COVID-19 cast a spotlight on the extraordinary work of healthcare supply chain professionals. At the same time, however, the crisis has magnified existing operational weaknesses and underscored the importance of organizational resilience.
During a virtual featured session sponsored by Workday as part of Becker's Hospital Review 11th Annual Meeting in May, Keith Lohkamp, senior director of industry strategy with Workday, discussed supply chain best practices revealed by the pandemic. Mr. Lohkamp identified five strategies that healthcare organizations can adopt right now to increase supply chain resilience and transparency:
- Reinvest in building a strong strategic sourcing process. Health systems must be flexible enough to source directly from suppliers, better manage categories, and diversify their supply bases. "When you think about resilience, you need a strategy that balances different aspects of product sourcing," Mr. Lohkamp said. "For certain critical product categories, I expect to see healthcare organizations own more aspects of sourcing and contracting."
- Rethink the just-in-time replenishment model. Although leaning out the supply chain is a great way to reduce costs and optimize limited storage space in hospitals, healthcare organizations need to reexamine what is needed during times of emergency. "For critical items like PPE," Mr. Lohkamp said, "I expect there will be a shift toward more bulk purchases. Organizations may need to stand up new inventory locations and processes to accommodate this change." Although that may increase costs, the commensurate reduction in risk will justify the investment.
- Develop demand-planning skills. Demand planning is common in many industries, but it is nascent in healthcare. Demand planning provides a single source of truth for product demand, driven by accurate, up-to-date information. What-if modeling based on machine learning algorithms can lead to better predictions and demand plans. Repeatable and scalable demand-planning processes support strong strategic sourcing and category management.
- Proactively manage supplier risk. Supply chain risk management is still evolving for many providers. The piece that's often missing is understanding the suppliers' supply chain and identifying where vulnerabilities exist. Unless this occurs in a repeatable and scalable way, it can be difficult to maintain a clear, 360-degree view of supplier performance. As healthcare organizations look more deeply into their supply chains, they may use that information to work with more local businesses and diverse suppliers.
- Deploy advanced supply chain analytics. All strategies for improving supply chain resilience require analytics to measure their effectiveness. Advanced analytics can combine data from the EHR, external benchmarks, supplier availability and more. Access to a single source of data can help organizations with decision-making. "As people look at their analytics strategy, I encourage them to identify which metrics will have the greatest impact on executing against their strategy," Mr. Lohkamp said.
Digitizing the supply chain is an overarching theme that applies to and enable each of the five strategies. Legacy technologies often hold organizations back due to disconnected systems, limited data access and manual processes. The good news is that enterprise cloud applications provide a solid foundation for digital transformation of the supply chain, leading to greater resiliency, access and recoverability.
This is a good time to take action, since the need for resilient healthcare supply chains is top of mind for C-suite leaders. "Supply chain disruptions and shortages aren't going to go away," Mr. Lohkamp said. "We must be prepared for ongoing change and future challenges. Think about the skills, processes and technologies that are most important to your organization to develop resiliency."
To learn more about this session, click here.