Stanford Supply Chain embraces, pursues doer, maker mentalities

July 26, 2021
SCMDOY 2021 Honorable Mention:
Flexibility forged between strategic, tactical decisions during pandemic

Stanford Medicine may be a highly regarded, top-tier healthcare organization, but the events of last year convinced the Supply Chain team that changes needed to be made.

The COVID-19 pandemic catalyzed the realization that standard operations were no longer sufficient to maintain operational integrity within Supply Chain within the Stanford, CA-based healthcare system and fertilized necessary innovation. Historically rooted reliance upon extant distribution and vendor partnerships fostered an environment insufficiently robust to weather anything beyond minor disruptions. Status-quo vendor performance, legacy contracts, negotiating standards and outmoded operational paradigms all required in-depth re-examination and evaluation, with most requiring retooling or total transformation. 

The driving question: Where and how could we improve end-to-end performance across our supply chain ecosphere to create more resiliency, efficiency, and value? Market volatility provided a viable petri dish within which to innovate and embrace new contracting paradigms and expense management strategies. Inviting open dialogue to present needs and challenges created a cross-pollination of ideas. Thinking outside the box was encouraged, but eliminating the box is applauded, and often rewarded. 

Our first step was to look beyond our current distributors, vendors, and even our borders. This required looking upstream – well beyond our traditional supply chain pipeline – to manufacturers and the suppliers of raw materials. Intrepid research into global providers of raw materials, vigorous research into the manufacturing base, and courageous conversations with strategic suppliers, our group purchasing organization (GPO) Vizient, and global industry experts such as Gartner, revealed a market more fragile than ever imagined. 

Sourcing from 5 of 7 continents 

Stanford Medicine Supply Chain recognized the need for expansion of our supplier base across many product segments to moderate market instability. We physically positioned our Assistant Director of Category Management in Asia. From there, he was able to secure entirely new and sustainable product pipelines. We analyzed raw material and manufacturing vulnerabilities to determine which new countries and companies to pivot to, allowing us to create greater patency and reliability within our supply pipeline. The eventual result of the work over the last year has been that Stanford Medicine now sources products from five of the planet’s seven continents to ensure regional supply disruptions have only minor effects on our ability to consistently provide quality product to the entities we serve. 

This brave new sourcing world required new logistics and contracting strategies. Vendor partnerships are valued over transactional relationships. Trusted partnerships represent a cornerstone of our strategy and are requisite to foster long lasting, mutually beneficial connections. Synchronizing the needs of vendors with those of the healthcare customers represented a key element to enhancing clinical supply chain performance. We recognized vendors seek greater end-to-end reliability within their supply pipeline, which is supported by stable customer demand. Healthcare organizations that are aligned seek resiliency within their supply chain. Key performance indicators (KPIs), carrot-and-stick motivators and mutually beneficial assurances are essential elements of crafting ideal agreements. Elevated fill-rate expectations with rewards and penalties, risk-sharing arrangements and stratified sourcing streams represent just a few opportunities that help promote said reliability and resiliency. 

Specific actions our team executed included the retention of an import agent partner to assist with customs and worked directly with shippers and airfreight carriers to derive new models. Essential elements of the action plan for those models required aggregating purchase volumes to align with shipping container volumes, delivery guarantees and risk avoidance strategies. We coordinated directly with Medline – our medical/surgical supply distributor – to derive greater product reliability scenarios, including pre-approved substitution triggers.

For large-volume products, we worked directly with manufacturers to secure guaranteed direct-ship supply agreements, bypassing our distributor and allocation concerns. This resulted in benefits including guaranteed safety stock, elevated fill rates, pricing locks and more products, such as N95 masks from 3M Health Care, exam gloves from SPH Medical and Benchmark Health, intravenous (IV) solutions from ICU Medical, syringes and more. Our team also strategically leveraged specific high-level relationships within vendor organizations and used the unprecedented work our clinicians were already doing to justify the expansion of some allocation pipelines at the height of the pandemic to ensure that clinicians and testing sites had the materials they needed. 

The Right Stuff of makers

 Despite great sourcing successes, the challenges of 2020 and 2021 for supply chain meant that many more strategies were needed to fill in the gaps. Isolation gowns, COVID-19 testing swabs, laboratory media, test tubes, face shields, PAPR replacement shields and repair parts all remained a challenge to reliably obtain, requiring us to turn to non-traditional suppliers and sources. Stanford Supply Chain connected with Lockheed Martin, who had stepped up to help address supply shortage needs and provided subject matter expertise to design and manufacture isolation gowns. The aerospace giant then converted a satellite production line for the manufacture of isolation gowns. This did not come a moment too soon. 

