Feb 02 2022

Solving Supply Chain Strain: Healthcare and Hospitals Can Use Tech to Help

Healthcare is one of the industries hit hardest by supply chain challenges. Organizations can leverage technology to reduce this risk.

Once a relatively unknown facet of organizational operations, supply chain issues are now in the spotlight. Public interest in how and when goods make it from point A to point B has skyrocketed since the start of the pandemic.

Not surprisingly, healthcare organizations have been at the forefront of these disruptions. Initial issues with the availability of personal protective equipment (PPE) gave way to challenges with vaccine supply and distribution. While recent pandemic pressures seem less disruptive to healthcare supply chains, questions remain: What does the new normal for healthcare supply chain management look like, and how do healthcare organizations reduce the risk of similar disruptions moving forward?

Technology offers a potential solution for this long-term concern.

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The State of Healthcare Supply Chains

A recent article from Becker’s Hospital Review puts it simply: “Supply chain issues are here to stay.” As healthcare organizations begin to recognize the risk in single-source supply chains, they’re now diversifying to deliver more consistency. However, this multimodal approach increases complexity for both hospitals and suppliers, in turn creating long-term challenges.

According to Michael Palazzini, executive vice president of operations at healthcare logistics management firm TRIOSE, there’s not a lot of slack in the system.

“Historically, healthcare supply chains have operated on very thin margins — around 2 percent — and there’s not a lot of extra capital,” he says. “Organizations want to invest in robotic processes or build new operating rooms. They don’t invest heavily in the supply chain.”

EXPLORE: Learn how to build a supply chain risk management program.

The result is a system that lacks excess capacity. Even small changes to the supply chain are quickly felt by organizations, and the pandemic came with changes of unprecedented scale.

Adam Coppin, program architect with Salesforce consulting and application development firm Traction on Demand, says that in his experience with healthcare agency supply chains, these issues aren’t new.

“The pandemic has put it into focus that agencies can suddenly run of out critical supplies,” he says. “It’s brought a push for healthcare agencies to not just focus on their supply chains but their overall operations to improve efficiency.”

Using Group Purchasing Organizations to Reduce Complexity

Group purchasing organizations (GPOs) offer a way for small and midsize healthcare providers to reduce complexity and streamline supply chain management.

“If you think about hospital systems, they tend to prefer to point resources at direct patient care rather than infrastructure,” says Palazzini. “GPOs, meanwhile, are centralized aggregators of supply chain knowledge. They understand how the system works and offer a centralized gateway to match customers with vendors. For example, they might negotiate a contract and then make it available to 1,000 health systems, letting smaller supply teams focus on distribution rather than searching for best-fit vendors.”

On the vendor side, being part of a GPO makes it possible to connect with new clients and expand business opportunities, creating a win-win for both suppliers and healthcare agencies.

“The supply chain is very complex, from pharmaceuticals to equipment and smaller supplies,” says Palazzini. “GPOs provide value to industry with efficient matchmaking.”

READ MORE: Find out how IT fits into COVID-19 vaccine supply chain logistics.

Strengthening the Chain with Supply Technology

While GPOs offer a solid starting point for healthcare organizations looking to bolster their supply chains, evolving technologies also offer an opportunity to stabilize supply over time.

Coppin notes, however, that effective use of these technologies requires a firm foundation. “Organizations need solid, unified data around the use of current supplies to make predictive analytics possible,” he says. “Consolidation is key.”

While the public focus is often on frontline healthcare technology such as robotic surgeries or telehealth, Palazzini says supply chain solutions focus on areas such as real-time tracking and GPS technology.

Michael Palazzini
Tracking material that’s flowing into a health system — from manufacture to shipping to delivery to storage to point of use — is critical for supply chain professionals to know where supplies are and when they’re expected.”

Michael Palazzini Executive Vice President of Operations, TRIOSE

“Tracking material that’s flowing into a health system — from manufacture to shipping to delivery to storage to point of use — is critical for supply chain professionals to know where supplies are and when they’re expected,” he says.

This naturally leads to the implementation of automation and predictive analytics. If organizations can automate key ordering, shipping and receiving processes, they can reduce the amount of time and resources required to manage incoming supply.

Predictive analytics, meanwhile, makes it possible for agencies to anticipate when they’ll require more supply based on current usage patterns. Combined with automation, this sets the stage for streamlined operations.

Still, technology itself isn’t enough to solve supply chain challenges.

“Tech in and of itself is not the answer,” says Palazzini. “Organizations still need intelligent, professional and skilled people to put it to practical use. Putting these tools into place isn’t about achieving 100 percent automation. It’s an equal combination of people and technology.”

The bottom line is that strengthening supply chains starts with consolidation. Armed with relevant data, organizations can leverage real-time tracking to understand current conditions, apply automation to reduce process complexity and deploy predictive analytics to anticipate ongoing needs.

GET THE WHITE PAPER: Find out how to achieve effective data analytics.

The Future of Healthcare Supply Chain Stability

Palazzini notes that there’s no guarantee current changes will lead to long-term improvements.

“Right now, people are talking about onshoring, but will that last? Are organizations willing to pay more for supply to build stability? We don’t know yet if there will be sustained changes,” he says.

More certain, however, is the impact of technology on healthcare supply chain management. No matter where goods are produced and how they’re shipped, automation and analytics — paired with intelligent human oversight — are now essential to build stable and sustainable supply chains.

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