The global COVD-19 pandemic has reshaped the healthcare supply chain

Perhaps more than any other crisis or disaster during modern times, the COVID-19 pandemic of 2020-2022 disrupted and reshaped global supply chain management and operations in myriad ways.

While terrorism, wars and weather-related disasters can hamper and harm manufacturing, production and transportation within limited geographic areas, the COVID-19 pandemic erupted virtually everywhere around the globe simultaneously with swift reactions emerging almost immediately.

Most other times, supply chains were diverted, rerouted, slowed; this time around, many stopped. Period.

The extended financial and operational hiccup spanned the gamut of supply chain activities including:

• Distribution & Logistics (e.g., transportation, receiving, storage)
• Inventory Management (e.g., internally on exchange carts, PAR levels, shelves)
• Clinical/Departmental Consulting and Facilitation (e.g., Value Analysis)
• Demand Planning (you know, forecasting, which suddenly is popular)
• Smart Sourcing (whether local, regional, national or global and intermodal)
• Track & Trace (rooted in accurate, clean, reliable data)

Leaders & Luminaries, the strategic and tactical thinking journal of the Bellwether League Foundation, tapped Hall of Fame award winners, sponsors and supporters for their impressions on how the supply chain continues to recover within each component and move forward in 2023 and beyond.

Charlie Miceli, C.P.M., Vice President and Network Chief Supply Chain Officer, The University of Vermont Health Network, Burlington, VT

• Distribution & Logistics
  "Make sure to diversify and mitigate as many single points of failure as possible. Work outside of the healthcare industry if possible and augment these resources with the healthcare industry infrastructure."
• Inventory Management
  "Automate as much as possible. Ensure materiel flow is considered in new construction."
• Clinical/Departmental Consulting/Facilitation
  "The pandemic moved us from want to need and exposed the parity of great products in the healthcare ecosystem."
• Demand Planning
  "Leverage the internal ERP system first and remove as much "mud" as possible, so that you have a clean line of sight to forecast."
• Smart Sourcing
  "You need to go old school, embrace trust and transparency vs. solely the transaction. We cost-managed ourselves into the supply chain disruption, so we need to commit to but also diversify sourcing."
• Track & Trace
  "GIGO (garbage in, garbage out) should not exist. Normalization of data is the coin of the realm. If your data is not clean, shame on us."

Tom Lubotsky, Bellwether Class of 2022, Senior Vice President, Supply Chain, Allina Health, Minneapolis

• Distribution & Logistics
  "Clearly the obvious need to centralize or have access to critical products that require days-on-hand levels has been a clear requirement over the past couple of years. Products such as PPE, Lab or products that are reliant on off-shore raw material access or production have been keen needs to build more reliability. Alternative strategies to address transportation dependencies have also required more attention, especially based on risks that they can reliably deliver products are required (e.g., trucking, rail, air, ships)."
• Inventory Management
  "Keeping abreast of product movement through automated PAR level management has demanded stronger vigilance, particularly for resetting PAR levels. Strengthening of backorder management processes to the overwhelming number of product delays has been necessary."
• Clinical/Departmental Consulting/Facilitation
  "Linkage to at-risk value-based payments to healthcare systems today to manage waste and variation of care has never been more required. Its alignment to reducing expense to produce so that hospital operating margins are sustained or improved will be needed more than ever. Value will be tied more appreciably to reliability of the product and hence movement from only sole source agreements have gravitated in some product categories to dual sourcing (e.g., blood collection tubes)."
• Demand Planning
  "This area is of the utmost visible element that has arose out of the global pandemic. It is a required imperative that all healthcare system supply chains must evolve as a key competency. Closely tied to demand planning is the emerging larger focus on vendor risk management. A review of its governance, policies and procedures, vendor inventory, risk tolerance models, assessment methodology and require automation, technology and reporting are all foundational components that have required more attention to effectively design a sound vendor risk management program. The development of an operating model that digests key risk intelligence and quickly moves toward product alternative decisions will be an essential feature. To support this agility has been the development of identified product substitutes hardwired into the ordering system."
• Smart Sourcing
  "Off-shore versus on-shore manufacturing and the reliance of Tier 1 and Tier 2 suppliers or manufacturers has certainly focused a sourcing team on the selection of suppliers to work with going forward. Where product attributes mirror more commodity-type choices, where to buy has indeed factored more into where best to source these products."
• Track & Trace
  "While always a challenge, data tracing for understanding status of product deliveries raised more acute awareness during the pandemic on the reliability to forecast when products would arrive. For the supply chain industry overall, better real-time monitoring of delivery status was key, especially among critically needed PPE products."

