Covid-19 forcing healthcare providers to rethink just-in-time supply chain management

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COVID-19 uncovers the considerable benefits of supply chain management in healthcare. Data may prove valuable in fixing the system and curbing shortages.

September 11, 20227 mins
COVID-19 Forcing Healthcare Providers to Rethink Just-in-Time Supply Chain Management- A smiling doctor looking at her laptop

COVID-19-related mask and personal protective equipment (PPE) shortages are likely to go down as some of the biggest supply chain management mishaps in history. Shortage issues are also undeniable proof that when the system is taken seriously, the benefits of supply chain management in healthcare are considerable. While other industries are already rebounding from these missteps, they're a lingering nuisance for the healthcare world.

Constant Shortages

Supply chain management in healthcare is a delicate dance of cost, volume predictions and management of already limited space to store materials needed in emergency situations. Faced with a global pandemic, its vulnerabilities are starker than ever.

For example, look at what's happening with remdesivir: the only drug known to be effective against COVID-19. Alarms of its critical shortages have been sounding for months largely because the company that makes it, Gilead Sciences, is facing issues acquiring raw materials, reports CNN. It's a story the healthcare industry knows all too well.

Nearly every drug necessary for mechanical ventilation is now in limited supply, according to Infectious Disease Special Edition, which includes sedatives, vasopressors and paralytics. Hospitals have long been running short on ventilators and PPE needed to safely care for patients. Looking into the future, another round of mask shortages might very well accompany the next wave of the pandemic.

But why are shortages still a possibility? One common factor is outsourcing. Because manufacturing facilities are mostly concentrated in areas outside the reach of U.S. influence, supplies are being limited by an inability to ramp up production. The fact that those facilities are also being impacted by COVID-19 further exacerbates the issue. But the industry's years-long and highly justified focus on cost containment is also a key contributor.

Sector-wide initiatives such as the Quadruple Aim encourage cost control but, at the same time, throttle many of the potential benefits of supply chain management in healthcare. And while the balance between quality of care and patient outcomes is already stressed in emergency response scenarios, it can be further compromised by the lean inventories that come from just-in-time budget buying. Healthcare is learning the hard way that in order to access the sheer volume of PPE and medical supplies required, it might need to rethink its emulation of other, lower-risk sectors' supply chain practices, notes Becker's Hospital Review.

Benefits of Supply Chain Management in Healthcare

So what's the best way forward? The answer, like most challenges in healthcare, is complicated. Although the strain of COVID-19 is expected to push hospital margins into the negatives, smart inventory management will be critical to successfully address an indefinite pandemic future.

Harvard Business Review recommends managing healthcare system congestion through an awareness of system interdependencies and unintended consequences while simultaneously forecasting short-term demand. Useful short-term insights such as this, it stresses, are attainable now that we're deep enough into the pandemic to generate them with data. This forecasting depends on high-quality and high-velocity information, fast decision-making and an ability to learn from mistakes and failures.

The Centers for Disease Control and Prevention has published suggestions for optimizing the supply of PPE to avoid and address shortages. Its recommendations focus on tiered surge capacity planning based on communication with local, federal and state healthcare coalitions as well as proper training on PPE use by healthcare professionals. The agency's PPE burn rate calculator helps facilities determine and monitor their average consumption rates of supplies and, in turn, support projections for future inventory management.

Another method is focusing on a resilient supply chain. According to Harvard Business Review, this risk management approach to sourcing divides suppliers into tiers of revenue impact and suggests tier-specific tactics, such as multiple suppliers, 24/7 supply monitoring and buying insurance. This route will require heavy collaboration with clinicians, the continued prioritization of patient outcomes and, in many cases, restructuring how space is used in provider facilities.

Pandemic Best Practices for the Healthcare Supply Chain

As we move deeper into the pandemic, it will be critical that healthcare organizations maintain insights into current inventory in order to dynamically adjust to shifts in demand and supply as they acquire and distribute essential supplies. This type of response will be supported by pandemic best practices including:

Preparing for Fast-Changing Demands

This will include establishing a stockpile of critical inventory (possibly at a secure, offsite location), scaling storage spaces with speed and control, and establishing safeguards to keep critical assets secure.

Enabling Rapid Fulfillment and Deployment

Optimal fulfillment processes will require centralized visibility - preferably through a single online portal - standardization of inventory fulfillment and employment workflows, and developing plans for stock rotation, inspection and equipment testing.

Measuring and Monitoring Inventory Consumption

Get ahead of consumption surges and craters by leveraging predictive analytics, tracking order trends, and incorporating usage volumes as a basis for your contingency planning.

These practices will help organizations reduce shortage risk, minimize disruptions and address real-time needs with increased agility.

86% of U.S. hospitals and health systems are concerned about the availability of face masks and PPE as COVID-19 continues to spread.

Premier Inc.

All of these approaches represent a shift toward supply chain transformation that minimizes disruption and leverages technology to manage increasingly complex processes and supplier relationships that require real-time monitoring. COVID-19 has undeniably pushed the healthcare supply chain into uncharted territory, but a resilient supply chain approach that harnesses the power of data will prove invaluable to hospitals as they weather this ongoing pandemic.

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