Since the emergence of the coronavirus pandemic, there has been much discussion about what the “New Normal” will look like for the healthcare supply chain after the calamity ends. I asked a group of healthcare leaders what each thought it meant. One of them, Brian Keeley, CEO of Miami’s Baptist Health South Florida, replied, “Fred, are you sure you don’t mean the New Abnormal?”
Current events have given credence to Keeley’s prophetic words. The COVID-19 virus continues to spread. The death of George Floyd revealed several things simmering just below the growing impatience and cultural irritation around self-quarantining, mask-wearing and business closures. Meanwhile, political unrest in China, where the origins of the coronavirus have been traced, continues to unsettle the supply chain in that China is where a preponderance of supplies are produced for the U.S. healthcare system.
Further, we cannot forget that tornado season, hurricane season and wildfire seasons co-exist. To add insult to injury: 2020 marks the year the locusts return as part of their 17-year cycle.
Still, elements of the “Old Normal” remain. Large systems continue to gobble up smaller community hospitals. Hospitals continue to fail. Those places that stay in business impose more stress on leaders to squeeze more and more juice (savings) out of a lemon that has little to give.
For you, Supply Chain leader, this is what the “New Normal” is going to look like – a series of immediate and existential challenges that you will have to deal with going forward, one followed by another, or worse yet, overlapped by two or more challenges occurring simultaneously.
Traditionally, the healthcare supply chain has been transactional in nature and notoriously understaffed. Strategic planning typically has not defined the norm. When crises strike, they are often resolved by heroic intervention. Add to that continual – if not continuous – pressure on Supply Chain leaders to identify and slash expenses to meet seemingly unrealistic savings goals often mandated arbitrarily by senior leadership.
Not only will this continue, but it likely will worsen as more organizations than hospitals and health systems will be threatened. Traditional distribution companies will find themselves threatened by systems choosing to do self-distribution and self-contracting, as well as by newer logistics entrants such as Amazon. GPOs will face the threat of losing members that choose to ink their own deals with manufacturers. They will do whatever they need to retain members, which means they may leverage senior leadership relationships against supply chain leaders, claiming to deliver considerable operational savings and costing good leaders their jobs.
The “New Normal” is going to be intense, and you, Supply Chain Leader, are going to be right in its crosshairs. What can you do to navigate your way through it? Here are some thoughts:
- Get out of the house. The breadth of many supply chain leaders’ vision does not extend very far beyond their own organization. That leaves them vulnerable and unprepared for what may come, tied to day-to-day activity and facing every threat or crisis with a frenetic response, then settling back in to the old routines until the next threat pops up. You need to be active and visible. You need to be aware of what is going on in (1) your organization, (2) your community, (3) your discipline and (4) the world.
- Form alliances. The coronavirus pandemic has demonstrated that when crises arise, organizations that traditionally consider themselves to be competitors are often forced to become collaborators. Truth is, a better model of behavior is one in which “co-opetition” takes place. In short, it means “cooperate where you can and compete where you must.” When you form alliances, your competitors become your peers, your professional colleagues. You learn together and make things better for everyone.
- Aggregate and use relevant data to support decision making. One element of the “New Normal” that no one disputes is that decisions will be evidence-based and data-driven. Your challenge is to figure out what data sets are critically important to the operation of your supply chain, collect that data, aggregate it and use it for decision support as well as to monitor the ongoing effectiveness of your operation.
- Challenge the status quo. Probably the single core characteristic of the “New Normal” is that there is no status quo. Change will be constant and liquid. Among the things you need to continually assess are:
- Staffing. Do you have the correct complement? Does your staff possess the necessary skills to perform their assigned functions? Have you been given enough resources to take care of the transactional duties and plan for the strategic ones? Do you have a succession plan? Have you established career paths for people?
- Distribution. Is your distribution strategy adequate for the present and flexible enough to handle the future needs? Can you handle disruptions caused by emergencies such as weather-related, pandemic-related, etc.? Do you have contingency plans in place? Do you know the costs/benefits of distribution options?
- Inventory Management. What is your inventory management strategy? What are the rationales behind your safety stock caches? Have you built in a plan for disruptions such as disasters and pandemics? Have you tested them in scenario analysis?
- Sourcing. Have you created a sourcing strategy (primary, secondary) for key items? Do you have a list of alternative suppliers in the event that the primary supplier(s) is/are unable to fulfill their obligations? Have you reviewed your existing agreements and revised/renewed them in order to be able to relate to disruptions or changes?
Address these areas and you’ll weather the “New Normal.” Just watch out for the locusts.
