As healthcare supply chain professionals debate, discuss and even joke about “Just-In-Case” versus “Just Enough” versus “Just-In-Stock” as potential successors to the beleaguered “Just-In-Time” hyphenated model of low-unit-of-measure (LUM) distribution, Healthcare Purchasing News asked more than a dozen supply chain experts to pontificate about future models and potential solutions.
“With the adoption of analytics and the [consolidated service center] model, hospital supply chains are becoming stronger. I like to think we are moving to a ‘just what is needed’ approach. With demand planning and forecasting, it gives us the power to be proactive versus retroactive.
“More hospitals are getting to that point, but that is a process too. It takes a culture shift to move from physicians and clinicians driving supply levels based on gut instincts and the fear of running out, to where supply chain can leverage data and analytics to stock what is truly needed.”
Cory Turner, CMRP, Senior Director, Healthcare Strategy, Tecsys Inc.
“Providers cannot apply a ‘one size fits all’ approach to inventory management. Each product category must be evaluated on a number of different attributes. The pandemic taught supply chain practitioners that having stock on hand in some categories does make financial sense – especially if not having it results in operational impacts. And a strategic approach requires a strategic vision. Procurement and inventory technologies must be flexible and allow for multiple business processes simultaneously.”
Michael DeLuca, Executive Vice President, Operations, Prodigo Solutions Inc.
“The ongoing consideration is: Where in the supply chain does it make the most sense for various activity to occur from the standpoint of efficiency and data visibility? It’s not the same answer for everyone. Whether bulk or LUM, more opportunity exists to blur the lines between distributed and direct purchase products. Distributors should expand their efforts in the [third-party logistics] space in pursuit of moving product through the most efficient channel and away from manual requisitioning and a very cumbersome order to pay cycle. As we think about the future, we need to challenge ourselves as participants in healthcare supply chain to think about how traditional practices need to change. If we don’t disrupt the industry ourselves outside players will.”
Mike Henry, Managing Partner, Ron Denton & Associates LLC
“Teams are looking at every possible solution right now, as they should be. With the massive labor shortage distribution teams are facing, they’re being asked to do more with less — more than ever before. Supply chain executives should be looking at where just-in-case, just-enough, or just-in-stock strategies make sense. The reality is that our warehouses only have so much space. Creating a multi-pronged strategy that relies on real-time, actionable data is the wave of the future. Executives need to know where they can find additional space for the products they need to increase capacity for—and they need to know how and where they can employ just-in-time or other strategies effectively across their networks. If they aren’t looking to proactively react and adjust in real-time intra-shift, then they’re going to be left behind.”
Alex Wakefield, CEO, Longbow Advantage
“There are many tools and methodologies for effective supply chain management to meet the needs of our stakeholders. I feel like we got lazy as an industry and relied too heavily on just one or two of these methods, and life was great until a global pandemic blew all the wheels of the truck. We knew there were flaws in these methods before the pandemic. Like you, I have listened to hundreds of stories at conferences about how some health system rose to the occasion and were superheroes amid some disruption brought on by disaster. I’ve heard these stories for over 25 years now. Everyone applauded and adjusted their own plans and went about business as usual.
“As an industry we never forced ourselves to fully address the flaws so that we don’t need heroics. We did not do the work to build the healthcare supply chain equivalent of a highly reliable organization. Once that is built to manage cost, quality, outcomes and risk. We all survived the previous events because they were local or regional and could get help from unaffected areas. The pandemic fully exposed all the fatal flaws that we must now address. Going back to the way it was cannot happen. We must tackle these wicked problems as an industry – not as individual businesses and health systems. For me, this is truly one of the most exciting times in history because we have the chance to fundamentally improve and revolutionize supply chain for generations to come.”
Steve Kiewiet, FAHRMM, FACHE, COO, CCS Medical, and Immediate Past Chair, AHRMM
“Future distribution model will start to consider the impact on patient home deliveries and create a more holistic experience for the patient, which could include delivery of supplies, equipment, pharmaceuticals, food and other materials.
“In today’s B2B model, it works well but it will need to evolve to consider the benefits of product kitting to more robustly support the surgical operations as well as patient specific needs. As deliveries expand beyond the patient care facilities, the ability to properly handle patient returns will require additional expertise and knowledge to manage effectively and efficiently. The decision to outsource will become more relevant as the number of touchpoints in the network increases and patient expectations are considered for home deliveries.”
Tom Redding, Senior Managing Director, Healthcare Services, St. Onge Co.
“It will be a combination of:
• More onshoring and right-shoring
• More diversification of supply chain by item and country
• More inventory carried by distributors and customers
• Safety stocks that are paid for by customers, but allow rotation.”
James Sembrot, Senior Vice President, U.S. Supply Chain, Cardinal Health
“Whether bulk or low unit of measure, we expect the current methodology of delivery to become irrelevant and distribution to depend more on the end destination or end user usage. In the past there was not solid actionable data on usage, so the idea was to have more stock to cover for mistakes. Now the industry is moving toward a centralized dashboard approach with healthcare organizations having greater visibility into their own product inventory levels as well as what their distribution partner, like Medline, has currently available and on order. This will make it easier to predict and prevent a potential inventory problem weeks down the road, rather than only addressing what the healthcare provider needs today.”
Peter Saviola, Vice President, Logistics and Supply Chain Optimization, Medline Industries
“Forever we’ve heard, ‘If you’ve seen one health system…you’ve only seen one health system.’ Each system is unique, and decisions about future program models will be driven by a number of complex factors, including real estate availability, geographic scope, patient volume and inventory turn times. No matter which model is adopted, agility is essential. We saw it during COVID when PPE and ventilators needed to be shared rapidly between facilities as they dealt with spikes. We are seeing it elsewhere with non-Covid related (but still vital) products needing to be repositioned. Optimizing every element of the supply chain to adapt to the future challenges and needs of the system is paramount. This end-to-end supply chain optimization must include vendors, suppliers, distributors and the supply chain working together in support of care, wherever it is taking place.”
Jake Crampton, Founder and CEO, MedSpeed
“We believe that the supply chain of the future will consider cost and service, as well as the following when building a supply chain model:
• Data and technology
• Automation and future labor skills needs
• Service level agreements (SLAs)
• Environmental and social impacts
• Diversification of suppliers
• Rationalization of product offerings.”
Jim Mullins, Senior Vice President, Global Supply Chain, Henry Schein Inc.
“At Amazon we innovate on behalf of our customers, creating a hands-off experience so organizations have the supply they need, in the right specifications and quantity, without overly complicated management. While Amazon continues to improve our bulk capabilities, we see opportunities for organization to do less bulk ordering, given the inflexibility and costs to manage, and transition to smaller orders that gets shipped directly to the end user, wherever they are. Combining our parcel delivery strengths with Amazon’s world class fulfillment network, organization are finding they can create efficiency and costs savings by bypassing intermediaries and eliminating multiple steps to get supplies directly and quickly to the final user. This model reduces cash tied up in inventory and improves operations by having fewer personnel assigned to managing and breaking down bulk deliveries. Creating future distribution models are something we obsess over on behalf of our customers at Amazon.”
Sandhya Dhir, Head of Healthcare Strategy and Development,