Refreshing Hospital Supply Chain Risk

Supply chain issues have become part of the new normal in healthcare—in 2021, 99% of hospitals and health systems reported challenges in supply procurement.

As forces such as a shifting pandemic and climate change continue to put new pressures on international trade, supply chain issues will become a defining feature of your supply chain strategy.

This level of change means that supply chain leaders will find new opportunities and successes in doing things differently—refreshing approaches to supply chain strategy to mitigate risk and support resilience in an age of change.

Define your “risk appetite"

The success of your supply chain strategy refresh will ultimately depend on your people—which is why defining your risk tolerance can be so valuable.

By formalizing your “risk appetite" (the level of risk your organization is ok with while working toward its goals) through ongoing communication and documentation, you can elevate risk management as a prioritized value across the organization. This still will help drive continuous discussion at all levels, including clinical, executive, and all other supporting staff. Consider these steps for supply chain leaders as recommended by Gartner.

  1. Take ownership of the process with a focus at the stakeholder level
  2. Assess and align your goals with the mindset of your organization and requirements across the healthcare landscape
  3. Continue to communicate while building out your risk appetite statement

Reassess internal and external risks

Like most healthcare organizations, the risks that can disrupt your supply chain have shifted in recent years. This means that now is a good time to review both internal and external threats to your supply chain.

Assessing external supply chain risks

These include the global risks that come from outside your organization. They are inherently more difficult to predict and can be a drain on resources when you try to respond. They include:

  • Demand risks, such as miscalculating needs for antiseptic or disposable bedding
  • Supply risks, like the problem of anesthesia masks or intubating stylets not being delivered on time
  • Environmental risks, such as new federal infection control mandates being released
  • Business risks, like poor contract negotiation or the acquisition of a small manufacturing partner

Improved contract negotiation and volume discounts start with taking control of your supply chain.

Reviewing internal risks to your supply chain

Internally, you have more control over supply chain risks, so this is where you have the most opportunity to realize benefits from a refreshed strategy. You can do this using a range of options, including sophisticated analytics, IoT options, and risk assessment software. These include:

  • Planning and controlling risks, such as inaccurate forecasting and assessments (for example, 7%-10% of clinical products expire on hospital shelves before they're used)
  • Business risks, such as staffing shortages
  • Mitigation and contingency risks, including not having a plan to address future PPE shortages or issues with saline bag quality

Mapping your risk environment is a crucial first step in building an accurate and actionable strategy—one that will help you get in front of and respond to healthcare supply chain disruptions.

Consider the PPRR risk management model

Originating from a global supply chain risk management strategy, the PPRR model has long been suggested as a risk management tool for healthcare leaders. It stands for:

  • Prevention: Taking precautionary action to mitigate risk before it affects your organization
  • Preparedness: Developing and taking action on contingency plans in case of future emergencies in the healthcare supply chain
  • Response: Applying your contingency plan when and if a disrupting event occurs
  • Recovery: Taking steps to resume operations and return your facility to normal capacity as quickly as you can

To take action on PPRR, consider solutions that allow you to shift the burden of storage and inventory risk management off of your supply chain staff.

Manage environmental supply chain risk

You've likely experienced the reality of gaps in the global healthcare supply chain and are now all too aware of how quickly an issue on the other side of the globe can have a direct impact on your organization. As the COVID-19 pandemic continues to contribute to absenteeism and wildly varying responses from governments around the world, managing environmental risk has only become more critical to your organization's success.

To move forward, consider strategies to improve supply chain resiliency, including:

  • Nearshoring: Look for suppliers and distributors that are domestic or as close as possible to your centers of operation. This can help reduce cycle times for product delivery and cut risk by reducing travel time.
  • Stress testing: Don't take the health of your supply chain for granted. Plan to make recurring comprehensive tests to identify vulnerabilities that can impact your patients, staff, and organization.
  • Building in your buffers: While this might cost more in the near term, buffer capacity can be built in when launching new service lines or opening new facilities. Consider the option of stockpiling for periods of increased risk (such as flu season and large events that can increase transmission rates of communicable disease)

If you find your internal resources could need some augmentation, consider consulting support in any areas you want to optimize operations.

Leverage technology to improve healthcare supply chain visibility

Visibility and insights are critical to the kind of decision-making that leads to better inventory management, improved clinical outcomes, enhanced patient safety, and increased profitability. For example, without visibility into on-hand PPE, you could have one department or location that's depleted, while another has ample stock—leading you to miss an opportunity to get out of the “inefficient zone" and reduce infection control risk with minimal effort and cost.

By refreshing your supply chain strategy with a goal of end-to-end visibility through the use of data, you can reduce the chance of future waste, stock-outs, and expiries. To make the business case for the tools and technology that improve visibility, consider calculating the losses (both hard and soft costs, as well as the impact on patient outcomes) if you do not achieve your visibility goals. For example, tracking neonatal mortality rates if pediatric medicines run short or assessing the risks of expired products being used on a patient (27% of staff report knowing of an instance of recalled or expired product being used on a patient.)

As you align your people, processes, and technology and develop your new supply chain strategy, we invite you to use this guide to ask critical supply chain questions. In addition, as you explore solutions to enhance your supply chain maturity, consider implementing WaveMark™ Clinical Supply Chain Solutions to better understand how a clinical supply chain can improve financial performance, enhance patient safety and elevate staff efficiency and experience. With the support of cutting-edge technology, you can empower your supply chain and clinical teams to work together to achieve their mission of delivering the best in patient care.

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