In the Chinese language, the word crisis also has the same meaning of opportunity. By necessity, supply chain professionals have used this opportunity to be innovative, creative, and collaborative to plow through this pandemic’s barriers. Now that the pandemic seems to be dissipating, let’s employ these same characteristics and lessons learned to rethink our supply chain operations of the future.
5 Supply Chain Areas That Need to Be Revisited
Once the dust settles, hospitals, systems and IDNs need to revisit some traditional areas of supply chain management that could have worked better in this crisis as follows:
1. Multiple Sources: At one time, there was an unwritten supply chain management rule that no “critical” supplies would be single sourced. Now, with the era of group purchasing influencing our product, service, and technology sourcing, that has changed. I would guess that no hospital, system, or IDN has multiple sources for their PPE or other critical medical devices today. This single source philosophy needs to change for our PPE and other medical devices if we are to avoid another supply chain crisis in the future.
2. Lowest Qualified Bidder: Our GPOs and local contract bids generally select the lowest qualified price bidder for even our most “critical” products, services, and technologies. This practice works well until there is disruption in these commodities’ supply chains. Therefore, I would recommend that you mandate your bidders to guarantee inventory levels for your PPE and other medical devices for a 90-day supply level as part of your contract terms.
3. True Vendor Partnerships: If you are buying on price alone, you are missing the benefits of a true vendor partnership in good times and bad with your prime vendors. For example, when I was vice president of operations in the 1980s for a medical/surgical distributorship, our steady customers were always protected from disruptions in the marketplace by my firm. On the other hand, if you called us once in a while when your healthcare organization had a stockout, we would refer you to a competitor, because our best customers came first. I’m sure the marketplace hasn’t changed this practice since then.
4. Regional Warehouse: It’s not unusual for hospital systems, IDNs, or alliances to have built and manage a regional warehouse for their members. This is another resource to stock a 90-day supply of PPE and other critical medical devices, since it would be almost impossible financially and logistically for a hospital to store this quantity of supplies needed for a crisis on its own.
5. Group Purchasing Organizations: GPOs now need to be more than a sourcing agent for hospitals, systems, and IDNs. They now need to be logisticians when there is a pandemic or other disruption in the healthcare supply chain. To do so, they will need to establish crisis planning committees of customers, stakeholders, and experts to help their members in a crisis.
I’m sure you can think of other opportunities and lessons learned during this pandemic that you can add to this list. Hopefully, these five ideas are enough to get you started with this project.
Don’t Let This Crisis Go to Waste
I hope you won’t let this crisis go to waste, since there will be opportunities and lessons learned, like those mentioned above, that need to be addressed to give stability to your healthcare organization’s supply chain of the future. For as you have already experienced, your local, state and the federal government can’t come to your healthcare organization’s aid for days, weeks, or even months after the onslaught of the emergency.
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