Dick Perrin, Bellwether Class of 2014, CEO, Active Innovations Inc., Annapolis, MD

"The pandemic has created impacts on all of these functions/areas. Shifting patterns in production due to workforce shutdowns and restrictions have had significant impacts. The need for resiliency in manufacturing actually was part of the outcomes of Hurricane Maria in Puerto Rico with major shutdown of plants that were responsible for manufacturing plastic bags for collection of blood products and distribution of normal saline. These impacts required manufacturers to scramble to find alternative sources for boosting production of critical supply manufacturing components and should have been seen as a precursor for subsequent pandemic problems.

"The pandemic impacts also included pharmaceutical products with the need to track the source of such items as pharmaceutical active ingredients manufactured in China and then transported to other Middle Eastern countries for manufacturing and assemblage before being shipped to the U.S. and other countries for consumption. This is of central concern to the issues of track-and-trace, although the focus in on the initial manufacture rather than on track-and-trace of products determined to be defective or harmful at the point of use for direct patient care."

Jamie Kowalski, Bellwether Class of 2017, Retired CEO, Jamie C. Kowalski Consulting LLC, Milwaukee, WI; Bellwether League Foundation Co-Founder and Board Secretary; Bellwether League Inc. Co-Founder and Founding Chairman, 2007-2013

• Distribution & Logistics
  "Think local. Extending the distances from source (off-shore) to points of use, raises the degree of risk of delays or unavailability of products. It also adds the risk of political influence on the marketplace (blockades and/or cut-offs) In healthcare, critical materials (drugs, supplies, etc.) cannot be subject to such risks. Weather can also be a major cause of disruption of delivery of materials. Distance makes that even more dangerous and likely a cause of harm or even death to patients."
• Inventory Management
  "The use of needs to be reconsidered. Lastly, the models, roles and responsibilities associated with inventory management should be evaluated. Can or should the government be responsible for maintaining 'back-up' levels and locations of materials hospitals cannot run out of? Can and should providers with a 'Consolidated Service Center' (CSC) collaborate with other CSC operators and share pandemic/backup inventories of selected items, statistical and mathematical formulae for establishing order points, order quantities, safety stocks, and even the concept of 'just-in-time' at each level or location of the inventory — at the manufacturer, the distributor, the hospital warehouse or storeroom, in user departments and at the ultimate points of use — must be reviewed and revised."
• Clinical/departmental consulting/facilitation
  "Value Analysis must be used as the way to determine which products are needed v. wanted in order to reduce the number of SKUs (stock-keeping units or items) that must be obtained and maintained. Cost-benefit analytics conducted at the hospital level can provide the medical and clinical team with the data and confidence that use of products selected applying Value Analysis tools will not reduce the quality of care and result in threats to patients."
• Demand Planning
  "Healthcare providers have struggled for decades with attempts to develop a reliable process for forecasting the use and need for drugs and supplies. The operating methodology has been, 'keep on hand as much as possible so we never run out.' This has not been a financially, physically or operationally viable (or reliable) approach. But given that the need to provide healthcare is frequently — at least in the short term, unpredictable, (e.g., how many moms will show up next Tuesday to deliver a baby, or car accidents or shootings will occur this weekend) and subsequent accuracy levels of demand and availability are at best an estimate, it is better than 'have enough so we don't ever run out.' Over time, the process may evolve into something much more reliable."
• Smart Sourcing
  "Too much off-shore production is not worth the risk. In the U.S., it would be smarter, and over time less risky and expensive than selecting and using a source of supply that is located somewhere around the planet, in a country that is dealing with economic, social and political challenges, and is therefore, not very reliable."
• Track & Trace
  "The data is out there. The technology is now out there, too. However, historically, investments in supply chain management have been wallowing in last place and been underfunded. Investments in facilities, medical technology advancements and staff compensation have been thought of as essential. Since the pandemic hit, the industry has learned that the supply chain needs more investment in technology and leadership, to help deal with many of the challenges a pandemic brings."

Ray Seigfried, Bellwether Class of 2012, former Delaware State Representative, Dover, DE

"The global pandemic is not over yet and will continue to cause disruptions throughout the supply chain. Yes, one can see the incremental changes in the supply chain due to the pandemic, but more significant, more profound changes have occurred that will alter the supply chain even more. Over the past years, younger workers have developed a new approach to work. This new thinking about work and family has rebalanced the work/life equation. Supply Chain staff working in transportation, warehouse, PAR cart exchange, etc., want greater flexibility in working hours, benefits and pay. Employers will need to retool their policy on 'work' and create new ways for younger workers to contribute. This will demand new technologies to fill in work assignments performed by staff in the past. These changes will affect the entire supply chain, from obtaining raw materials to administering products and services to patients."