Supply Chain as a Competitive Advantage

John Pritchard

John Pritchard

I have been waking up every day for nearly 20 years to see what is happening in the U.S. Healthcare Supply Chain. Though I hadn’t targeted the healthcare industry as where I planned to spend the most time professionally, through a series of friendships, conversations and interactions I was soon immersed in it, and I have found the journey absolutely fascinating. My curiosity is off the charts when people start discussing how IDNs, hospitals and physician offices source from manufacturers, service providers and suppliers of all kinds.

In the last couple decades I’ve predicted some trends, but many others blindsided me. Some of the trends I saw coming were the growth and empowerment of IDN Supply Chain Leaders, the importance of Cost, Quality and Outcome Improvement as a result of the ACA and consolidation of IDNs, GPOs and even payers. I didn’t see the financial collapse coming in 2007-2008, the interest in self distribution or the massive supplier consolidation.

Every morning, I open the Wall Street Journal (yes, the paper version) over my first cup of Starbucks. Today, an article jumped off the page about Amazon suing a former executive for going to work for a retail competitor. The executive had signed an 18-month non-compete should he leave Amazon. I really don’t know or care of the merits of this case, but it is clear that Amazon looks at the intellectual know-how as a competitive advantage.

I believe some of our nation’s IDNs clearly think they have a competitive advantage in Supply Chain and their tenants of Strategic Sourcing. But will we ever see an IDN sue a former Supply Chain Executive for violating a non-compete? Will Supply Chain become such a competitive advantage that it could sway the economic and operational performance of a system so much that the loss of that intellectual know-how could be damaging?

One trend we are seeing today is the drive for IDNs’ Supply Chain initiatives to be better than healthcare’s best. Said another way, an IDN that benchmarks its performance on self-distribution will not compare their efforts to suppliers such as Owens & Minor or Cardinal. Rather, the IDN will compare itself to Wal-Mart or Amazon. If the IDN wants to evaluate its stakeholder satisfaction, they won’t compare it to a system across town, upstate, or even Mayo or the Cleveland Clinic. They will compare it to Nordstrom and The Ritz-Carlton.

Stay tuned. These trends will be fascinating to watch. Thanks for reading this issue of The Journal of Healthcare Contracting.

John Pritchard