Becker's Hospital Review

40 EXECUTIVE BRIEFING EXECUTIVE BRIEFING 1 SPONSORED BY Supply chain management reimagined: How leading health systems are increasing productivity and resiliency with technology + strategy F or 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. Supply chain visibility and resiliency continue to be persistent challenges Throughout the pandemic and even today, supply chain visibility is a major concern for healthcare organizations. As Philip Smith, regional director, supply chain for Methodist/ Proctor/Pekin, UnityPoint Health in Peoria, Ill., explained, "We are struggling with hundreds of back orders and not getting the products we need." As UnityPoint Health has navigated these back orders, its visibility into the supply chain has dwindled. "Our processes have become overwhelmed," Mr. Smith said. "There are too many back orders on the exception reports for buyers to follow up on in one day. Managers and directors must step in to make calls, trying to find substitutes." To improve supply chain visibility, Cardinal Health has invested in advanced technologies, processes and predictive analytics. According to James Sembrot, senior vice president of U.S. supply chain at Cardinal Health, "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 partnering 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. "We have bi-weekly meetings with specific vendors to discuss product shortages and potential substitutes," Mr. Smith said. "We discuss Plan B, as well as Plans C and D. You need a lot of different options." As healthcare organizations develop and execute supply chain strategies, leaders must think explicitly about resiliency. Cardinal Health helps clients shift their mindsets. "In our optimization models, we've changed how we think about delivering to a certain service level," Mr. Sembrot said. "It's not just about low cost, it's also about having resiliency baked in. I believe in being efficient, but health systems must step back and consider how much they value resiliency." Internal and external strategic relationships are key for healthcare supply chain efficiency When supply chain disruptions arise, strategic collaborators like Cardinal Health are a must for healthcare organizations. According to Mr. Sembrot, "If you're a transactional buyer of products and services, that's not a recipe for success." Working with distributors on business continuity plans and jointly planning for supply chain disruptions can be very helpful for health systems. "We have to drive toward a standard way of working that drives toward better solutions for the product substitution problem," Mr. Sembrot said. "Working with distributors on that issue ahead of time is time well spent." Supply chain leaders also need strong relationships within the four walls of their health systems. At UnityPoint Health, Mr. Smith engages in rounding and walking around the facilities to develop better connections with clinical staff. As he noted, "We collaborate closely with clinicians and nurses. Once you have developed trusting relationships, employees will do what they can to make substitute products work."

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