The COVID-19 pandemic disrupted many industries, but few were as strained and disrupted as healthcare. A recent survey by HealthTrust Performance GroupSM showed that over the past two years, an overwhelming 84% of respondents who are healthcare professionals said their world had been significantly disrupted. The unprecedented demands placed on the healthcare system have highlighted the importance of critical, but often overlooked functions, such as the supply chain.
Additionally, 90% of survey respondents now see the world and the global supply chain with a different perspective post-pandemic. For supply chain professionals who have worked for decades in back offices and loading docks, this newfound attention and appreciation is a welcome silver lining amid the crisis, as it can be used to build resilience. healthcare providers and enable them to provide the best possible service without interruption. patient care.
Supply chain moves to the forefront
At a high level, COVID has increased awareness of supply chains both within and beyond the healthcare industry. Personal protective equipment (PPE) has become a common phrase and shortages, ranging from gloves to saline solution, have made national news. Discussions about healthcare supply chain disruptions have become commonplace. This dialogue has been fueled by supply shortages that impede consumer purchases (for example, chip shortages affecting the automotive and tech industries) and medical product shortages that impact how from which health care is provided. These events have made supply chain disruption both ubiquitous and expected; and we have all learned to manage later delays as part of our daily lives.
Along with this widespread societal dialogue, business leaders and executives have focused more on supply chain awareness. Supply chain factors are no longer an afterthought, but rather a primary consideration. With this heightened focus, the past few years have also fostered new conversations around risk, including how to mitigate risks to healthcare supply chains while opening the door to broader and candid conversations. on risks in general. It has, therefore, helped to strengthen disaster preparedness planning across all sectors, fueling faster decisions and the identification of resources that will put us all in a better position for future events.
While this increased attention and discussion has been essential for healthcare, the benefits don’t end there. Since this is a priority consideration during the decision-making process, stronger and more resilient supply chain solutions can be achieved.
Achieve a clinically integrated supply chain
The importance of clinical integration is also critical to long-term supply chain resilience. Clinically integrated supply chains were discussed long before COVID, but for many organizations the pandemic has spurred them into action. At its core, a clinically integrated supply chain is achieved through interdisciplinary partnerships and coordination to improve patient-centric outcomes. Continuing to foster and grow this collaboration between manufacturers, distributors and supplier (e.g. supply chain, clinical and operational stakeholders) is more important than ever. The supply chain focus across all groups will ensure that all are working towards the same goal of providing the best possible patient care. And while we’ve discussed improving communication and transparency, they need to stay front and center.
For example, manufacturers of healthcare products are beginning to involve their purchasing managers more specifically in contractual decisions in order to assess their ability to meet their commitments and meet customer needs. These decisions were previously left to sales or other similar customer management teams. However, thanks to this emerging collaboration, manufacturers are now looking at the “big picture” in addition to pushing to achieve their sales targets. Additionally, due to this changing procurement process, healthcare companies are now able to make more informed vendor and product choices that support quality outcomes while reducing waste and overall costs. . This change benefits everyone, creating stronger relationships and providing better patient care.
In addition to working towards the same goal, clinical integration also has clear operational benefits. For example, suppose a supplier is looking to reduce the number of Stock Keeping Units (SKUs) in a category to improve production, inventory efficiency, and costs. From the vendor’s perspective, as long as clinical considerations are taken into account, standardization can improve vendor operations by requiring fewer purchase orders, streamlining inventory management, and improving clinical workflows.
Changes still to come
Although we have discussed some of the advancements that have been made for healthcare supply chains over the past few years, there are still some necessary advancements that are not yet in place. Specifically, in order to solve the global supply and demand headaches at scale, we must continue to rethink how healthcare supply chains work. This will materialize through tactics such as building domestic manufacturing capacity and/or relocating nearby; reconsider inventory strategies (eg just-in-time, days available, distribution methods); and thoroughly assess supplier resilience and supply chain risk with increased transparency across a supplier’s entire supply chain.
Domestically, the US needs to consider long-term commitments and volume-driven strategies (not just subsidies or cash injections). Moreover, when it comes to domestic production, we all have a duty to ask ourselves hard questions to understand what is realistic to produce domestically. These questions include:
- Can the supply chain be resilient from raw material to finished goods?
- Can it be profitable?
- Will it be high quality?
- Can it be ecologically sustainable?
Making strategic and honest choices about opportunities that make sense will be key to optimizing local products and services. For example, items like procedural face masks can be highly automated and require a relatively low cost of capital, making them a viable product for domestic production. While on the other hand, items like Nitrile Examination Gloves could certainly be mass produced in the United States, however, the cost profile would be significantly higher than the alternatives and the production of the raw material (Nitrile butadiene) itself is quite complex.
Taken together, and in conjunction with the progress already made, these additional steps will reinforce the robustness of global supply chains and help avoid delays, shortages and disruptions in the future. Ultimately, it is up to the current generation of supply chain leaders to turn the hard-won lessons of the pandemic into meaningful and lasting changes that will make our systems more efficient and resilient.