What will we see in Supply Chain's Future State? COVID-19 clears canvas for new capabilities around collaborative thinking and ventures

By Rick Dana Barlow

Fifteen years ago, with the U.S. poised on the precipice of fiscal collapse preceding what would be branded as "The Great Recession" that upended the economy and operations across industries, only a few predicted the dire result of a hyper-inflating market.

The ensuing years flashed signs and warnings of the world's lack of preparedness should a health-oriented calamity much more intense, virulent and widespread than SARS-CoV-1, H1N1/Swine flu, MERS-CoV and Ebola emerge. Then, in late 2019, SARS-CoV-2 a k a COVID-19 surfaced and mushroomed quickly into a deadly and disruptive global pandemic, the aftershocks of which continues to leave economies, industries and the world at large reeling.

Looking through glass caked with condensation or simply cracked under all the pressure-coated events and issues of today may make it more challenging to predict what might happen 15 years from now, but let's face it. Future forecasts can be as fun to conjure up as they are to read.

Nestled among the weeds may make it hard for some to see where healthcare supply chain operations might be in the year 2037. Some ascribe to the notion that history repeats itself while others say it merely rhymes or usurps synonyms. Regardless, what's noteworthy is how the years 2007 and 2022 represent crisis-related bookend peaks with a valley of recovery, reform and rehabilitation in between. Should the pattern continue, the healthcare supply chain likely will see some curious developments before some major crisis around 2037 that follows a presidential election.

Still, eyeing the future enables you to rule out the extremes — digital vs. analog.

On one side, robots run everything through computer programming and processing via wireless internet that controls and guides vehicles and provides humans with direction. Of course, think of the scenes aboard the Axiom spaceship in the 2008 Disney film "WALL-E" where humans are bulbous marshmallows with twigs for bones as they remain sedentary all the time in front of video screens.

On the other side, humans do everything sans computer technology in a rebellion against cybercrime, cyberterrorism and loss of privacy that ushers society back to a mid-century modern renaissance. Back then, of course, the healthcare supply chain amounted to a decentralized, loosely knit web of basic functions where service dueled with cost savings as managed care and payer dominance remained decades away.

Naturally, the truth resides somewhere in that great middle gulf with the bridge borrowing selected elements of either extreme, balancing human (analog) process creativity and ingenuity with automated (digital) implementation and operations.

Today, after boring through more than two years of the COVID-19 pandemic, buffeted by public-sector and private-sector reactions and government intervention and economic reverberation, what have we seen?

Here are some highlights:

• The migration of care to the outpatient setting accelerated — and not just to outpatient operations within acute care hospitals or to ambulatory surgery centers, clinics and physician offices but more to retail care outlets within drug and grocery stores, boutique clinical practices and even to the home with telemedicine capabilities paving the way.
• The distribution, inventory and transportation trajectory toward stockless, just-in-time (JIT) and modified JIT models slowed considerably after the proverbial needle-scratch on a vinyl album spinning on a turntable. While the whipsawing retreat to storing stuff onsite hasn't motivated supply hoarders to crow, "I told you so!" it has driven supply chain leaders to strive for accurate track-and-trace data on products throughout the product pipeline, ideally embracing data standards, but also reaching for blockchain, artificial intelligence (AI) and robotic process automation (RPA) to keep score and stock as well as partnering more closely with suppliers and vendors to manage caches within their own footprints.
• The defection of product manufacturing and raw material sourcing outside of the United States (off-shoring) hit a variety of speedbumps and roadblocks that saw cost-containment and revenue and profit maximization through cheap labor and tariff loopholes offset by virus-driven labor shortages and spiraling sea, rail, land and air transportation costs. This fostered interest in near-shoring and onshoring of manufacturing, production and distribution through more localized and regional — versus national and global — strategies and tactics to facilitate easier and more convenient access to product — or at least the perception of convenience and ease.

In short, clogs in the pipeline slowed production, which accelerated shortages and backorder gluts, resulting in skyrocketing demand and opportunistic price hikes at times.

