchasing and controlling. Ideally, demand planning specialists will partner and work very closely with clinicians moving forward.
Angie Haggard, CEO, RDA
1. Crisis/Critical Action Team(s) that specialize in selected areas with senior-level support and ad hoc/multifunctional members akin to military models. This needs to be done yesterday. This is critical and needed, especially in a hospital or healthcare facility to proactively prepare for the unexpected. If we have learned anything in the past few years, it is that the unexpected is inevitable. Identify select resources from supply chain and key departments throughout the facility to serve as the crisis/critical action team. They should establish contingency plans and protocols for each area and then meet periodically to review and update them. This is not a “side job” but roles that should be part of a job description. If it’s not part of a current job description, there should be a clear delineation and roles defined for this task force and others are clear on their responsibilities. The critical action task force must have designated time for them meet to review, plan, and execute. In addition, the critical action team should have documented responsibilities, a clear escalation and communication path and defined authority (with internal and external resources) pre-, mid- and post-crisis.
2. Internal liaison(s) with distributor, GPO and/or manufacturer to track inventory access, consumption, levels, and locations. Hopefully most organizations already have liaisons with their primary distributor/GPO/highest volume manufacturers. However, if they do not, this should be in place immediately. This does not have to be a full-time job but should exist across various supply chain roles within a health system. In addition, this responsibility could be spread across various resources in Supply Chain: Identify a liaison for the distributor, a liaison for the GPO and a Sourcing leader or Category leader for the manufacturers. These liaisons should meet with the primary distributor, primary GPO and highest volume manufacturers no less than quarterly for a formal business review. The distributors, GPOs and large manufacturers have these reports readily available so there should be little to no effort required from a hospital to generate the reports. The responsibility of the liaison is to review the reports, collaborate with the distributor/GPO/manufacturer to incorporate the changes occurring and/or forecasted to occur within the health system and surrounding areas to mitigate risks.
3. Dedicated sourcing managers per clinical service line or product category. Having dedicated sourcing managers per clinical service line, product category and capital is extremely beneficial. It enables them to become experts within the category, know the products, establish a strong relationship with the clinicians using the products, and a strong relationship with suppliers in the space, and an awareness of the latest and greatest news/technology/tools in that space. However, a key to success with a structure of dedicated sourcing managers, is collaboration across the sourcing managers. This enables expertise to be leveraged across categories when dealing with a single supplier that covers multiple categories. Progressive supply chain organizations utilize this structure. For the healthcare organizations that are moving to this structure, the most common categories that are deployed first with this model are Orthopedics, Cardiology and Spine/Neuro.
Ashok Muttin, Founder & CEO, SupplyCopia
1. Clinical connections through value analysis/management by having clinicians actively serving on supply chain staff, including a physician as Medical Director of Supply Chain. Assuming that all of our focus is on physician preference items and physician empowerment, having physicians involved in the supply chain processes is an eye opener for them and this improved collaboration will result in many benefits such as product and procedure standardization, improving thee thinking on PPI, waste management, etc.
2. Data/readiness/systems analysts and/or scientists. While you may not necessarily need scientists to manage the data, it’s imperative that any organization must have the data readiness and system readiness. Without this necessary infrastructure none of the decision making is going to be accurate.
3. Dedicated sourcing managers per clinical service line or product category. These managers could serve not only as subject matter experts, but also manage the risks associated with the supplier and products. They can identify issues much before they become unmanageable. If they are also provided the accurate data and systems, then they can be doubly productive.
Brandon Reeder, Vice President, Operations, Supply Chain Optimization, Medline
1. Crisis/Critical Action Team. For continuity through a crisis, it is critical to have an established team and a defined process and “mock drills.”
2. Data/readiness/systems analysts and/or scientists. When you get into crisis mode, there’s a heightened need for on-the-fly analytics around what products are being used and what’s needed when and where. It is important to have a team of people focused on looking at demand needs across every department and can assess the data to help create a strategic plan.
3. Dedicated demand planning specialists. This team will drive demand planning activities and should work hand-in-hand with the analysts to strategically plan around the needs identified through data analysis.
Jeff Jochims, Executive Vice President, COO and President, Products Healthcare Service, Owens & Minor
1. Dedicated demand planning specialists. Demand planning is critical to any healthy supply chain. Dedicated data management by demand planners can help connect hospitals, suppliers, and distributors to enable better planning and speed of response when handling challenges.
2. Data/readiness/systems analysts and/or scientists. Accurate and available data and information are critical to response times and decision-making during a crisis. However, it is also a critical element of daily operations and should be managed and leveraged daily to truly empower results.
3. Internal liaison(s) with distributor, GPO and/or manufacturer to track inventory access, consumption, levels and locations. We know more than ever that supply chain management is a team sport. Success requires the full and collaborative engagement of all parties involved in each step of the supply chain. Dedicated points of contact who can problem solve, make decisions and liaise across supply chain partner resources are invaluable.
