By John Pritchard
Systems perform exactly as they were designed, as the saying goes. We have gotten a reminder of that the last 6-7 months. The Just-in-Time supply and distribution systems we have put in place showed us just how true that statement is.
I hear people muttering that we have short memories and will be vulnerable again soon enough, but I’m not so sure. In fact, here are three things I believe have changed for good.
- Visibility will part of the sourcing relationship.
Supply chain leaders will require more information about a supplier’s ability to supply from now on. New metrics will emerge as to what a supplier has in raw materials, work in progress, finished goods and product in transit. This will give them the ability to sound the alarm that a possible disruption may be looming. No longer will this alarm be sounded when a back order is noticed on the dock.
- Resiliency is a new imperative for supply chain departments.
Bruce Johnson does a great job on page 26 detailing how Demand Forecasting can greatly help make a more resilient supply chain for IDNs. Other parts of the supply chain, such as vetting and approving new vendors, must also be more resilient. The luxury of only doing business with organizations we know may no longer be a luxury we enjoy.
- We will see new links in the supply chain.
For now, I will call them surge capacity suppliers. I think we all learned that the national stockpile as it was designed was not the answer. Maybe it will be distributors having more product or IDNs adding warehouses for more inventory. Or, it may be a new player we have yet to see. Dr. Eugene Schneller from Arizona State University uses the parable of a fire house for this new stakeholder. We don’t build fire houses so we have fires, we build them in case we have a fire. The real challenge is, how do we finance this new “fire house”?
I’d love to hear your thoughts of changes you see happening as we exit this COVID-19 era into what the new normal is. Thanks for reading this issue of The Journal of Healthcare Contracting.