Four steps to building resilience in healthcare provider supply chains

The critical role supply chain plays in healthcare systems was brought to light during the pandemic. Up until that time, supply chain function was considered transactional with a focus on buying the right product at the right price and ensuring items arrive on time and at the right location for the clinical areas to function. There was minimum investment put towards making the supply chain resilient. There was also less priority given to data, systems and collaboration with suppliers.

As a result of the pandemic, there have been several supply chain disruptions that have impacted healthcare supply chain and the frequency of these disruptions is only set to rise. Pandemic related disruptions, port disruptions, energy crisis and geopolitical issues across the globe have been the primary causes of shortages. This has also put a heavy inflationary burden on healthcare providers.

Amid ongoing disruptions, supply chain leaders need to take a strategic look at their supply chain and build a short-term and long-term plan focused on resiliency. This involves modernizing data management practices, optimizing information systems, developing performance dashboards and building collaboration with suppliers.

Challenges facing healthcare providers

Achieving supply chain resiliency requires a concerted effort. To achieve success, supply chain leaders at healthcare providers need to overcome several challenges. These include:

Healthcare provider supply chain departments struggle with constantly changing item-level data, lack of accurate inventory view and several downstream systems that rely on accurate supply chain data as the primary source.

Healthcare provider information systems are built for transactional processes. They are not optimized for sharing data or for conducting analysis. Most health systems have not utilized demand planning modules and forecasting capability within their enterprise resource planning (ERP) systems.

Providers struggle with access to dynamic supply data from suppliers to develop a supply chain health dashboard. This prevents providers from being proactive with their demand planning and causes last-minute cancellation of surgeries thus impacting revenue.

Collaboration between providers and suppliers is at a transactional level. Traditionally, there has been a lack of trust between providers and suppliers that has prevented sharing of supply chain data such as demand and forecasting data, shortages in supply, and inventory visibility.

Only those supply chain departments that are data-dependent and have 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 provider supply chain leaders invest in infrastructure to deliver a resilient supply chain.

Four steps to build resiliency

There are four steps healthcare providers must implement to build a resilient supply chain. These include:

1. Achieve supply chain data accuracy by building data from multiple sources to address inventory issues and to optimize all supply chain functions. This should be implemented by upgrading data management systems, integrating data between supply chain and clinical systems, and building partnerships with solution partners, suppliers and group purchasing organizations.
2. Assess strengths and weaknesses of information systems and implement resiliency capabilities for supply chain and clinical systems. Providers should evaluate critical functional capabilities of information systems such as enterprise resource planning systems, inventory management systems and electronic health record system that help in monitoring spend, providing an accurate inventory view, and documenting accurate usage.
3. Develop a supply chain performance dashboard by focusing on important metrics related to contracting, requisitioning, purchasing, inventory management and supplier performance. Selecting the right indicators and metrics is critical in monitoring disruptions and coming up with remediation plans to deal with the impact.
4. Build collaboration tools with suppliers for critical data (such as past purchase history, future changes in demand, and inventory visibility). Supply chain can react quickly in the event of a supply risk or a major disruption with increased sharing of data.

There are many factors that must be considered when building a resilient supply chain. Change will not be realized overnight. This is a multi-year journey that every healthcare provider supply chain department needs to undertake. To learn more about steps healthcare providers should consider, tune in to this webinar on healthcare supply chain in November.

Salil Joshi is a senior director, analyst in Gartner’s Supply Chain practice, providing research insights, advice and thought leadership to healthcare provider clients. His research coverage includes supply chain strategy, procure to pay, master data management, track and trace initiatives and regulation requirements for healthcare providers. He focuses most of his time with healthcare providers and advises them on maturity model development, best practices for managing their supply chain data and systems, and performance metrics to measure supply chain success. He can be reached at [email protected].

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