The critical role the supply chain plays in healthcare systems has been brought to light during the pandemic. Up to this point, the function of the supply chain was considered transactional, with a focus on buying the right product at the right price and ensuring items arrived on time and in the right place to keep clinical areas functioning. Minimal investments have been made to make the supply chain resilient. Data, systems and working with suppliers were also given less priority.
As a result of the pandemic, there have been several supply chain disruptions that have impacted the healthcare supply chain and the frequency of these disruptions is expected to increase. Pandemic-related disruptions, port disruptions, energy crises, and geopolitical issues around the world have been the main causes of shortages. This has also placed a heavy burden of inflation on healthcare providers.
Amid ongoing disruptions, supply chain leaders need to take a strategic view of their supply chain and create a short- and long-term plan that focuses on resilience. This includes modernizing data management practices, optimizing information systems, developing performance dashboards and establishing collaboration with suppliers.
Challenges for Healthcare Providers
Achieving supply chain resilience requires a concerted effort. To be successful, supply chain leaders at healthcare providers must overcome several challenges. These include:
Healthcare provider supply chain departments are struggling with ever-changing item-level data, lack of an accurate inventory view, and multiple downstream systems that rely on accurate supply chain data as the primary source.
Information systems for healthcare providers are being set up for transaction processes. They are not optimized for data sharing or performing analytics. Most healthcare systems have not used demand planning engines and forecasting capabilities in their enterprise resource planning (ERP) systems.
Providers struggle with access on dynamic delivery data from suppliers to develop a dashboard on the health of the supply chain. This prevents vendors from being proactive in their demand planning and leads to last-minute cancellations of operations, impacting sales.
Cooperation between vendors and suppliers is at transaction level. Traditionally, there has been a lack of trust between vendors and suppliers that has prevented the sharing of supply chain data such as demand and forecast data, supply shortages, and inventory visibility.
Only data-aware supply chain departments with the right combination of people, process and technology will be able to withstand supply shocks, demand changes and price pressures. It is critical that healthcare supply chain leaders invest in infrastructure to ensure a resilient supply chain.
Four steps to building resilience
There are four steps healthcare providers must take to build a resilient supply chain. These include:
- Achieve supply chain data accuracy by creating data from multiple sources to solve inventory issues and streamline all supply chain functions. This should be implemented by updating data management systems, integrating data between supply chain and clinical systems, and building partnerships with solution partners, suppliers and group purchasing organizations.
- Assess strengths and weaknesses of information systems and implement resiliency capabilities for supply chains and clinical systems. Vendors should assess critical functional capabilities of information systems, such as enterprise resource planning systems, inventory management systems, and electronic health record systems, that help monitor spend, provide an accurate view of inventory, and document accurate usage.
- Develop a supply chain performance dashboard by focusing on key metrics related to contracting, purchase requisitions, purchasing, inventory management, and supplier performance. Choosing the right indicators and metrics is critical to monitoring incidents and creating remediation plans to manage the impact.
- Build tools to collaborate with suppliers for critical data (e.g. past purchase history, future demand changes and inventory visibility). The supply chain can react quickly in the event of a supply risk or major disruption through increased data exchange.
There are many factors to consider when building a resilient supply chain. Changes are not realized overnight. This is a multi-year journey that every healthcare provider supply chain department must undertake. To learn more about the steps healthcare providers should consider, attend this November healthcare supply chain webinar.