Technology’s role in helping healthcare avoid supply chain gaps

Well-documented shortages of personal protective equipment (PPE) and life-saving medications have hit healthcare hard over the last three-plus years. They’ve also revealed a need for the industry to rethink and revamp its approach to supply chain management.

Recent research from Deloitte suggested supply chain leaders “are still operating in survival mode,” contrary to indications that operations would stabilize as the COVID-19 pandemic did. Organizations are dealing with continued scarcity of semiconductors, aluminum, plastics, and helium. They’ve also faced sudden shortages in the wake of cold weather, hurricanes, and this summer’s tornado that hit a Pfizer plant in North Carolina that makes 8% of all injectable medications used in U.S. hospitals. All told, the industry has accepted a “new expectation of constant disruption,” Deloitte reported, and 73% of organizations said that makes it difficult to focus on strategic initiatives.

A shift in supply chain approach

Some of these supply chain challenges have been years in the making, though. Inspired by Toyota, many hospitals and health systems have embraced just-in-time stock management. In theory, this approach delivers items only when needed, cutting down on the amount of inventory in stock (and the time, space, and personnel required to manage and store it). However, as healthcare delivery is both uncertain and unpredictable, and as many suppliers are located overseas, organizations still face significant risk of supply chain disruptions.

One solution, according to a recent analysis, is a transition to a just-in-case approach, which builds an inventory buffer for essential items. This allows for continuity of operations in times of increased demand. It also comes with the added cost of keeping more inventory on hand – no small matter given healthcare’s tightening operating margins.

To mitigate the impact of establishing a more resilient supply chain, healthcare organizations can turn to technology for support in four key areas.

Automated inventory management. Systems that automatically create purchase orders when inventory starts to run low – say, when a warehouse opens the last case of tongue depressors – help replenish stock without forcing workers to closely monitor supplies of inexpensive items. For organizations with large enough distribution centers, using self-driving vehicles to move supplies and robots to pick them off shelves can pull staff away from routine tasks.

Big-ticket item tracking. Expensive inventory ranging from surgical implants to medical equipment benefits from more comprehensive tracking; care gets delayed if these necessary items go missing. Using radio frequency identification (RFID) tags or blockchain can trace how materials move through the continuum of care. This ensures items are in the right place at the right time, and it creates an audit trail of structured data that can be imported into clinical and business applications.

Demand forecasting. Health systems can access historical data to forecast seasonal demand for items such as back-to-school vaccinations, flu medications, or splints for skiing injuries. This helps organizations predict needs and place orders well in advance. Looking at real-time data, meanwhile, helps supply chain leaders redistribute items to where they’re needed most if shortages arise.

Risk management for resilience. In addition to the risk of a surge of demand, supply chain leaders must confront the likelihood that a supplier won’t be able to meet demand. In this case, risk management systems can assess and sort suppliers based on how a shortage of their inventory would impact the organization’s clinical and financial outcomes. This helps organizations determine which supplies require close monitoring – and which supplier relationships are the most important to maintain.

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Brian Eastwood is a Boston-based writer with more than 10 years of experience covering healthcare IT and healthcare delivery. He also writes about enterprise IT, consumer technology, and corporate leadership.