Since the onset of the pandemic, the healthcare system has struggled to get medical devices, surgical supplies, and pharmaceuticals to the frontline workers on time. Almost 59-83% of healthcare organisations have reported delays or increased lead times in acquiring supplies. The pandemic has exposed structural weakness and cracks in the supply chains. To strengthen and stabilise the healthcare supply chain for the future, it is important to identify the challenges that resulted in supply chain disruptions during the pandemic.
1. Lack of resilience
Prior to the pandemic, most supply chains were lean with a focus on cost minimisation and just-in-time (JIT Distribution Model) deliveries. Healthcare organisations with lean supply chains struggled to adapt to the disruptions. COVID-19 exposed a need for greater supply chain resiliency.
“Health system resilience describes the capacity of a health system to (a) proactively foresee, (b) absorb, and (c) adapt to shocks and structural changes in a way that allows it to (i) sustain required operations, (ii) resume optimal performance as quickly as possible, (iii) transform its structure and functions to strengthen the system, and (iv) (possibly) reduce its vulnerability to similar shocks and structural changes in the future”.
“The coronavirus disease 2019 (COVID-19) pandemic that began hitting Europe in March 2020 put unprecedented strain on most health care systems in the EU. The scale and rapid escalation of COVID-19 clusters revealed the existence of structural fragilities within health systems that either remained undetected in the past years, or which risk potential had been severely underestimated. ” Source: CIPFA
“Among the weaknesses brought to light by the health crisis, the sudden disruption of global supply chains for personal protective equipment (PPE), essential pharmaceuticals, and medical devices, combined with the large surge in demand for these products severely impinged on the resilience of their health systems.” ELCOM abruptly noticed an influx of urgent requests to source suppliers with available stock therefore in April 2021 initiated a PPE campaign to support healthcare organisations to quickly source for PPE. Multiple NHS trusts were able to access ELCOM’s MultiQuote solution. MultiQuote is a dynamic real-time pricing marketplace with a unique categorised database of over 35,000 suppliers and over 3.3 million products. ELCOM also was approached by a number of customers who were asking for support managing their PPE stock to ensure front-line clinicians have what they need when they need it. Our team delivered a specific inventory solution for PPE. This allowed PPE stock to be receipted, stored centrally, and distributed around the organisations, reporting internally and to NHS England.
2. Lack of visibility and inefficient management of the stock
COVID-19 pandemic has generated an enormous demand for a healthcare system that is already running at close to full capacity. Most hospitals still capture data from multiple and disperse data sources. The fragmented visibility of the inventory interferes with the efficient management of the stock. It is hard to determine what is in stock, in what quantities, from where could it be sourced during emergencies, and makes it harder if not impossible to forecast future demand. As an example, in the healthcare industry, unexpected situations occur overnight and hospitals have to address them no matter the cost. Generally caused by stockouts, high overnight shipping costs have a detrimental impact on hospitals’ revenues.
COVID-19 pandemic and the abrupt demand for PPE have highlighted the importance of a robust inventory system. With a Hospital Inventory Management Solution (Hospital IMS) hospitals can almost eliminate their overnight shipping costs that are caused by stockouts. A real-time IMS solution helps to access data across the entire supply chain, adds value, reduces costs, and improves stock visibility throughout the hospital, whilst delivering clinical safety. Stockouts drop dramatically and demand forecast becomes more accurate. Want more information about how a Hospital Inventory Management Solution works? Download here our EVOLVE IMS Infographic.
3. Hierarchical, siloed, and fragmented processes, systems, and cultures
Covid-19 has reinstated the importance of public procurement across the globe. It has emphasised the need for collaboration and strong relationships across all entities in the healthcare system not only between hospitals and trusts but also between health and social care. Back to the beginning of the pandemic, when there was a shortage of PPE, different trusts had different PPE requirements. To tackle the PPE crisis, it was crucial to share information between NHS trusts and supply partners. Healthcare supply chains need to be integrated to be cost-effective and efficient. Integration of data and interoperability for information sharing are essential for seamless data flow between various systems and external sources and enable the best care decisions. Lack of data integration and interoperability remains a common problem.
As per the Quadrant knowledge report SPARK Matrix™: Procure-to-Pay(P2P), 2021 “A unified and holistic procurement platform facilitates a seamless information flow across different procurement functions and thereby offers a significant advantage over standalone systems.” The market is growing towards an end-to-end procurement platform, data-centric model, and seamless information flow between different procurement modules. A unified procurement platform like EVOLVE S2P “may include integrated modules for spend analysis, category management, strategic sourcing, expense management, contract lifecycle management, procure-to-pay, supplier relationship management, and others. This unification will aid organisations in gaining a unified view of their spending, optimise supplier relationships and assess supplier compliance, enhance procurement cycles, and gain total cost of ownership.”
4. Limited view of the spend and analysis
As the demand increased for critical supplies, medical materials, and logistic support along with non-essential items, organisations increased their inventory levels which inflated demand, and costs soared. Going forward, supply chain spending is forecasted to be the biggest expense in healthcare. Relevant data is the key to making the best decisions and healthcare organisations are getting more pressure to be data-led. Implementing digital and analytics solutions using machine learning (ML), artificial intelligence (AI), predictive analysis techniques to drive deeper insights can improve supply chain resiliency at a reasonable cost. Elcom’s analytics offering is a business intelligence tool that captures good quality data and generates value for our healthcare organisations by helping different trusts collaborate and make sense of the combined data.
5. Reshape sourcing and procurement functions
The COVID-19 outbreak has caused considerable disruption across the supply chain and procurement. At ELCOM, we suggest organisations re-examine their supply chains, supply & demand, supplier relationships, supplier selection, negotiation, awarding, and supplier risk assessment to identify potential problems and bottlenecks. Forward planning and forecasting are essential to gain control and resilience. According to a recent survey conducted by ELCOM amongst 2900+ buyers and suppliers, more than 50% of the respondents believe that COVID-19 has significantly amplified the supply chain uncertainty created by Brexit. 75% of the respondents believe that COVID-19 has led to an increased focus on a more localised supply chain as it can minimise disaster risk and provide greater efficiency. More than 50% of the buyers and suppliers have increased their responsible supplies prioritising local sourcing by 10% or more.
