Drafting a New Playbook

Why the game plan for healthcare supply chain distribution needs to change now

Since March, pretty much every aspect of our lives has been turned upside

down by COVID-19. There’s little normalcy left – so to keep our sanity – it’s important to find anything that reminds us of what life was like pre-pandemic.

During the fall and winter, football was one of those things. There was something comforting in turning on the TV on a Sunday afternoon and seeing football. Although, as we know too well, football was not the same. From no fans in the stands, mask coverings, widespread testing, quarantines, and limited practices – professional football had to completely change their game plan to keep players, coaches, personnel, and fans safe. Although they delivered the same fast-paced, hard hitting, exciting action on Sunday afternoons – they had to draft a completely new playbook to get there.

The same might be true for healthcare supply chain distribution.

Thousands of healthcare organizations in the United States depend on distributors to deliver the right product at the right time – but the COVID-19 pandemic presented a host of new challenges to the industry. Although this was an unprecedented event, and distribution companies moved mountains to get supplies out to their customers, the opportunity to improve the processes by which healthcare products and services are delivered should not be missed.

This was the topic during a recent panel discussion hosted by SMI, a memberdriven, non-profit organization of providers, suppliers, manufacturers, distributors, and disruptors. Executives from Cardinal Health, Concordance Healthcare Solutions, Henry Schein, McKesson, Medline, and Owens & Minor talked about the recent challenges their organizations faced during this crisis and what they will be doing differently in the future.

There were 4 key themes that emerged in the discussion: 1. We need better, more proactive communication between buyers and sellers

2. We need better sources of actionable data at all points in the supply chain 3. Transparency between all trading partners is critical 4. Collaborative relationships generate more rapid problem solving and better outcomes

The panel agreed that the healthcare industry can’t forget these and other lessons we’ve all learned from this crisis. It became obvious in the early stages that existing distribution models weren’t effective in a crisis of this magnitude – organizations had to pivot quickly and operate differently, and they did. As with

any good football team, the industry is now taking what we learned, making adjustments and improvements, listening and learning from one another, and creating a new playbook to be better prepared and more resilient for future crises big and small.

Based on this SMI panel discussion, here are some ways we can change the playbook to drive different outcomes going forward:

It’s critical that we work together as an industry to ensure continuity of supply to get products to staff and patients as securely and effectively and in the most efficient manner possible.

Future demand planning

As we learned during the pandemic, allocation was a challenge because demand shifted so rapidly and dramatically that historical demand was not a good predictor of current and future demand. Going forward, we need to use new tools and approaches to understand future demand and establish better product allocation protocols. We should include the following tactics in the new playbook: > Understanding demand drivers and pivoting to adapt to changing drivers > Deciphering the difference between anticipatory demand and true patient need and sharing that real demand data upstream with manufacturing partners > Creating rational product allocation protocols based on future demand

> Increasing investment in inventory management solutions which incorporate state-of-the-art demand planning strategies and tools > Creating effective communication channels to share this new demand data quickly and easily along the entire supply chain, with consideration for emergency government resources

Data sharing and transparency

The lack of product availability data was a huge challenge, especially at critical moments early in the pandemic. We need to update our playbook to include new ways for trading partners and the government to exchange data and information to allow for full visibility and transparency across all links in the supply chain to ensure delivery of optimal patient care. The new playbook should include ideas such as: > Implementing industry-wide data standards to allow for transparency along the supply chain > Creating information that is available real time and on demand at all points in the supply chain to allow for response as a collective group and not simply as individual entities > Developing an open platform built on trust which gives the industry the ability to trace products back to place of origin to respond to all forms of crisis

Collaboration and proactive communication

There will be disruptions in the future, so we need to prepare and have relationships that can be most responsive to crises as they happen. Having these stronger relationships now will mean that the industry can cope more effectively in the future. Our new playbook should include the following: > Building and enhancing collaborative partnerships now with key trading partners and adding new relationships to the traditional sales interaction (sourcing to sourcing, etc.) > A focus on mutual success and the shared mission of caring for patients – we all have the same aim, and we need to understand our trading partners’ priorities and business objectives as we work toward our common goal

As we learned during the pandemic, allocation was a challenge because demand shifted so rapidly and dramatically that historical demand was not a good predictor of current and future demand. Going forward, we need to use new tools and approaches to understand future demand and establish better product allocation protocols.

> Maintaining open lines of communication downstream, upstream, and across stakeholders and sharing information as it becomes available > Working together creatively and pivoting to new solutions for trading partner activities as needed

Supply chain diversification

It’s critical that we work together as an industry to ensure continuity of supply to get products to staff and patients as securely and effectively and in the most efficient manner possible. We need to embed the learnings from COVID-19 into our work standards and include the following priorities in our new playbook: > Creating redundancy in the supply chain, expanding supplier relationships and identifying non-traditional sources of supply > Developing channels to increase supply through alternate manufacturing that can be activated in a crisis and validate these non-traditional suppliers in advance to be prepared for crises > Diversifying the countries of origin for sourcing > Having an emergency resilience plan ready to implement by thinking ahead and doing advance scenario planning to include a predetermined crisis formulary which set options for acceptable alternate product > Bringing product closer to the customer and building capacity to manage customer owned surge inventory

It’s very apparent that recalls, disasters, pandemics, border closings and more are going to continue, and we need to be nimble and flexible because the next crisis likely won’t look like this one. Taking the lessons we’ve learned these past few months and revising the game plan now is critical for how we respond moving forward. It’s time to stabilize our supply chain and prepare for the future. Because the end game is still the same – getting supplies into the hands of clinicians to protect employees and care for patients. Now is the time to move forward with a new and more resilient playbook.

Many thanks to our SMI Distributors who participated in this discussion and contributed these ideas for a new healthcare supply chain playbook.

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www.smisupplychain.com.

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www.linkedin.com/company/smisupplychain NANCY ANDERSON Associate Executive Director, SMI

CHRISTINE DEAN Senior Director, SMI