Three Ways To Manage The Healthcare Supply Chain In An Era Of Disruption
For over two years, businesses argos the world have felt terrible effects of the supply chain crisis due to the pandemic. Suppliers can’t keep up with demand because they don’t have enough workers. The front end businesses can’t keep their doors open without enough supply because they can’t service the customer. Thus, more customers don’t shop because they either don’t have a job, or they don’t have enough money due to the rising costs of inflation. Around and around the circle of supply chain issues go.
Instead of retail sales though, hospitals are also feeling the pinch because COVID-19 continues to increase the number of patients admitted (as well as how long they are staying) and that is puting a MAJOR wet blanket on an already struggling healthcare system.
We design our nurse call systems, handsets and intelligent software to help nurses work more efficiently and effectively, so when there are supply chain constraints for components in these products, we have an imperative to do everything we can to meet their needs.
We kept these principles in mind in our response to these global constraints, as recent events like the conflict in Ukraine, inflation, the spike in fuel prices and the impact of the Covid lockdown in China have spurred even more disruption. The effects connected to these events, like the “Great Resignation,” have also led to a lack of drivers and overloaded harbors. This makes careful supply chain management our top leadership issue this year. Here are three ways we’re responding in our business and how you can use some of these lessons to respond to an environment that’s increasingly volatile, uncertain, complex and ambiguous (VUCA).
- Reexamine innovation processes. When you’re responding to large-scale disruption, you have to respond appropriately. That starts with reexamining your processes, both at the macro and micro levels and thinking about the potential for radical and incremental change simultaneously.
For example, our region worked closely with our global crisis teams to meet customer needs based on the supply constraints for equipment. Our local team created an order prioritization matrix and dedicated a full-time employee to handle escalations based on natural disasters, emergencies or potentially delayed installations. In New Orleans, Louisiana, we worked with our channel partner to prioritize orders of nurse call equipment to get a hospital up and running following Hurricane Ida. As a result, we helped reestablish access to healthcare in that community for a hospital with more than 700 beds.
At the same time, we also changed our globally-based FIFO process to use a local prioritization matrix and ship products by air. By doing this, we helped more than 10 hospitals across North America get their orders so that they could open new wings or locations on time. This model shift represented a more radical change to our previous ordering process.
- Question long-held assumptions. If you want to operate more efficiently with customers, you need to question long-held assumptions. For technology implementations, time on site was standard practice and an expectation among many customers. However, that changed with Covid when customers wanted to minimize time on site for people who didn’t have to be there. To respond to this new market condition, we began remote implementations of software, which maximized efficiency by reducing costs for both us and the customer.
This leads to another piece of advice: In times of change, look for new opportunities. During this time, we introduced multiyear Software Maintenance Plans (SMPs), which included professional services to offer customers the latest versions and updates of critical communications workflow software solutions in one package, which for many customers can be booked as an operational expense.
- Look beyond the crisis. Often, a time of great change allows you to better position yourself for the long term. For example, we added new end suppliers, as well as new component/sub-suppliers, including those for raw materials, to diversify our network for better availability and pricing on parts. This was a measure taken to eliminate the short-term supply chain pressures, but it will have a long-term impact on the business.
Make sure you go back to lesson one and reexamine the processes across the entire organization and how they are interconnected. For example, in R&D, we reduced the number of parts needed in devices, and we continually monitor the market. Additionally, we extended our inventory forecast to 14 months and worked with our global team to make spot buys of certain parts. We absorbed cost increases for as long as possible to avoid passing higher costs onto customers; however, when this became unsustainable, we raised our MSRP on most products as well as implemented a temporary global shipping surcharge, giving our channel partners and customers advance notice and communicating the reasons behind the decision to them.
Constraints force innovations, and those innovations end up benefitting all. While lessons like the three I’ve outlined above for managing the supply chain crisis can be challenging for any business, they will help your organization grow into a more flexible and resilient one for the years and new challenges to come.