Managing Healthcare Supply Chains With Technology

One very important example is the medical center’s inventory management system, a platform that allows it to closely track changing needs for a wide range of supplies. For high-volume, low-dollar commodities, Gates’s team relies on a two-bin Kanban system. As soon as a bin of items is emptied, a worker scans it to automatically alert the supplier. “The order flows from the inventory management system to the ERP, which then creates a purchase order,” he says.

As that order is filled, the workers in the storage room — there’s one in each of the organization’s hospitals — simply pull items from the second bin.

It’s a somewhat different process for the high-dollar items Cleveland Clinic needs in its procedural units. Stents and hip implants, for example, are registered in the inventory management system with a radio-frequency identification (RFID) tag. When a product is used, the clinician scans the tag to automatically deduct it from the inventory and capture data for the patient’s medical record.

“Lot information, serial number, the item’s expiration date — it allows us to replenish the item as needed, but it also makes documentation much easier because the clinician can do everything in one place, and it all goes into the electronic health record,” Gates says.

EXPLORE: How healthcare organizations can benefit from real-time supply chain visibility solutions.

Managing Healthcare Supply Chains With a Tech-Driven Process

While Gates and his colleagues at Cleveland Clinic make up one of hundreds of supply chain teams at health systems across the U.S., they stand out for the accolades they’ve received from industry peers and independent analysts. Gartner awarded Cleveland Clinic the No. 1 slot on its annual Healthcare Supply Chain Top 25 list in 2021.

Gartner highlighted the Cleveland Clinic team’s exemplary leadership and collaboration with other departments, and pointed to its use of self-driving vehicles to move materials and supplies. The health system was investing “locally and with diverse suppliers,” Gartner notes, and its successful implementation of RFID technology had not only improved patient safety but was “capturing revenue and reducing loss and expiration.”

All of this was taking place against the backdrop of the COVID-19 pandemic, and Cleveland Clinic was not immune to the supply chain challenges all healthcare organizations faced at the time. Still, Gates says, his team held its own, largely thanks to the systems in place.

“With the visibility we had, we kept our inventory levels in check by not overbuying and by making sure we were covered for spikes in demand,” he says. “When you’re using technology to enable the process — to track real-time usage and make sourcing decisions — that really helps create resiliency.”

Cleveland Clinic’s supply chain ­management has received top marks for its innovative use of technology and highly regarded leadership.

Increasing Healthcare Supply Chain Efficiencies

Improving supply chain management with an eye toward building resilience has been a recent focus for many healthcare organizations. One Kaufman Hall survey found that 99 percent of hospitals and health systems experienced challenges in supply procurement in 2021, and that many industry leaders think price increases and shortages of key products are issues that will continue.

“Things are improving today, but we’re not out of the woods,” says Gregg Lambert, a senior vice president at Kaufman Hall. More than two years into the pandemic, there’s increased availability of items such as masks and gloves that clinicians need to go about their daily work. “But now, we’re seeing intermittent shortages in categories beyond personal protective equipment, and sometimes that’s catching people off guard,” he says.

One organization that has taken proactive steps is BJC HealthCare in Missouri, where it’s in year three of a five-year initiative intended to “simplify our supply chain as much as possible,” says Chief Supply Chain Officer Tom Harvieux.

DISCOVER: Supply chain management strategies for healthcare organizations.

Toward that end, in early 2022, BJC HealthCare opened a 415,000-square-foot distribution center with a three-level picking module equipped with robots and outfitted with hundreds of photoelectric sensors. Harvieux says more than ­40 percent of the health system’s inventory is now processed automatically: “It’s allowed us to be more efficient, and it’s helping us as we deal with labor shortages.”

Like Cleveland Clinic, BJC HealthCare uses a Kanban system to improve management of low-value items, while RFID technology and barcode software are used to track high-dollar inventory and push key information to patient files. Finally, the organization relies on what Harvieux describes as a “very robust data and analytics team.”

The team uses Tableau to visualize, monitor and measure the supply chain down to the smallest detail. “We see what we’re using, how and where we’re using it, and how we engage our ­stakeholders and deliver results,” Harvieux says. “It allows us to expose issues that we wouldn’t have seen before, and that means we’re able to do what we need to fix them.”

Managing Healthcare Supply Chains from Dock to Stock

Another organization with its own ­distribution facility is Indiana University Health. The state’s largest healthcare provider has relied on its nearly 300,000-square-foot Integrated Service Center since mid-2018.

“The big benefit of the ISC is we can go directly to the vendor for our purchases, and we can do bulk buys,” says Tasha Boyd, director of logistics and supply chain operations. Depending on the product line, her team strives to keep enough in stock to supply IU Health for 30 to 90 days, she says.

“Our promise at IU Health is to offer the best care, specifically designed for you, and that’s the model we’re going for here,” Boyd adds.

As an example, she cites the facility’s specialized zone rooms, which are designed to make it easy for clinicians to access the supplies they need. “When they get their products in the hospital, they’re already packaged in a way that they can take them directly up to the floor without having to do a lot of sorting,” she says.

IU Health relies on a robotic warehouse management system that interfaces with its Oracle Cloud ERP, Boyd adds: “Everything is automated to ensure we’re replenished as inventory is decremented.”

Looking ahead, Boyd says her team’s job at IU Health will continue to evolve to reflect best practices. She’s happy to report that the “dock to stock” supply chain system served the organization well during the pandemic, but she also has enough experience to know that challenges down the road could be bigger than any seen to date.

“All we can do is keep improving,” Boyd says. “We’ll do everything we can to be prepared.”