A few months ago, COVID-19 brought into sharp focus the fragility of the medical supply chain. From a lack of visibility into inventory levels to drug and supply shortages caused by unprecedented demand spikes that disrupted the global supply chain, the pandemic has put a spotlight on common challenges deeply rooted within the health care supply chain.
As the industry works to recover, it won’t be enough to simply get back to where we were. The pandemic must also serve as the catalyst to implement important and lasting changes that address known challenges and create health care supply chain reliability.
“Supply chain leaders have seen this need to shift toward greater supply chain visibility and resiliency coming for quite some time. Vizient was already working to increase both when COVID-19 elevated the urgency for everyone in health care. Everyone now understands why knowing where raw materials come from and where products are manufactured are so important,” said Steve Downey, group senior vice president, Vizient supply chain operations.
To encourage a new level of reliability, Vizient is implementing strategies that are designed to help prevent supply shortages and efficiently mitigate any that do occur. In addition to continued regulatory and legislative advocacy, the strategies are expanding domestic capacity and increasing trust, transparency and predictability in the supply chain.
The strategies include solutions that address immediate supply needs while also launching a new digital supply platform that will offer the visibility necessary to have a resilient supply chain going forward.
Expanding supply capacity now and in the future
As the pandemic has reinforced, supply chains can be vulnerable to disruption when there is minimal stock on hand, or there is over-reliance on a particular supplier or geographic location. Vizient’s Novaplus Enhanced Supply Program addresses these issues with supplier agreements for essential medications, personal protective equipment (PPE) and other essential medical supplies by providing increased levels of inventory as well as requiring transparency into raw material sources and manufacturing locations. These supplier agreements are based on predictable demand that help support additional production and inventory that is warehoused in the U.S. based on historical member purchases and expected need.
“The idea behind the program is to increase material availability through managed stockpiles within the supply chain itself, accessed by members when needed,” says Downey. “This helps create a more resilient supply chain and ensures members have access to essential medical supplies and medications now and during times when demand spikes going forward.”
An early success for the program was during the initial surge of COVID-19 when the demand for medications required for ventilator patients spiked. The program enabled 676,000 additional doses of propofol to be immediately available to members who needed the medication to treat patients. More recently, agreements with Standard Textile and Encompass, two PPE suppliers, will provide millions of reusable and disposable isolation gowns, bouffant caps and shoe covers available to Vizient members to meet their needs. The Novaplus Enhanced Supply Program requires a 90-day member-specific stockpile supply.
In addition, purchase opportunities through a new “spot buy” program with contracted suppliers are helping meet member needs for PPE products and other supplies. This sourcing strategy helps hospitals more nimbly acquire the products they need at reasonable costs. Vizient’s spot buy strategy uses a variety of manufacturers, including non-health care manufacturers, to help expand capacity for essential products.
Members also have access to several Vizient supply chain resilience resources to help support need-based supply purchases during the pandemic. Those resources include:
- A personal protective equipment calculator to determine the average consumption rate for each type of PPE
- A COVID-19 surge demand calculator to project non-ICU bed, ICU and ventilator demand
- A ventilator medication demand projection tool to predict the need for medications used to support mechanically ventilated patients (See Vizient Tools Unlock Powerful Insights Into Supply Price, Consumption and Future Demand.)
Increasing supply chain trust, transparency and predictability
Along with the solutions to address immediate member needs for certain supplies and equipment, Vizient’s strategy also addresses the long-standing barriers for supply chain resiliency.
Traditionally, the health care supply chain model has been a linear process with limited visibility across trading partners. Each manufacturer, supplier, distributor and health system handles planning, ordering and forecasting within their own silos. Consequently, there is little real-time data available to inform purchasing decisions.
“This siloed approach causes costly inefficiencies across the supply chain as organizations respond to a disruptive event without full and up-to-date information,” said Rachel Martin, senior supply chain operations program director for Vizient. “It’s like a big game of telephone. By the time you get to the end of the chain, the information being shared is usually not very accurate.”
To increase trust, transparency and predictability across the health care supply chain, Vizient recently developed a two-sided marketplace that creates visibility for inventory availability and improves collaboration between health care organizations and suppliers around forecast for demand and consumption of goods.
The solution creates a digital supply chain ecosystem that enables all trading partners to see a single version of the truth when it comes to supply and demand. It offers the following capabilities:
- Increased inventory visibility to ensure trading partners and members understand critical items, amount of days on hand and other metrics
- End-to-end visibility into demand and order forecasts that allows suppliers to better respond to members’ needs
- Mapping and tracing where supplies come from all the way from raw materials to finished goods to hospital dock
- Disruption management to evaluate the impact events have on inventory and orders
- Member and supplier performance tracking, including on-time, in-full (OTIF) delivery and forecast accuracy
“A lot of industries have this level of supply chain transparency, but this is new for health care. It’s important for trading partners across the value chain to understand real-time demand and inventory availability. That’s how you start to understand what is needed, where vulnerabilities exist and how to better match supply and demand,” said Martin.
The platform monitors order and shipment milestones to track and trace exceptions. It tracks low, out-of-stock, and excess inventory, and generates suggested order quantities to vendors. As it continues to gain adoption across Vizient’s members, distributors, and suppliers, it will be able to aggregate information and insights and deliver exponential value to all trading partners.
“The solution gives us a control tower view across our membership and suppliers to be able to aggregate and measure the performance necessary for continued improvement in supply resiliency. We aim to measure supplier on-time, in-full delivery as well as provider order-forecast accuracy,” said Martin.
The way forward
The spotlight is now shining on the health care supply chain. As the pandemic continues, as an industry we must respond with agility and flexibility in the short-term, while also working to improve supply chain reliability over the long-term.
Building supply chain reliability requires a new way of thinking. It requires trust, transparency, and predictability by all trading partners – suppliers, manufacturers, distributors and providers. Contact us to learn how Vizient can support your organization’s supply chain reliability initiatives.