Reducing inventory levels through Just-in-Time (JIT) distribution strategies has proven effective in cutting operational costs. However, as we have seen with COVID-19, it can also increase the potential for supply shortages when unanticipated demand spikes beyond the capacity to supply.
While JIT is not going away, we’ll see more balance between JIT and efforts to reduce supply chain risk. A variety of tactics will be pursued, from keeping more safety stock on hand (either as an individual organization or as part of a broader collaborative), mapping supply risk factors upstream to supplier’s suppliers, and more demand forecasting.
Prediction #3: Healthcare will move toward a “system of intelligence.”
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When battling public health emergencies, a “system of intelligence” can help multiple stakeholders (public and private) share information, collaborate on decisions and take more immediate and informed action. COVID-19 has highlighted the problems created when information systems do not talk to one another, or when the data used by various systems is neither standardized nor normalized and is therefore unrelatable, even when shared. There needs to a better way to keep healthcare stakeholders informed and aligned.
An industry-wide “system of intelligence” can improve visibility and communication, better facilitating rapid response to crises. It goes beyond IT plumbing by forming a nationally integrated government and commercial network that can gather, share and interpret data. In the context of the healthcare supply chain, such a system of intelligence can bring decision makers together to share data related to patient demand, forecasted needs and available resources.
During normal times, the supply chain typically operates on an even keel with automation, standardization, visibility and analytics helping stakeholders balance cost and quality, while generating evidence on what delivers the most value to patients. In times of public emergency, such as COVID-19, the supply chain needs to kick into high gear with all parties collaborating and following new rules dictated by extraordinary circumstances.
Had this system been in place when the pandemic began, the industry would have already been monitoring typical order activity and could have more readily identified abnormalities such as increasing numbers of backorders for personal protective equipment as COVID-19 infections rose. As the emergency progressed, various parties, such as the federal government, that are not generally involved in the commercial operations, would continually communicate to coordinate resources and activities. Aggregate data at the country, state or federal level could be accessed by all to determine the best way to allocate resources and make substantially better decisions for patient care every day.