Supply chain hiccups in healthcare can be more consequential than supply chain issues in other industries. Patient care is time sensitive and if providers don't have access to the necessary medications and products, care outcomes can suffer.
During a Sept. 18 webinar sponsored by Cardinal Health and hosted by Becker's Hospital Review, two Cardinal Health executives — Scott Barnhart, president of global manufacturing and supply chain, and Sean Halligan, senior vice president of supply chain — discussed how to reduce friction in the healthcare supply chain and the importance of complying with new regulations.
Reducing friction and category management
As the retail industry evolves into an e-commerce business, leading retailers are always looking for ways to reduce friction and facilitate business transactions with customers. Simplifying the ordering process, increasing delivery visibility and streamlining returns procedures can decrease friction in the supply chain.
"It's about reducing friction and making it easier to do business," Mr. Halligan said. "We find that our customers want to see where their delivery is in the supply chain. Instead of fixed time deliveries that we use today, we'll be working on evolving to more predictable and visible deliveries for our networks."
Cardinal Health manages a vast number of SKUs in its medical business, a large number they manufacture and purchase from third parties and others are tied to custom kits developed for operating procedures.
It's common for distributors in the food and beverage industry to have vast numbers of SKUs within a particular product category. However, Mr. Barnhart said it's more practical to have less SKUs on hand, especially in healthcare, and stressed the importance of category management.
"It's better in terms of being able to categorize and manage the category of premium, standard and value SKUs and meet the healthcare provider's needs and their patients' needs," Mr. Barnhart said. "Not only is it better for the customer and consumer, but you can actually apply different sourcing, inventory and planning strategies all the way back up the supply chain to unlock value."
Tackling speed challenges in the supply chain
Speed throughout the order, delivery and returns procedures is what supply chain leaders strive for, however it can be challenging to consistently provide fast and efficient delivery of products throughout the U.S., particularly in rural areas.
In order to meet speed and efficiency goals for clients, Cardinal Health implements order fulfillment strategies and provides increased premiums for flexibility and agility of suppliers to ensure timely deliveries.
"From a healthcare perspective, a patient's health situation is as important in rural America six hours away from our distribution point as it is in an urban market," Mr. Halligan said. "Healthcare can't wait and a person's life can't wait, so we drive our supply chain to be that responsive for the pharmaceuticals that we provide to our customers."
Although supply chain in the food and beverage industry is similar to healthcare in that they both deal with the FDA, healthcare organizations must comply with added regulations to ensure the safe movement of medical products both domestically and internationally.
"There's always a pressure point in order to launch the either renovation to products or new products in a pretty short time frame," Mr. Barnhart said. "We have a stage-gate process that actually takes things from ideation, through our research and development teams and engineering into our sourcing, manufacturing, and ultimately our scaling up and distribution of those products."
Optimizing patient care and compliance with evolving regulations
Patient care is at the top of the totem pole when it comes to the concerns of health system leaders, particularly for their pharmaceutical supply chains where safety, regulatory and security legislations are continually evolving.
The medical products that Cardinal Health moves throughout its supply chain are used directly for patient care, so it ensures that staff understand the value of their responsibilities. Patient safety and care outcomes are top priorities for health systems, which means organizations must place a strong emphasis on compliance with evolving regulations in their pharmaceutical supply chains, according to Mr. Halligan.
Title II of the Drug Quality and Security Act, enacted by Congress in November, 2013, is the Drug Supply Chain Security Act, which outlines steps to develop an interoperable platform to identify and trace prescription drugs as they are distributed throughout the U.S.
The DSCSA is directly linked to the authenticity of pharmaceuticals and the control chain of those drugs. It incorporates the supply chain from the manufacturer to any intermediary — such as logistics providers, wholesalers or pharmacists — to the endpoint where it's prescribed.
The initial phase requires manufacturers to provide bar coding that interweaves not only the product identifier but lock, batch and dating. Set to be implemented later this year, the second phase requires wholesalers to scan and track products, ensuring authenticity through manufacturer databases.
"We're watching through our supply chain how those serialized drugs are flowing through," Mr. Halligan said. "We as a warehousing and distributor of those products need to track where they came from, that they are authentic and that we distribute them to our customers because that is critically important to patient care."
The DSCSA is a key component in ensuring the safety of the U.S. population and the requirements, standards and system for product tracing will be rolled out through 2023.
Delivery speed throughout healthcare supply chains is crucial to ensure that pharmacies, providers and patients receive the medication they require, however, patient care and transportation safety should always be a top priority, according to Mr. Halligan.
"This is something that none of us can ignore," Mr. Halligan said. "I think what you're going to see is more of those types of regulatory environments coming forth, all with the idea of patient care, and that won't be exclusive to pharmaceuticals. That comes to the entire healthcare supply chain."
Conclusion
By reducing friction and ensuring timely and safe transportation throughout its healthcare supply chain, Cardinal Health aims to create value for its customer base, which consists of everything from small independent pharmacies to an internationally-recognized hospital network and regional care center. No health system is immune to disruptions in its supply chain, but Cardinal Health champions a 99.3 percent service level and is always looking for ways to optimize that number.
To learn more about Cardinal Health, click here, and view the full webinar here.