Within hours of receiving the first 8,000 isolation gowns – before Stanford Supply Chain could even move the products into inventory – Stanford received an urgent call from one of our county hospitals who was had literally run out of isolation gowns. Stanford quickly loaded up the 8,000 gowns and delivered them to the county hospital. 

A harbinger of supply challenges, a shortage of test tubes emerged quickly. Because Stanford University and Stanford Medical School were on COVID hiatus, Supply Chain scoured these centers of excellence and quickly found thousands of new test tubes sitting idle. Then, leveraging the talent of our reference laboratory scientists, Stanford started self-manufacturing test media for COVID-19 tests. Soon afterward, oropharyngeal swab shortages rocked the global market while need skyrocketed. Stanford partnered with Carbon3D and Resolution Medical – two leaders in the 3-D printing industry – to design a 3-D-printed swab. Several development iterations and the Institutional Review Board (IRB) study of the final product were conducted at Stanford Medicine. This provided the world with a new source of COVID-19 sampling swabs. Similarly, as respirator PAPR devices began breaking under the increased utilization stemming from the pandemic, repair parts quickly became impossible to find on the market. Stanford Supply Chain partnered with on-campus imaging and 3-D engineers to scan and manufacture hundreds of repair parts for the essential devices, keeping the fleet fully available to protect our patient caregivers. 

These many product innovations were developed and supported with Stanford Health Care’s Product Innovations Task Force that was formed in response to the pandemic. This task force joined several other new and existing committee structures and divisions to help keep Stanford in a strong position as a market partner. These included: An emergent personal protective equipment (PPE) committee helped boost conservation through education, usage protocols and N95 reprocessing; an extant Substitution Task Force streamlined the process for getting organization-wide approval for substitute items facing management by objectives (MBO) or allocation restrictions to a matter of hours instead of days; and the formation of a Resiliency program within supply chain addressed current shortages and novel PPE safety stock regulations, but also created and developed systems of support and analytics to guard against the effects of any future supply disruptions. These collaborative structures, along with a robust non-labor savings (NLS) process for our Supply Chain that is a best-in-class model driving millions of dollars of cost savings – even during the pandemic – served to make Stanford Supply Chain a more excellent and reliable partner in business for vendors. This allows Stanford to be trusted by our vendor partners and ensures that suppliers know that the organization is doing all it can not to ask more of them than absolutely necessary to fill our clinical needs. 

Kaizen-driven collaboration to douse fires 

Stanford Supply Chain grappled with shortages and daily firefighting well before the pandemic; then, amid the global supply disruptions, product shortages were exponentially exacerbated. Many supply chain staff worked heroically hard and long days to ensure no negative clinical outcomes but ended up spending 60% or more of their day responding to the latest product disruption. With the pandemic, distribution raw fill rates fell to 80%; nearly 20% of daily orders were not being filled through the “normal” channels. Something had to be done and our process improvement-focused team agreed that a structured Kaizen event (a short-term brainstorming and implementation sessions intended to improve an existing process) to develop a response matrix to supply shortages would drive standardization and move us to a more proactive approach. 

The organization was experiencing a ten-fold increase in the number of supply back orders and low raw distribution fill rates as a result of the pandemic. Supply Chain staff from across the divisions were being pulled into last-minute supply shortage firefighting to ensure that our clinicians had the supplies they needed to care for our patients, and clinicians urgently were being pulled to review, approve and educate on numerous substitution products. The sheer volume of shortages, lack of reliable and actionable data and distributed ownership of response efforts all contributed to placing staff into reactive mode. 

Stanford Supply Chain reached out to peer organizations of similar size and structure to interview and inquire about this challenge and their solutions. This helped us to validate ongoing operational challenges common across the industry and seeded our thinking about how we could do things differently – if not better. 

Supply Chain Administration partnered with the Performance Improvement department to co-lead an improvement effort with the goal of determining how to streamline the supply shortages response process and use the same number of staff to drive more consistent results. Our distribution partner and suppliers were engaged and took part in the process of identifying root causes of shortage escalations through a multi-day virtual Kaizen event. 

