Former COVID task force member on how to create a resilient health care supply chain
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Medical supply shortages caused by the COVID-19 pandemic revealed the critical need to rethink and restructure the U.S. health care supply chain system.
Executive Director of Supply Chain Resource Cooperative Rob Handfield discussed ways to encourage a resilient health care supply chain by addressing and predicting supply chain vulnerabilities during the 14th annual McKenna Lecture presented by the W. P. Carey School of Business and the Center for Advanced Procurement Strategy (CAPS) Research in partnership with the IDN Summit on Aug. 25.
The Mark McKenna Lecture series recognizes McKenna’s contributions to developing the health sector supply chain, bringing key innovators and thought leaders in health care to ASU to speak on current health care issues, and highlighting the importance of the supply chain in improving organizational performance and clinical practice.
"Immunity refers to resistance to an infectious disease, including creating barriers, vaccinations, and receiving antibodies that react to an invader in the body. ... That's what we need today in our supply chains," said Handfield, Bank of America University Distinguished Professor of Supply Chain Management at North Carolina State University, during his keynote presentation.
Handfield, who served on the White House COVID Joint Acquisition Task Force, emphasized the critical need for health care organizations to prepare for inevitable future disruptions by restructuring the nation's supply chains.
"We don't know what's going to hit us next. … If it isn't COVID, it will be something else. The world has become a very uncertain place. It's going to continue to stay that way."
Handfield described supply chain resilience as the degree to which preparedness, elasticity and collaborative risk management can successfully and predictably provide the right product at the right time. During his presentation, he proposed actionable ways health care leaders can infuse immunity and resiliency into their supply chains through increased transparency, inventory documentation, identifying critical supply continuity plans and prioritizing domestic sources.
"If you can at least try to predict where the vulnerability lies, that's half the battle," Handfield said.
Many health care organizations are unaware of where their supplies — from pharmaceuticals to personal protective equipment to medical equipment — are manufactured and sourced, and often rely on a single manufacturer to provide these critical medical supplies. Increasing supplier visibility and awareness of global disruptions that could potentially impact supply creation, like natural disasters and geopolitical uprisings, would help organizations anticipate supply chain disruptions and mitigate supply shortages.
Additionally, by developing a team of dedicated personnel focused on supply chain disruption response, health care organizations can increase their ability to predict and react to supply shortages, anticipate potential revenue risks and more.
"We're seeing major disruptions occurring at a rate of three or four events per day around the world," Handfield said. "We need to map it out, not just by supplier, but by site and location."
Handfield encouraged supply chain leadership and personnel to partner with physicians to identify the supplies critical to patient health, and distributors who can provide acceptable backups in the case of a supply chain disruption. Many organizations also lack consistent inventory tracking processes, which negatively impacts the company's ability to forecast future supply demands.
"Intelligence is about understanding your supply chain, mapping your supply chain, assessing those suppliers, building backup plans and measuring this stuff," Handfield said. "We need our leaders to invest money into this because it's going to take a team of people to create these things we need."
Considering alternative policies, like prioritizing domestic sources or nearshoring, the process of outsourcing production to countries closer to the U.S., would also contribute to supply chain visibility and transparency. Many U.S. health care organizations rely heavily on suppliers outside the country to manufacture everything from basic pharmaceuticals to medical equipment. While this may be more cost-effective for the organization, it also increases the risk of supply chains being impacted by disruptions and increases lead times.
Often only a handful of manufacturers create a type of product or pharmaceutical, and if the manufacturer is unable to maintain and invest in their factory or is impacted by a disruption, health care organizations in the U.S. are subsequently unable to obtain the product and treat patients accordingly.
"I think our country is facing some dire consequences if we don't reduce the complexity of our supply chains, especially our health care supply chains," Handfield said.
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