I’m a huge advocate for the value of distribution. I think that both manufacturers and providers benefit when they partner with a distributor to improve their supply chain efficiency.
Still, some supply chain issues are too big and complicated for distribution alone to solve. That’s why HIDA has formed the Healthcare Supply Chain Collaborative. Our aim is to pull together leaders from across the end-to-end supply chain – health systems and other providers, group purchasing organizations, distributors, manufacturers, and technology companies – to address difficult issues.
Recently I had the chance to witness collaboration in action, when HIDA hosted three conferences in April: Contract Administration, E-Commerce, and Supply Chain Visibility. Each event brought folks together from different types of organizations to share their successes and their pain points, and to look for improvement opportunities.
The conference I moderated was the new Supply Chain Visibility Conference – part of a larger initiative aimed at better aligning supply and demand, reducing both shortages and waste. I can’t say we solved all the problems, but we made real progress at understanding each other’s perspectives and identifying areas we can work on.
One big focus area was everyday demand planning. We heard from a business forecasting expert about the technical methods major companies use to project demand. We all quickly realized that most healthcare organizations are light years behind such companies. Is that because healthcare demand is so much more unknowable than, say, demand for groceries or razor blades? Steve Kiewiet, Chief Commercial Officer of Intalere, didn’t think so. He pointed out that healthcare supply chain leaders tend to believe that everything done inside a hospital is unpredictable. “In reality about 90% of what happens in a hospital is predictable if we put the right processes in place,” he said.
Russell Royer, Director of Heart and Vascular Services for Loma Linda University Medical Center, agreed that while there is a mystique around the unpredictability of healthcare demand, it’s really not that much of a surprise: “We can predict the length of a procedure, and the supplies that are needed. Almost everything is algorithmic – if not A, then B.”
Some pointers I took away from the discussion:
- Pre-approve substitutions: Ron Collins, Vice President of Supply Chain with the University of Tennessee Medical Center, asked suppliers to proactively identify the best subs when a product is back-ordered. “We have to take care of patients, so please tell us what alternative products will work, even if they’re from your competitor.”
- Build trust: Participants noted that utilization management methods don’t work if clinicians fail to trust the system to ensure product availability. If users expect shortages, they tend to hoard, which exacerbates the problem.
- Make demand more forecastable: Experts noted that common practices like end-of-quarter promotions introduce volatility into the supply chain and make it harder to align supply and demand.
While we were working on product availability challenges, participants at our co-located conferences on Contract Administration and E-Commerce were laser-focused on addressing challenging issues in those areas. Participants called it “an important platform for providers, distributors, and manufacturers to learn from one another and instigate collaborative problem solving.” That’s what we’re trying to do, and we’re looking for more folks to get involved. If you’d like to get to work on a thorny industry issue – like chargeback reconciliation practices, establishing common definitions for industry terms like back order and fill rate, or developing best-practice resources, please contact me at email@example.com.