Kyle MacKinnon, Senior Director, Operational Excellence, Premier
1. Clinical connections through value analysis/management by having clinicians actively serving on supply chain staff, including a physician as Medical Director of Supply Chain. Value analysis and supply chain should be in constant communication with one another.
2. Internal liaison(s) with distributor, GPO and/or manufacturer to track inventory access, consumption, levels and locations. This role can help orchestrate the flow of information between critical stakeholders within the supply chain and hospital. It can identify and communicate clinical needs and provide situation updates based on product utilization at each hospital facility.
3. Crisis/Critical Action Team(s) that specialize in selected areas with senior-level support and ad hoc/multifunctional members akin to military models. Designated teams such as this ensure that roles are clearly defined in each situation that arises. Each team member has assignments, responsibilities and knows the roles of other contributors as well. Scenario planning and playbooks can also be firmly established and executed against.
Atul Vashistha, CEO and Founder, Supply Wisdom
1. Ongoing risk and resilience operations center team.
2. Data/readiness/systems analysts and/or scientists.
3. Crisis/Critical Action Team.
First and foremost, I believe going forward that all organizations should move beyond a reactive approach to risk and supply chain resilience and pursue proactive vigilance. To that end, I recommend prioritizing the establishment of a permanent and continuously operational Risk and Resilience Operations Center (R2OC) Team. This team can be staffed up or down as the risk environment requires but is always functioning – continuously monitoring, collecting real-time risk intelligence, alerting when the risk landscape changes and planning for disruptions – and most importantly, supporting proactive steps to reduce any risks of disruption.
The R2OC team should include data/readiness/systems analysts or scientists. Their specialized knowledge and skillset provide the ability to leverage data science to understand trends and enhance predictive capabilities. This team can also assess the efficiency and effectiveness of an organization's risk response.
Finally, instead of waiting to establish a Crisis/Critical Action Team after a crisis has unfolded, I believe this should be a function within the R2OC that is activated when a crisis reaches a certain threshold. Such specialized, experienced, and expert thinking is critical during an ongoing crisis. As the R2OC Team has been continuously monitoring the event since the earliest indicators of trouble, this specialized team can access the real-time risk intelligence necessary to stay ahead of risk and more effectively and proactively mitigate or even avoid disruptions entirely.
Margaret Steele, Senior Vice President, Med/Surg, Vizient
1. Data/readiness/systems analysts and/or scientists. An organization’s data must be readily available and accurate, and an organization must have staff available to pull and understand data trends. Analysis of the data provides the foundation to demand planning and ultimately clinical connections across an organization.
2. Dedicated demand planning specialists. Dedicated demand planning specialists are certainly a luxury that not every facility can afford to have on staff. However, with the right data, they can help forecast future product demands including signaling a need for a backup product selection.
3. Clinical connections through value analysis/management by having clinicians actively serving on supply chain staff, including a physician as Medical Director of Supply Chain. It’s no secret that having clinicians actively serve as supply chain staff or on the value analysis team maximizes the effectiveness and voice of the team. This can help with the interpretation of the data, the acceptable substitutions and of course the lift associated with a change. Additionally, creative, clinical minds can solve for product challenges that supply chain teams face by leveraging their experience and understanding of what’s clinically acceptable.
Keith Lohkamp, Senior Director, Industry Strategy, Workday
1. Clinical connections through value analysis/management by having clinicians actively serving on supply chain staff, including a physician as Medical Director of Supply Chain. Focusing on clinical integration is one of the best opportunities to drive efficiencies in the health system.
2. Dedicated sourcing managers per clinical service line or product category. By setting up a category management structure, supply chain teams will be able to assign an individual who can become an expert in a category, building supplier relationships, understanding demand, collaborating with clinical and more to create a strategy that supports balances cost, quality, and outcomes.
3. Data/readiness/systems analysts and/or scientists. Data – about product, price, compliance, utilization, demand and more – is at the core of an efficient supply chain and is the fuel that powers any technology investment.
Mark Wheeler, Director, Vertical Marketing Practice Lead, Zebra Technologies
1. Taking a lesson from the military, war-room scenarios ahead of time with a cross-functional team can help expose pitfalls and gaps in visibility or responsibility.
2. Data scientists are needed to ensure that decisions are made based on statistically valid information and assumptions. This is even more important as we begin to leverage artificial intelligence in increasingly sophisticated ways.
3. Dedicated sourcing managers will develop insights into their particular category, suppliers and markets.
Rick Dana Barlow | Senior Editor
Rick Dana Barlow is Senior Editor for Healthcare Purchasing News, an Endeavor Business Media publication. He can be reached at [email protected].
