Written by: Shawn Janus
As National Director | Healthcare for the USA, Shawn's focus is to cultivate a strong, value-driven platform in the healthcare space, allowing Colliers to raise the bar in delivering innovative and successful solutions to our healthcare clients. Check out his post on Colliers Knowledge Leader here.
The healthcare supply chain is constantly facing disruptions, such as: new regulatory mandates, natural disasters and global health crises. To face these pressures, the supply chain has deftly learned to adapt and evolve. However, the necessity to be nimble eroded its resiliency over time, a weakness which was underlined by the COVID-19 pandemic.
With vaccinations rolling out and a chance to catch their breath, many organizations are now taking steps to shore up their supply chains, so they’re better prepared for the future. From product inventory to transaction management, here are some of the ways U.S. healthcare systems are building more resilient supply chains.
Increasing Visibility with Automation
We know that emerging technology and digital advancements are accelerating major shifts in healthcare delivery. The same can be said for technology utilization within the supply chain.
The latest Colliers Healthcare report states the industry’s reliance on artificial intelligence (AI) is primed for higher utilization. Automated medication reminders, personalized dosage recommendations and treatment plans are just the beginning. The next, most advantageous application of AI is within supply chain management.
Digitizing and automating manual processes like vendor invoicing, for example, can save time and costs while increasing supply chain visibility to prevent PPE shortages or product holdups.
“At the height of the pandemic, manual processes led to a lack of clarity on order status, anticipated delivery timeframes and supply-allocation needs. Providers who had previously invested in automation were more capable of understanding these factors that drove care delivery and purchasing decisions,” according to Supply Chain Brain.
Introducing Robotic Process Automation (RPA) and AI within the healthcare supply chain can improve resiliency through ensuring controls and compliance, improving quality, increasing process efficiencies and more.
Exploring Innovative, Alternative Methods
Even a robust supply chain would have faltered under the PPE increases brought on by the pandemic. To put it into perspective, the WHO estimates that 89 million medical masks are required for the COVID-19 response each month, and, “a single positive COVID-19 case in a community can cause demand for PPE to increase from 300 to 1,700%.”
This staggering demand caused supply shortages and manufacturing delays, resulting in significant financial losses and posing serious health risks. As providers were scrambling to secure N-95 masks for staff, at prices which had risen 6,136%, alternative methods had to be explored.
One such method was 3D printing. According to Future Medicine: “The widespread availability and cost-effective nature of 3D printing lead to an incredible phenomenon of collaboration among makers to develop various PPE products. Face shields, face masks and strap adjustment devices became particularly popular products.”
3D printing can help expand the local capacity of PPE supply to offset shortages and can serve as a reliable alternative production method.
Another innovative response to supply chain shortages during the pandemic was the distillery partners that helped fill the gap for sanitizing products. National brands like Jack Daniels, as well as many local distilleries, shifted their production to pitch in.
In Florida, the St. Augustine Distillery made more than 10,000 gallons of disinfectant and sold and donated it to local hospitals and emergency responders. These alternative distillery suppliers were so effective, we now have a surplus of hand sanitizer.
When it comes to construction, some are predicting there will be an increase in modular healthcare design, as prefabricated pieces are generally less labor-intensive and can be used flexibly to accommodate surge scenarios in hospitals. It certainly offers supply chain advantages over traditional design, and its popularity is gaining steam.
Healthcare organizations will need to continue to think outside of the box and explore alternative methods when it comes to building a long-term, resilient supply chain.
Addressing Challenges
Starting with raw materials and ending with transportation, the pandemic had an impact on the entire healthcare supply chain and few providers had plans in place to manage such widespread disruption. Everything along the supply chain continuum, from the way products were delivered to identifying backup suppliers, was thrown into chaos for the healthcare industry.
Specifically, organizations will be looking to address challenges such as: expanding supplier lists, ensuring geographic diversity in sourcing (pre-pandemic, 80% of masks were manufactured in China), increasing supply chain redundancy and improving transparency.
According to Harvard Business Review, potential solutions may include running emergency drills, testing inventory and establishing a single point of contact for coordinating with alternative suppliers.
Emerging Trends
An over-reliance on third party logistics (3PLs) was the broken link in many supply chains last year. Hospitals and health systems that used third party distribution warehouses for inventory were helpless to finding alternative suppliers for PPE and other products.
In a new trend, many health systems have expressed they will manage their own inventories to avoid a similar shortage in the future. This strategy will directly impact providers’ real estate, both leased and owned, as they will need to secure the space to store product.
Moving forward, there will likely be a rise in demand for warehouse and storage space among health systems as they shift to this new inventory management process.