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Hitting the reset button on supply chain strategies

July 15, 2020
Risk Management
From the July 2020 issue of HealthCare Business News magazine

By Valerie Dimond

One lesson that healthcare supply chain professionals are learning from COVID-19 is that it might be time to look outside the bottom-line box.
Some procurement experts are revising what used to be a common goal for most: keep it lean. Implementing low unit of measure (LUM) and just-in-time initiatives — practices that have been shown to optimize inventory levels, improve clinical efficiencies, and reduce waste and spending — might not be the answer in times of trouble. Reversing that move isn’t a guarantee that interruptions won’t ever occur, but it could reduce serious inventory problems during a crisis.

“COVID-19 has broken the global supply chain and it will be disrupted for at least many more months,” said Doug Bowen, vice president of supply chain services at Banner Health, a nonprofit integrated delivery network based in Phoenix, which operates 28 hospitals, three academic medical centers and other services in six states. “Those health systems with just-in-time deliveries from their distributor found out how quickly that model can fail due to low inventory. Banner evaluated the opportunity to implement LUM and we declined in order to provide more safety stock for the healthcare operations.”

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Also, while demand planning certainly makes sense for achieving successful outcomes, healthcare’s changing landscape can make the task difficult. “Today’s healthcare supply chain is forced to make decisions in an ambiguous and uncertain environment,” said Bowen. “Banner created a corporate dashboard using patient census and predictive modeling to provide insight into days on hand of PPE supplies and a host of other COVID-19 topics. In supply chain, we use both the traditional days-on-hand method and the predictive method. This provides two views of situational awareness so we can make the most informed decision to support the healthcare operations.”

Using a vertical supply chain strategy, Banner also relies on a consolidated service center to provide self-distribution, self-contracting, and self-manufacturing of surgical packs. Having a 200,000 square foot distribution center has been central to their effort and serves as the health system’s “workhorse” during COVID-19 and other unexpected events.

“Banner’s distribution center is not just a tactic, it is the business model for our supply chain,” said Bowen, whose division is currently ranked in the Top 10, nationally, in the Gartner Healthcare Supply Chain Top 25. Also critical is Banner’s Emergency Operations Center (EOC) and a network of teams they established to work with stakeholders and develop strategies for managing various needs. For example, Banner’s chief clinical officer chaired a special team named the PPE Cabinet.

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