Recognizing that the solutions often sit with those doing the work, a cross-functional team of supply chain frontline staff, embedded supplier personnel, and managers were brought together to dive deep into the issues that occur and to develop a solution for the future. We prioritized this focus and work intensive Kaizen event despite being engulfed in the pandemic, dedicating key team members from across Supply Chain over the course of four days: 

The first day had a heavy focus on reviewing the current state, process pain points and the beginning design of a future state SIPOC diagram (a common process mapping tool that stands for Supplier, Inputs, Processes, Outputs and Customers.) On the second day the Kaizen team finished the SIPOC, did a deep dive of the existing process capabilities and built out the key elements of our desired future state that revolved around identifying a Shortages Workgroup (intra-supply chain Pod). The Kaizen team also looked at data needs and defined KPIs. On the third day, the team took two case studies from the last few months where a product shortage caused critical process failures and ran them through our desired future state. This generated more actions and a more robust future state design. The fourth and final day was dedicated to action planning and creating a communication plan, followed by a report out to leadership. 

The Kaizen event allowed for the launch of a shared intra-supply chain framework to prevent, prepare, predict and respond together to shortages and build greater supply reliability. Key elements of the framework include: 

•        Creating and adhering to a single end-to-end process that spans shortage management from identification to getting product physically to the point of use.

•         Having a single source of truth for data between our internal systems and our distributor’s system.

•         Establishing standard reports and dashboards to support decision-making.

•         Achieving consensus on criteria and thresholds for how we identify critical supplies based on a shared set of data.

 This Shortages Workgroup structure has led to multiple benefits. First and foremost, having a dedicated “Shortages Workgroup” resulted in an almost overnight reduction in Supply Chain-wide escalations. The shortages escalations list that we review at the daily “All Hands” meeting quickly dropped from the previous half a dozen or more to just one or two items. Now there often are no items requiring a broader review as the Shortages Workgroup is handling emerging shortages preemptively and faster. Another major improvement has been more automation, particularly with substitutes that are proactively pre-approved and pre-loaded into our systems. This centralized response to shortages has allowed us to have consistent and coordinated communication with both our vendors and our clinical partners regarding back orders, substitutions and other shortage-related impacts. 

Stanford will be measuring this work over the next two years to study how the global market and disruptions are addressed with the expected long term improvements metrics to include: Double bin stockouts (down); Over-ordering (down); Days on Hand for critical items (at/above target); Killed lines from distributor (down); Freight expense (rush orders) and Resourcing (time/effort efficiencies) for managing shortages (down). 

The group that participated in the Kaizen event is working through the actions identified in a weekly meeting cadence to implement this significant process redesign within 90 days. The Shortages Workgroup will sustain the effort once the processes are built and implemented. 

This Kaizen event process has applicability to any process improvement in an unpredictable environment. Results are contingent on fidelity to the process and sustained collaboration to build resiliency into the team. The entire event and process of Kaizen has been in a 100% remote environment and utilized tools to help us collaborate including Mural (an online virtual white board), Zoom and Microsoft Office programs. 

This work was largely completed by a cross-functional team of both supply chain frontline staff and managers by embracing the lean methodology that the solutions reside with the individuals who perform the work daily. The work continues with detailed shortage trackers that combine input from multiple sources for real-time decision making across the teams for coordinated remediation in collaboration with supply partners. Relying on their expertise and cross-functional collaboration in this environment to drive effort to mutually beneficial solutions is key to the success of this initiative. Ultimately, by addressing supply shortages in a proactive way, Stanford Supply Chain has been able to become an even more reliable partner for our diverse vendor and product groups. 

Engaging people energizes Supply Chain 

The pandemic disrupted many aspects of how healthcare workplaces operate, but the underlying truths about how education, collaboration, and communication can drive business outcomes remain unchanged. At Stanford Supply Chain, productivity was increased in departments that moved remote while improving service metrics, improvements achieved through investments in collaborative culture, effective communication, and ongoing training for current and future skills. 

Across the nation during the pandemic, hospital supply chain departments have had to work incredibly hard to manage supply shortages, patient surges, protective gear and distancing measures. The pandemic may have disrupted how many aspects of the healthcare workplace operate, but the underlying truths about how education, collaboration, and communication can drive business outcomes remain unchanged. Due to the overnight, and ongoing, move to remote work amid a distributed workforce, the need for connection and intentional communication is greater than ever. This trend will only accelerate as institutions look for other areas of non-labor spend that maintain or improve productivity. 

