Supply chain management reimagined: Insights from Cardinal Health supply chain leaders

For years, the operational environment for healthcare supply chain leaders has been anything but easy.

Prior to COVID-19, health systems chased every last penny in their quest for greater efficiencies — and offshoring was the name of the game. Then everything changed in 2020 and the brittleness of the supply chain became all too evident. Now, the healthcare sector is reexamining how to build greater flexibility into supply chains while preserving efficiency and preparing for future shocks to the system. 

Recently, Becker’s Hospital Review gathered health system leaders for two panel discussions on the current state of the healthcare supply chain as part of a Supply Chain Forum, which was sponsored by Cardinal Health. One panel, Supply Chain: Navigating Change, Using Technology to Increase Productivity and more, featured Pete Bennett, senior vice president of global planning at Cardinal Health. The second panel, The Supply Chain Reimagined: Best Ideas and Concepts for Sharper Processes Now, featured James Sembrot, senior vice president of U.S. supply chain at Cardinal Health. One discussion focused on how supply chain visibility and resiliency continue to be persistent challenges in the healthcare industry.

To improve supply chain visibility, Cardinal Health has invested in advanced technologies, processes and predictive analytics. According to Sembrot, “The long pole in the tent isn’t so much knowing where assets are, it’s integrating that information into internal systems in healthcare organizations. We are working with companies like FourKites to drive that visibility.” Cardinal Health also believes collaborative planning, forecasting and replenishment (CPFR) could be beneficial for healthcare supply chains. While this disciplined process is relatively new to healthcare, retailers and consumer packaged goods companies have excelled at CPFR for years.

“We know we’ll get improved results by jointly reviewing our plans and contingencies with both our customers and suppliers. With CPFR, we are disciplined between health system, distributor, and key manufacturers in reviewing our service and operating metrics, locking in on a consensus forecast, reviewing supply performance, and creating the best possible ‘Plan A,’” Sembrot said. “Now for ‘Plan B,’ we’ve invested in Kinaxis’ Rapid Response software to help us generate options and choices for when something goes different than we had collectively planned,” Sembrot added. While supply chain visibility is essential, resiliency is also critically important. Supply chain disruptions are highly likely in today’s world, but when and where they will occur is hard to predict. As a result, healthcare organizations must be prepared to go beyond Plan A.

Additionally, to improve supply chain productivity, Cardinal Health and healthcare organizations are turning to new technologies. Cardinal Health leverages advanced technologies to improve demand sensing, data ingestion and inventory management. As Bennett said, “I think the healthcare industry needs to get away from historical consumption rates and look at multivariable demand planning. This means considering factors across the globe that are external to healthcare, like inflation, limitary actions and crisis management that could disrupt global supply chains.”

Automation is another area of focus for Cardinal Health. The company recently launched 33 robotic process automation (RPA) bots to look at the estimated time of arrivals every day. This helps Cardinal Health provide more clarity and accurate information to customers about inbound products. “Our employees in supply planning could get through about 2,000 lines of purchase orders per day,” Bennett said, “and we had to figure out how to process 8,000 lines of data a day. The automation has been incredibly successful. Bots collect 8,000 lines of data each day and we no longer have frustrated employees trying to keep up with PO management.” On the warehouse side, Cardinal Health recently piloted autonomous mobile robots in some of its distribution centers. The employees loved the robots and the technology drove greater efficiencies, a stronger safety culture and improved quality.

Find the full whitepaper on our Supply Chain Center to gain more insight from healthcare supply chain leaders on reimagining your supply strategy.

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