How health systems can build a strategic supply chain model to support long-term goals

Supply chain is one of the most critical functions of a health system, so it's critical they create a strategic supply chain model that aligns with their vision. A strategic model means moving beyond delivering products with high efficiency to incorporating the long-term goals of a health system. 

Amid the COVID-19 pandemic, the importance of a strategic supply chain has become even clearer to health systems. During a Nov. 17 webinar hosted by Becker's Hospital Review and sponsored by Cardinal Health, supply chain leaders from Cardinal Health and the Health Industry Distributors Association detailed how health systems can look at supply chain in a holistic way to create a strategic model. Cardinal Health provides supplies to more than 85 percent of U.S. hospitals, and HIDA is a nonprofit trade association that represents U.S. medical product distributors.

The leaders were: 

  • Paul Farnin, Director of Supply Chain Solutions at Cardinal Health 
  • Elizabeth Hilla, Senior Vice President of the Health Industry Distributors Association

Five takeaways from their discussion: 

1. A strategic supply chain model incorporates the long-term goals and vision of the health system. No matter if those goals are centered on patient safety, patient experience, cost saving, innovation or quality, a strategic model echos those goals, Mr. Farnin said. It allows health systems to not operate in silos and to look at their system in a holistic way that includes input from clinical staff and operational teams and goes beyond the four walls of an acute care hospital. "Health systems have seen the breadth of responsibility for supply chain officers expanding as the supply chain becomes more strategic," Ms. Hilla said. 

2. Supply chain should not be executed in isolation, but in a cross-functional way, Mr. Farnin said. The benefits of integrating more than one supply chain solution include improved cost and resource efficiency as well as increased productivity. It also increases visibility as well as risk mitigation and allows you to see the big picture. "If you're strategic, you're looking ahead. It means you get the big picture," Ms. Hilla said. "If we really want to be strategic, we need to share information between organizations. To have visibility in the supply chain, we have to be willing to share information and create trusted partnerships with distributors."

3. Executive sponsorship is an important first step to creating a strategic supply chain model, according to Mr. Farnin. "Most successful initiatives to integrate strategies like this start at the top of the house and having your COO or CEO endorse a strategic supply chain model is a great place to start," he said.It's also critical to build a cross-functional team. Collaborate with clinical staff and other key constituents across your health system. Then create key performance indicators and regular checkpoints to monitor your progress and measure your results so you stay on target or adjust your plan as needed. 

4. Leverage strategic partnerships with trusted suppliers. You have to have conversations about more than price with your suppliers, distributors and manufacturers Ms. Hilla said. Talk with your partners about your goals as a health system and their goals as a company and how you can align those goals. "It's not just one party's responsibility to build resiliency into the supply chain. The challenge is on all of us to work up and down the supply chain, and everybody has a role here," Mr. Farnin said. Distributors can also work with you to address your preparedness plans for now and in the future, Ms. Hilla said. There needs to be more inventory cushions in the supply chain, because the COVID-19 pandemic doesn't make us immune from facing another one in the future, she said. Distributors are willing to work with health systems on options such as sequestering their customers' inventory and working with the government to increase levels in strategic national and state stockpiles.

5. Use available resources to create your strategic supply chain model. Cardinal Health has a library of resources for health systems, which includes their supply chain excellence model. Cardinal Health looked at supply chains across the country and noted common success factors and metrics to create the excellence model, which highlights the best demonstrated practices. The company also offers benchmarking and analytics with a robust set of data that allows health systems to compare their supply chains to see where they rank in comparison to peers in key metrics. Cardinal also offers no-cost assessments, where the team audits health systems' current supply chain and offers recommendations. The Health Industry Distributors Association offers industry resources such as an overview on its website explaining the challenges the industry faces on issues such as allocation, glove shortages and shipping capacity. It also closely tracks what's happening in government affairs related to the supply chain. After you've developed your strategic supply chain model, it's important to continue exploring innovative solutions, Mr. Farnin said, as improving your supply chain is an evolution. 

To view the full webinar, click here

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