To create a more resilient supply chain, there needs to be better transparency and more diversified sourcing. Keith Lohkamp, senior director of industry strategy at Workday, shared this insight during a session on healthcare supply chain management strategies during the fall AHRMM conference.
“While we continue to face the disruptions of today and tomorrow, innovation, both big and small, is needed to create more resilience in the supply chain,” said Lohkamp. “Now is really the time to start acting to transform and digitize the supply chain, because this will not be the last disruption.”
Among these disruptions are COVID-19 and extreme weather events. Hospitals have been dealing with everything from personal protective equipment (PPE) shortages to sketchy suppliers.
Lohkamp pointed out that while the past year has highlighted the creativity of supply chain teams as they discovered new suppliers and direct sources for product, it also brought attention to cracks in the healthcare supply chain. One such crack is the lack of visibility regarding inventory.
“Almost every healthcare provider I spoke with needed to quickly pull together additional reports and dashboards to track their inventory on hand, specifically tracking detailed information about PPE,” said Lohkamp.
Those tools modeled scenarios to help predict what supplies will be needed, and the data was then shared with leaders across the organization and even government agencies. When organizations tried to find alternative sources of products, they realized just how little information they had on the supply chain of their suppliers.
Other gaps were uncovered, including the lack of strong analytical processes and structured demand, as well as the challenges associated with vetting new suppliers. Teams that have historically over-relied on GPO contracts had to dust off their direct sourcing skills and learn about things like international trade to source things directly from manufacturers overseas.
“Often these gaps were exacerbated because the technology wasn't available to support these processes or wasn't in the Cloud and easily accessible when teams shifted to working from home,” said Lohkamp.
The solution is a more resilient supply chain, and the first stepping stone to getting there is building a strong strategic sourcing process. This involves developing processes for identifying opportunities, gathering requirements, engaging with stakeholders, identifying the suppliers, gathering the bids, and negotiating the agreements.
“Most healthcare supply chain teams have the skills, but may not have leveraged them extensively as they relied on GPO contracts,” said Lohkamp. “Often organizations haven't invested in the tools to really simplify and manage the process.”
However, the pandemic has pushed organizations to reinvest in strong strategic sourcing practices to source PPE directly and contract directly with manufacturers both in the U.S. and overseas.
In addition to that, the “just in time” replenishment strategy needs to be replaced with a more balanced approach. This strategy has helped reduce costs but has left little room to adjust when the global supply chain is disrupted, explained Lohkamp.
He predicts although there will still be a place for the “just in time” approach, there will be a move toward safety stocking, warehousing, and inventory distribution. It may increase costs, but it will give hospitals greater control over supply in those categories.
Another important stepping stone is developing the skills and techniques to adopt demand planning and manage supplier risks. This includes tracking electronic transactions, recalls and price exceptions, and hosting quarterly business reviews with strategic partners to coordinate strategic activities.
“By tying this understanding of total supply chain to events like natural disasters, we can start to anticipate potential breakdowns in supply and then start putting together plans to develop alternative sources that can be quickly leveraged in time of need,” said Lohkamp.
Lastly, the industry needs to focus on developing more advanced supply chain analytics to identify opportunities and measure effectiveness. These analytics tools need to be able to combine data from core supply chain systems, electronic medical records, external benchmarks, and even inventory availability information from suppliers.
He concluded the session with a call to action for organizations to sit down and determine what is truly meaningful to their leadership. That will ultimately help to identify ways to better manage their supply chain operation.
“Given the elevated status of supply chain today, this is the perfect opportunity to use analytics and data to drive more strategic collaboration and demonstrate the impact of supply chain on the overall business,” said Lohkamp. “We know it will take a lot of work, but it will have long-term impacts, not just for your organization, but also for the rest of your extended supply chain.”