Why “just in time” is “just not appropriate” for optimizing the healthcare supply chain

Matt Stewart, CEO and Partner at RiseNow

The continuing shortage of masks and personal protective equipment (PPE) linked to COVID-19 has sent shockwaves through the healthcare sector; we’ve all seen the newsletters and forecasts predicting that these supply chain disruptions are not going anywhere anytime soon. Since China implemented its first lockdown at the start of the pandemic, it has created a cascading effect of redirecting reduced supply to its own country, amplifying supply chain problems around the world – and hospitals. unprepared were caught in the crossfire.

These shortages are also undeniable proof that the benefits of proactive supply chain management in healthcare are enormous and should certainly not be underestimated in our current climate. The “just-in-time” supply chain model – a strategy that aligns distributor orders with demand to ultimately reduce inventory costs for healthcare providers – has long proven ineffective for healthcare systems. health wishing to protect against shortages.

The ‘just in time‘ model has driven up the costs of supplies, cost hospitals more money than ever before, and hampered health organizations nationwide as they attempt to deliver life-saving care to those in need. need it most. The pandemic has given greater attention and attention to the direct procurement and self-delivery model – and now is the time for health systems that have been on the fence from self-delivery to take action.

A broken model

For example, a client of a large medical system in North Carolina found that his healthcare facility’s distribution practices were not where they needed to be in the event of a supply chain disruption. It was only through a focused, data-driven effort to optimize hospital central warehouse operations that they were able to ensure that the healthcare system would be ready to respond to disruptions.

It’s important to think of your healthcare supply chain as if it were a business supporting healthcare. While this industry has already faced a supply chain disruption, the COVID-19 pandemic has crippled distributors and resulted in unprecedented shortages of personal protective equipment (PPE). Rather than working proactively to forge direct relationships with manufacturers, hospitals and other facilities prioritized ordering the materials they needed and did not stock adequate supplies of gloves, masks and d ‘other vital care tools and products.

Before COVID-19, the “just-in-time” supply chain model had some appeal; hospitals often lacked storage space to take more products than they actually thought they needed and preferred to use space that could be used to store bulk amounts of PPE for more patient beds and care facilities.

However, now that the supply chain has been disrupted to an unprecedented degree, the long-term impacts of COVID-19 are being felt across the supply chain, and many health systems are realizing the benefits it brings. direct relationships with suppliers can help. Keeping the pulse of the supply chain alive has never been more important than it is today, especially since lives can be on the line if your organization runs out of PPE and other life-saving care equipment.

The power of direct sourcing

While keeping a massive stockpile of inventory might seem impractical, it is, by far, the smartest and safest decision for your organization. Adopting a direct sourcing model is the best way to ensure that your organization gets the products it needs at a sustainable cost, while ensuring that you don’t fall prey to future disruptions.

That said, if you only source from a single supplier, you are still plagued by a pre-COVID-19 supply chain mentality. The only way to be absolutely sure that your organization will be able to withstand the end of the disruption caused by the pandemic – and any other disruption that follows – is to make sure you minimize your risks. Setting up backup providers for first, second, and even third level providers will keep you on top of any possible disruption that could cripple your organization now and in the future.

If you are directly connected to your suppliers, without going through a distributor, then you will be better able to set aside time on a quarterly basis to review the data to determine if your supply chain is operating as profitably. and global as your organization. need to be successful.

Prioritizing these reviews is crucial for continued success as it allows you to continue to verify and refine processes, both to adapt to fluid post-pandemic supply chains, but also to ensure that your organization is ready to adapt to the next big disruption. .

What if your organization doesn’t feel ready to take on these challenges on its own? Now is the time to get help.

The challenges presented by the past year have shown why the “just-in-time” approach should no longer be the norm for health systems. COVID-19 has proven beyond doubt that the supply chain industry is fragile and that healthcare systems need additional supplies to tackle present and future delays and disruptions. By using direct sourcing and self-distribution models within your organization, you will ensure that your staff and administration are equipped to tackle COVID-19 and that your organization is prepared for any future disruption to the environment. supply chain that could otherwise hamper your facilities and employees. .

About Matt Stewart

Matt is a senior executive who has a proven track record in starting, growing and leading consulting firms over his 20-year career. Matt’s unique ability to see what others don’t yet see; predict trends before they become trends; identify, recruit and retain the best consultants and team members; and building a culture that top performers want to stay in for the long haul makes RiseNow a leading supply chain consultancy.

Under Matt’s leadership, RiseNow has become a market leader and has seen substantial growth over the past seven years. He attributes this to unwavering faith and a pursuit of transparency, honesty and accountability to customers, partners, employees and suppliers. Some of Matt’s clients include PPG, IBM, Kaiser Permanente, Trinity Health, and McDonald’s to name a few.


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