With that in the healthcare supply chain's rear-view mirror, what's possible in the windshield forward?

Bellwether Community members, consisting of award-winning Hall of Famers and Future Famers, sponsors and other supporters, shared their vision, rooted in hope and wonder.

Restructuring infrastructure

"With the emergence of environmental [and] social governance (ESG) becoming more prominent than ever within our supply chain sourcing, gone will be where price initially dominates the choice of products and services needed to stock healthcare shelves," forecast Tom Lubotsky, Bellwether Class of 2022, Senior Vice President, Supply Chain, Allina Health, Minneapolis. "Healthcare system supply chains will be requiring more sustainable products and clearly will be judging how well their suppliers are adhering to these ESG disciplines and required regulations. These inclusions may be the first value determinant for a supplier to be considered eligible to provide a product or services before price even factors into the selection process."

As expected by rational thinkers, technology will play an increasing and key role in siphoning process inefficiency.

"Advancement of [artificial] intelligence will remove the non-value tasks among the myriad of supply chain processes conducted daily today," Lubotsky continued. "The supply chain work force will transform to higher-level analytics and diagnosticians that will target key gaps for improvement. Process mining will become the common thread to identify these gaps by harvesting database knowledge that can isolate transactional steps that need to be addressed. Areas that are likely targets for this improvement include cash preservation, late payment fees, rework, maverick buying, conformance checking among others."

Look for demand forecasting and management to become ubiquitous elements of standard operating procedure, according to Lubotsky.

"Gone will be the current absence of no forecasts provided from healthcare system supply chains to its largest supplier of goods and services," he said. "End-to-end supply chain aspirations will continue to grow and will insist on capabilities to perform demand-based management analytics. Data intelligence will feed forecasts required by our suppliers to fulfill products as required by the 'schedules' of clinical work to be performed. Healthcare systems that develop these capabilities will be able to create multiple supply response scenarios so that a robust reaction is generated that best meets the demand-supply gap objective. The emergence of an immediate demand signal to suppliers will require capital commitment and coordinated technology planning to produce a signal that supplies need to be fulfilled."

Lubotsky anticipates and recognizes redefined partnerships between providers and suppliers.

"Structured supplier relationships beyond the traditional transactional models will be the norm that embraces new forms of governance and management to address key strategic imperatives such as the delivery of remote or hospital at home care," he predicted. "These new relationship models need to consider a deliberate alignment of both organization's strategic imperatives driven by a higher discipline of planning to be successful. Coordination among integration leaders, project managers and a project team to advance initiatives associated with assimilating technology platforms will be just some of the synchronization resources essential to advancing these efforts."

New Age GPOs?

Steve Kiewiet, FAHRMM, FACHE, COO, CCS Health foresees a redefinition of group purchasing through consolidated purchasing coalitions that likely will be much smaller and more localized than the national group purchasing organizations (GPOs) of today. Further, the national GPOs could become dedicated management organizations of these smaller and more diverse CPCs.

"As more and more of the world becomes open market and more products need to be delivered in smaller quantities to millions of more locations (i.e., the home) the need for group contracting and bulk distribution will erode," Kiewiet deduced. "I do believe that the value the GPOs bring in the power of analytics, benchmarking, best practices development and advocacy will grow significantly."

Kiewiet also envisions delivery mechanisms changing against the backdrop of labor issues. "I absolutely believe we will see the day that delivery trucks, vans, trains, planes, drones, etc. will be operated autonomously," he indicated.

He also questioned the existence and legitimacy of paper in the future. "In the world of electronic medical records, electronic contracts, DocuSign, etc., it is still amazing how many trillions of pages of paper are part of the healthcare and supply chain ecosystem."

Charlie Miceli, C.P.M., Vice President and Network Chief Supply Chain Officer, The University of Vermont Health Network, Burlington, VT, offers three of the more creative predictions that should arch eyebrows.

"There will be a homogenization of basic supplies by corporate/nationalized manufacturer consolidation and standardization of specifications, no variability," Miceli envisioned. "Think one brand, one cost, best quality."

