A Guide to Building the Supply Chain of the Future

Like it or not, if you are working in the healthcare supply chain today, you are a part of the design of the healthcare supply chain of the future. Unfortunately, the healthcare supply chain has traditionally been characterized as being reactive as opposed to being proactive. The bane of healthcare supply chain leaders is the never-ending unfavorable comparisons to the supply chains present in industry, manufacturing and retail.

The facts are that the head start the other industries have on the healthcare supply chain comes from several influences:

  • Other industries recognized from the start the strategic and operational importance of the supply chain to the overall enterprise, whereas healthcare organizations saw the supply chain components as support functions to the primary task of humoring physicians so they could render care to patients.
  • Early attention to the supply chain focused of price, not process. The rise of the Group Purchasing Organizations (GPOs) turned the attention of healthcare leaders to contracting and pricing. The supply chain of that era was dominated by people with a purchasing background, leaving the operational areas such as inventory management, internal and external distribution strategies to fend for themselves. Some pioneers made inroads, but largely, the operations fields were left unplowed.
  • Recognizing the importance of the supply chain, other industries committed resources to the discipline, whereas healthcare tended to limit its commitment of resources to the purchasing, contracting and fulfillment aspects of the function, ignoring the focus on the movement of goods through the channels from requisition to disposition.
  • Other industries have a relatively static product offering that enabled standardized data and systems

Today, in a whorl of activity, mergers, acquisitions and the advent of an ever-expanding body of knowledge, the tools of the outside have made their way to healthcare, leaving the leaders of the discipline to ask, “What should I do? Where should I go?” And finally, “What do I need to do to get there?”

This is the first of a series of articles intended to answer those questions. The process identified in these offerings applies no matter where you find yourself in the industry, be it at a Critical Access Hospital, a private, not-for-profit community hospital, an administrator of several non-acute facilities, the leader of the supply chain at a small Integrated Delivery Network (IDN), a leader at a for-profit system or the supply chain leader at the largest IDN in the nation. By following the steps identified in this series, you will be able to construct and active, dynamic, agile and resilient process- one that will serve you and the organizations you represent well across your entire career.

Here are the steps in the process. In future articles, I will discuss each in detail in future articles:

  1. Build your case: Get commitment and buy-in from senior leadership. Before you can go anywhere, you need to get full buy-in, support and continued involvement from Senior Leadership. To do this, you must build a compelling case for going forward, then you must build an Oversight Team (OT) to manage the process.
  2. Assess your current operation. Before you can go anywhere, you have to establish where you are. An assessment of your current state will do that. Hire an unbiased professional to conduct the assessment. Make certain that your operation is compared not only to healthcare supply chains, but to non-healthcare supply chains as well. A good third party consultant will make certain to measure against accepted Key Performance Indicators (KPI). At the end of the assessment, you will understand your performance gaps, the scale of opportunity for improvement and the priority of action.
  3. Prioritize the results of the Assessment. In this step, the Oversight team established in Step One prioritizes the results as they relate to (1) Operational Effectiveness and (2) the organization’s Strategic Supply Chain Roadmap (if one exists).
  4. Develop a Strategic Roadmap. The team crafts a plan, replete with time frames, priorities, resource requirements (capital, time) expected benefits and measurable results (including the enabling projects). The map becomes the framework for all future activity. From time to time it may require revision, but it remains both the guide and record of the initiative.
  5. Socialize the plan to finalize and develop  support Before you go ahead and begin to implement your plan, it is necessary to have a clear understanding that senior leadership and operational stakeholders is behind you as you go forward. Plan charter, governance structure, as well as all expected activities and commitments of time, energy and resources need to be fully communicated and fully accepted at all levels of the organization.
  6. Implement the Plan. With the help and involvement of the Oversight Team, begin the implementation of the Plan. Meet regularly, identify progress, and address issues that arise. Revise and annotate the Strategic Roadmap as needed.
  7. Measure Results against the opportunities identified in the Assessment phase. As you make specific changes, it is absolutely imperative to measure against the Key Performance Indicators to see if the impact is what you intended it to be. KPI should become part of the reporting process. They should be included as part of the monthly reporting process to Senior Leadership.
  8. Be resilient, agile and flexible. Make adjustments as needed. The chances of your organization being exactly the same as it was when you started lessens every month. Things happen- things that require attention and adjustments. You are working with a moving target. Play the long game; keep the bigger goal in mind.
  9. Bring in outside expertise as needed. No organization possesses all the resources it needs to implement a Supply Chain Masterplan on its own. Subject matter experts outside the organization will need to be brought in from time to time to make certain that the plan stays on track and goals are met. That is what it is important to keep Senior Leadership informed, involved and supportive throughout the process.
  10. Repeat steps 1-9 as needed, and Measure, Measure, Measure. Continually assess progress via the Project Team and its Steering Committee.

The St. Onge Company has been in the business of helping clients apply industrial engineering rigorous process, data analysis, advanced analytics and technology to complex operations and design issues since 1983. Our staff of over 140 engineers and SME can help you ask the right questions, make the right decisions implement those decisions and measure the results.  For more information about our capabilities, contact me at 563-503-1847 or email me at fcrans@stonge.com.

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