What hath COVID-19 wrought on supply chain operations?

By Rick Dana Barlow

The COVID-19 pandemic may have wreaked havoc on global supply chains, which trickled down in firehose fashion to continental, national, regional and local supply chains, stalling progress, fomenting shortages, breeding backorders and utterly inconveniencing everyone with life-or-death decisions on the line in healthcare.

But the world-wide crisis also taught everyone at least two major lessons — particularly in healthcare.

1. Supply chain is essential to patient care, clinical and financial operations, culture, daily lifestyle and economics.
2. To compensate for blockages and clogs amid teeming demand, supply chain professionals improvised and innovated, occasionally sidestepping traditional and standard operating procedures for more fast-track results, but also adopting and implementing some questionable behaviors for short-term results.

With the government "declaring" the global pandemic as over back in May 2023, relegating COVID-19 to endemic status, healthcare organizations gingerly have tried to return to "normal" — whether that translates to life circa pre-pandemic 2019 to pick up where normalcy allegedly left off or some post-pandemic-tinged operations that fuse lessons learned into a hybrid model.

Yet one observation that lingers in the minds of some is that they're seeing some "bad" or "questionable" operational behaviors and habits that supply chain may need to ditch going forward.

Maria Hames, Partner, HealthCare Links, which is a Bellwether League Foundation Event Sponsor, cautions against the obvious.

"Don't go back to the easy button or the way things used to be done pre-pandemic," Hames advised. "Stay sharp with resiliency and redundancy in supply chain. Be diligent to the potential future disruptions."

Amanda Chawla, FACHE, CMRP, Chief Supply Chain Officer and Vice President, Stanford Medicine, Bronze Sustaining Sponsor, warns against embracing a crutch that drew frowns even pre-pandemic.

"We must ditch our habits of reactiveness and stockpiling," Chawla told Leaders & Luminaries. "While it is tempting to ensure that you over-order just in case of another disruption, we must recognize that by doing so we are part of the problem. We must move away from 'Just in Case' to 'Just Right," which means some of our procurement will be just in time, some may be strategic, and it's a combination to ensure we have just the right inventory to meet the demand.

"We must bring forward and balance the strategy side of supply chain and pursue innovative disruption in our organizations and industry to continue the evolution of our industry," she continued. "We must focus on where we make it 'easy to do the right thing' — advancing our systems, analytics, processes and coordination to serve the healing hands that care for the patients and to partner with our stakeholders."

Charlie Miceli, C.P.M., Bellwether Class of 2023, Vice President, Network Chief Supply Chain Officer, University of Vermont Health Network, offers this advice: "Make sure you take time to think and not just move on a pursuit."

Supply chain leaders must take stock of all operations, according to Jane Pleasants, Bellwether Class of 2015, Executive Director, SMI. She pegs four issues that should raise an alarm.

1. "Over-reliance on a single source or location.
2. "Inefficient inventory management — we bought far more products than most of us needed. We should get back to being smart about what is purchased and managing inventory.
3. "Re-establish robust trading partner interaction in ways that create win/win opportunities for both.
4. "Find the balance of in-person and virtual meetings. Building trust between trading partners takes time and interaction. You will get out of it what you put into it — both trading partners," Pleasants recommended.

Erik Walerius, Future Famers Class of 2016, Chief Supply Chain Officer, UW Medicine, homes in one key pandemic-motivated behavioral change: Meetings.

"Certain meetings are appropriate for Zoom or [Microsoft] Teams virtual meetings, but the return to in-person for strategic or complex meetings that are difficult to accomplish virtually due to the topics at hand is beneficial for all parties," Walerius indicated. "Conversely, there are meetings that now are acceptable to be conducted virtually and those should continue due to the efficiencies provided for all parties."

The pandemic caused many to rethink crisis planning and preparation, according to Tom Lubotsky, Bellwether Class of 2022, Vice President, Supply Chain, Allina Health, Bronze Sustaining Sponsor.

"Certainly, a sense of panic that may have been evident during the pandemic experience would likely not be seen post-pandemic, but there are still very demanding expectations that both suppliers and healthcare providers need to address given the present economic challenges," he noted. "Traditional transactional relationships will need to set new bars of service expectations and understanding. Service reps are going to have to get more knowledgeable of and comfortable with inviting others from within their organization to address transactional and operating working relationships.

"While preparedness of working through difficult price negotiations will still be required, addressing value among a broader set of dimensions that include diversity, sustainability, resiliency and appropriateness and use of products and services post-pandemic are now the new norms that factor into choice," Lubotsky continued. "The willingness to create a more transparent working environment — whether it is through data sharing or integrating understanding of supplier-provider operations to deliver services levels that must be managed under a more fragile supply chain will be necessary."

Rand Ballard, Chief Customer Officer, Vizient, Founding Sustaining Sponsor, points to sourcing.

"Many supply chain executives have gone back to the bad habits of sourcing from China and using bundled agreements with large suppliers who have their manufacturing in China, or other overseas countries, where there can be a significant supply chain disruption," he lamented. "How many supply chain executives are walking the talk where they will put 10% to 20% of PPE supplies into a domestic supplier? The domestic suppliers will not be able to sustain their resiliency if we don't step up and invest through standing, recurring orders. This is what we need to do."

David Hargraves, Senior Vice President (retired), Supply Chain Services, Premier, Founding Sustaining Sponsor, calls for re-examining the corporate culture.

"Overall, the most important step we can take as an industry — for both providers and suppliers — is to build a proactive culture and concerted effort around mitigating disruptions and improving resiliency," he recommended. "In the world we're living in today with extreme weather, geopolitical risks, trade and labor disputes and other potential disruptions, we simply can't afford to revert to old habits of the past to build a stronger, smarter future-forward supply chain.

"For example, we learned that while just-in-time inventories can be cost savers and conveniences on typical days, they are very problematic in times of disruption," Hargraves continued. "Experience shows that for products needed in an emergency, a hybrid approach is necessary: Buyers carry in-house inventory on a just-in-time basis, while manufacturers take a just-in-case approach, reserving capacity for surge, retaining safety stock and building rapid replenishment channels for restock."

Hargraves also suggests the adoption and implementation of geographic diversification, repatriating manufacturing to the U.S. and de-risking the overconcentration of vital health care supplies coming from low-cost-labor nations like China and India.

"There's been some notable progress on this with Premier and its member investments in domestic manufacturers of medical supplies and pharmaceuticals," Hargraves indicated. "We employ a sustainable model that leverages automation for greater efficiencies and buying commitments that help create a steady demand signal for manufacturer surety to increase production, expand capabilities and drive innovations. This is just one example — and recent reports demonstrate a broad trend of manufacturers looking to shift production away from China and source facilities in other Asian low-cost countries, or in Mexico and the U.S.

"Lastly, another key challenge remains a lack of data and transparency around supply availability for full visibility across the end-to-end global supply chain," he said. "Broadly, we've got to better understand product availability and risk — from raw materials to production and distribution locations, to state and national stockpiles, to hospital inventory."