Further, 3-D printing, otherwise known as additive manufacturing, will be "ubiquitous and in our homes."

And imagine this one: "The supply chains will be nationalized and there will be a United Nations of Supply Chain," Miceli declared. Possibilities to ponder for sure.

Rethinking the shape of the box

Like Lubotsky, Dick Perrin, Bellwether Class of 2014, CEO, Active Innovations Inc., Annapolis, MD, points toward addressing and solving issues related to ESG, both public and corporate.

"Sorry, but our kids are going to inherit a world that is most difficult unless we can figure out how to do carbon dioxide sequestration, capture and reuse of plastics, and completely modify our lifelong approach to carbon-based fuel consumption," Perrin lamented. "All of these elements are going to require serious forward thinking with our best leadership in collaboration across the aisles and the seas to enhance our use of solar, wind, and other alternate energy sources. We simply must reduce waste or at least significantly change the efforts we are putting forth to recycle all the packaging and waste materials we generate routinely today."

Perrin drafts the supply chain to take charge.

"We as leaders must be proactively involved in guiding governance of our organizations to move forward with methods that will maximize the benefits to our organization and to society," he insisted.

"Certainly, the issues of healthcare and the processes and methods [used to deliver] will continue to evolve," Perrin added. "Robotics as a means to facilitate surgical procedures, AI to facilitate diagnosis and provide definitive care plans based on individual patient needs. Pharmaceuticals formulated and provided for the specific needs of each patient. The list goes on, but it will all be for naught if we do not face the realities of global warming and climate change.

Perrin challenges the industry to think about the television cartoon "The Jetsons" and how all things were created/manufactured locally as they were needed — not unlike the "replicators" on the science fiction television show "Star Trek." Pop culture already is playing a role, too.

"The outreach of technology along the lines of FitBit will continue to influence the linkages for care patterns as care shifts from hospital to in-home modalities — albeit with loss of personal privacy," he said. "And along with these processes the linkages for artificial intelligence, machine learning and robotics will continue to expand. Just-in-time will most likely go through some iterations along the way but will survive as healthcare organizations continue to merge the entirety of the patient care support process from insurers to providers to patients all with an ever-increasing number of tenacles tied to information about who you are and what you are doing to protect your health and contribute to productivity."

Jamie Kowalski, Bellwether Class of 2017, Retired CEO, Jamie C. Kowalski Consulting LLC, Milwaukee, WI, and Bellwether League Foundation (BLF) Co-Founder and Board Secretary, envisions a streamlining of the supply chain hierarchy and process.

"One practice that will — or should — go away, is that of having too many players in the supply chain, [a portion] of them not adding value to the chain," he noted. "Would it be more efficient and effective with or without more direct business being conducted between manufacturers and customers? Will GPOs provide the financial value needed to remain in the game? How will remote care best be served — by distributors, by manufacturers or an entirely new source? Will truckloads of deliveries to the hospital providers become secondary to drone delivery to patients' homes? Will the skies be so crowded that drones will fill it like gnats — and need their own air traffic control system? Or will the UPS/FedEx companies fill city streets with their trucks making even more home deliveries? Would this also increase the automobile traffic because many of the materials that could be delivered to patients' homes need some clinician to go there to administer the materials/drugs and/or show the patient how to use them? Think Visiting Nurses." Kowalski also served as Co-Founder and Founding Chairman, 2007-2013, of Bellwether League Inc., BLF's predecessor organization.

There will be significant uncertainty about many things, and during this time, the winning strategy will be to implement an organic learning operation that adapts to changes," admitted Ray Seigfried, Bellwether Class of 2012, former Delaware State Representative, Dover, DE. "Transferring healthcare into the home will demand that patients become more active in their care, which up to now has not be the behavior of most people. The concept of 'personalized medicine' where a health plan is designed at birth based on DNA and geography may be a more realistic approach. If this occurs, then perhaps supply chain logistics like Amazon may take hold."