Additionally, the need to grow teams and their skills to meet the challenges of the moment as well as provide flexibility for future needs is vital. This can’t start in the middle of or even after a crisis, but must a proactive process that delivers training, just-in-time (JIT) when possible, with supports from the date of hire onward. Leadership must drive this process, carving out protected time, leading by example as learners themselves, and putting staff investment at the center of the work being done. 

Stanford supply chain recognized the opportunity to use work-from-home orders as a catalyst for re-thinking how training and communication amongst teams could move from informal to purposeful. In adjusting to the abrupt change, Supply Chain institutionalized a whole host of new and enhanced structures to support a culture of collaboration and communication among the newly redistributed workforce: 

•         Routine supervisor touch points to define objectives and clarify what success is for a given project or workflow;

•         Team and leadership huddles that involve direct input from our distributors and cascade information up and down the leadership structure, including recognitions of hard work and escalations to team leaders and beyond to the greater organization as needed;

•         All-hands meetings where we create spaces to discuss challenges for the organization to address issues ranging from internal project needs to difficult conversations around inclusion and the workplace culture;

•         An enhanced initiative with full-time staff support and support from best practice drivers such as Gartner to improve the on-boarding documentation and structures. These improved processes will bring more transparency and accountability to the design and implementation of training for all in order to dramatically reduce the lag time before an employee reaches full productivity by 50% or more while driving down turnover through clear success targets and supportive training;

•         Distance learning opportunities hosted internally to grow employees’ skills and empower staff to achieve national certifications like AHRMM’s CMRP;

•         Implementing improved, engaging, dynamic, accessible newsletters and novel deep-dive Supply Chain team-based podcasts that inform staff about happenings while also celebrating achievements big and small;

•         Structured events like socially distanced happy hours and online escape rooms to remind ourselves to have fun with each other safely. 

Each of these initiatives designed to keep communications and collaboration thriving in a time that teamwork was vital not only to the success of the Supply Chain teams, but also to the safety of the organization. By prioritizing education and communication, we have kept our staff cohesive, on the same page, up to date, and aware of changes big and small. Especially during the pandemic with its ever-changing circumstances and safety guidance, having well-trained, collaborative staff is vital keeping a focus on safety and solving the problems of the moment while supporting solution-making that offer lasting improvements to process and practice. 

During this time, we’ve used StandOut Pulse engagement surveys, internal polling and the open/click/scan metrics for communications to measure engagement, interest and impact across the organization. 

The results of many of these initiatives are already clear: Staff who are continuously supported with strong communication and relevant training reach full productivity sooner during onboarding, stay with the organization longer and feel greater satisfaction at work and stronger connection to the organization and colleagues. Productivity was increased in departments that moved 100% remote such as Purchasing, Category Management and Business Operations, while also improving service metrics: price accuracy increasing by 25%, match exception (ME) rates improved several-fold, reduction on turnaround time on Bill-only, and driving a non-labor savings initiative enterprise wide; all while increasing employee engagement scores by 23% and having 13 additional leaders certified as new CMRPs. 

Additionally, courtesy of a minor restructuring of our purchasing team, our team’s headcount was reduced by 1 full-time equivalent (FTE) while the purchase order (PO) volume increased 25%. In fact, the workload increased to the point of the Purchasing and Master Data Management teams recently being recognized as part of the 2020 GHX Millennium Club, which means our team generated more than 1,000,000 GHX transactions in 2020! The Millennium Club recognizes healthcare provider and supplier organizations that generate more than one million automated transactions annually through the GHX Exchange. This level of supply chain automation drives significant efficiencies, accuracy and visibility for the organization, our trading partners and the healthcare industry, significantly improving the cost-quality equation. Not only that – but Stanford Health Care is now ranked 14th with GHX after being ranked 132nd in early 2020! This increase in productive work also coincided with our Purchasing department being ranked in the top quartile when benchmarked according to our GPO Vizient. These results were achieved through thoughtful investments in collaborative culture, effective communication, and ongoing training opportunities for current as well as future job skills.

Ultimately, while all teams in healthcare worked extraordinarily hard during the last 14 months, the Stanford Supply Chain team routinely used the rolling crises to their advantage, becoming stronger, more resilient and closer than ever as one Supply Chain supporting the multiple entities across Stanford Medicine. This team’s tireless efforts in supporting each other and the organization safely through the worst parts of this crisis to date while also strengthening ties internally and externally speaks volumes to Supply Chain’s dedication to continuous improvement; that dedication ensures that Stanford Medicine Supply Chain is always seen as a trusted and reliable clinical/enterprise support service and business partner.

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