Supply Chain Resilience in Healthcare
How to Build Supply Chain Resilience in Healthcare
As COVID-19 cases spike around the world due to Omicron and other variants, supply chain disruptions continue to plague the healthcare industry. Factory workers, truck drivers and others involved in the manufacturing and delivery of supplies to hospitals are getting sick with the disease, leading to ongoing shortages of clinical care products.
When faced with persistent shortages, it can be challenging for the finely tuned clinical supply chains of hospitals and health systems which by and large consolidate their purchasing power through group purchasing organizations (GPOs), to pivot to alternate suppliers in a timely manner. Knowing that the pandemic is far from over – and that this is not likely to be the last event of its kind – it’s important for healthcare organizations to take steps now to mitigate further disruptions to their clinical supply chain.
What is supply chain resilience, and what does it mean in healthcare?
Supply chain resilience is the ability to resist or potentially avoid the impact of a disruptive event, as well as the ability to quickly recover from any disruption that does occur. An agile and resilient supply chain is built using strategies and modern technologies that enable procurement teams with data to help them forecast accurately, anticipate any potential outlier actions and quickly respond to any risk that might occur.
During the pandemic, hospitals and health systems that previously relied on strong relationships with their GPOs to obtain clinical supplies have found that these aggregators are often unwilling to seek alternate suppliers in the event the GPO’s primary source is out of stock. Left to source their own PPE, healthcare leaders can feel isolated and procurement teams can become frustrated. The pandemic has highlighted the risk of a hospital being too tied to a single GPO and of not having direct relationships with distributors and suppliers.
The risk of being over-reliant on a GPO
GPOs are well-suited to maximize a healthcare organization’s clinical supply budget by grouping multiple organizations’ purchase orders into a single, high-value transaction and leveraging the volume to negotiate discounts with manufacturers and vendors. But hospitals that rely too heavily on their GPO risk the very shortages in a crisis as we experienced at the dawn of the pandemic. Hospitals and other care providers that want to take better control of their destinies can take a few simple steps to avoid shortages:
- Identify alternate suppliers: Have in place backup GPOs, distributors and, in some cases, direct relationships with manufacturers to ensure multiple sources for hard-to-source equipment. Many hospitals have found that going directly to distributors is more effective than negotiating with their GPO to source alternate products.
- Leverage community resources: Another way to identify alternate suppliers is to look at manufacturers not traditionally in the medical space. One hospital that could not get masks early on in the pandemic approached a local chocolate manufacturer, which was able to retool its production line to manufacture PPE. Consider local manufacturing facilities that could serve as a source in a pinch, putting in place redundancies that avoid the GPO lock-in.
Technology’s role in supply chain resilience
Procurement teams can also leverage modern software technologies to add resilience to their supply chains. For example, when quick decisions need to be made, nothing beats the ability to rely on strong data on which to base a decision. Nearly every healthcare organization keeps records of what they have bought, who it was bought from and how much it cost. Traditionally, this was a manual process, and no one really minded how long it took to gather and analyze the data until speed mattered. During the pandemic, hospitals regularly have to quickly and accurately determine not only those aspects of previous purchases but also identify comparable products and their source when a primary product is unavailable.
Like in many other industries, the COVID-19 pandemic has exposed critical vulnerabilities in the healthcare supply chain. Moving forward, procurement teams need to approach their sourcing relationships more strategically and avoid reliance on a single GPO, regardless of how attractive the discounts are; establish relationships within their communities that enable creative solutions during extreme circumstances; and explore technology that enables healthcare organizations to become fiscally independent and flexible.
Want to build resilience in your supply chain? Schedule a demo today to see the Curvo Platform in action and how it can work for your healthcare system.