Article

Beat the Crunch: The Importance of Long-Term Supply Chain Planning

November 8, 2022
Woman sitting at desktop computer and next to printer, planning
Supply chain shortages and ongoing disruptions to product fulfillments have wreaked havoc on businesses, including non-acute healthcare organizations. One root cause of the problem is that raw materials and other components needed to manufacture some products, medical devices and drugs were not available when needed, causing delays.
 
COVID-19 is at least partially responsible. Manufacturers, distributors and suppliers struggled with low, even insufficient, staffing levels, which slowed production. The resulting product shortages across the supply chain caused price spikes and temporary unavailability of some items.

Even short-term shortages can pose a significant risk to patients who need non-acute healthcare. For example, an inability to access vaccines or an implant for a surgery can impact peoples’ lives. To help mitigate shortages and keep inventory in stock, organizations must improve their planning and procurement processes. These optimizations often require the help of outside experts, such as specialists with a group purchasing organization (GPO).

LONG-TERM PLANNING FOR ESSENTIAL PRODUCTS IS MANDATORY

Organizations have experienced delays for myriad items that are in high demand, including some personal protective equipment (PPE) gear. However, delays aren’t limited to the most commonly used products. Even infrequently ordered items, like office furniture or parts for capital equipment, may experience months-long delays.
 
Short- and long-term planning must take into account essential items such as flu and COVID-19 vaccines. The planning should also consider food that’s subject to unstable pricing or shortages. Organizations should even look at regularly used items that have not experienced shortages, but could face new demand or sudden price surges.
 
Tactical procurement planning that utilizes a data-driven forecast and has a strategy for longer-than-normal lead times can help prevent potential inventory shortages. A GPO can help in these areas. GPOs work directly with suppliers to identify supply chain bottlenecks or other issues then notify members to help them plan for delays.
 
Another GPO-enabled benefit is identifying buying behaviors. For example, GPOs use data and analytics to pinpoint seasonal buying habits, which allows organizations to gain better visibility into potential problems and plan ahead for upcoming changes in purchasing volumes. If there are product delays, GPOs can oftentimes recommend alternatives that can be substituted for the original product in order to keep a facility running at the speed and scale required to meet patient needs.

FORM AN AGILE PROCUREMENT STRATEGY

Most non-acute healthcare facilities organizations realize “business as usual” now means being agile and having the flexibility to react quickly to changes in the supply chain. 

Being proactive could involve changes to long-standing business processes, like increasing inventory. Just-in-time approaches may no longer work, both from a cost and an availability perspective. As a result, organizations must reevaluate their on-premises inventory levels versus the cost of storage to determine the right balance.
 
Forward-looking planning for big purchases can help uncover savings, especially if organizations have flexibility when they buy. For instance, Provista offers Quarterly Promotions that allow deep savings on specific items every three months. Proactively leveraging these promotions for capital equipment and other expensive items can result in significant discounts that impact the bottom line. 

In addition, Provista has an advisory council of members for almost every industry. These member councils share information with each other, including details about product shortages and supplier issues. The councils offer a good sounding board for members to discuss their needs and challenges, making sure Provista plays a key role in their planning processes and identifying any potential issues that could impact their business. This collaboration helps ensure the contracts members need are available through Provista’s portfolio. 

A modern material management software, such as Envi®, can also help identify procurement and supply chain issues. Envi gives facilities control over and visibility into their entire supply chain. It also centralizes purchasing and operations, giving organizations a complete view into each facility. 

Another benefit is the platform gives organizations a line of sight into their buying patterns and their suppliers, enabling them to predict inventory levels that match usage. This enterprise-wide visibility helps identify potential bottlenecks and shortages in time to take action. Other benefits of the software include driving higher levels of automation, integrating with financial systems to simplify payments, using mobile scanning technologies to save time and delivering customizable reporting for informed decision making.

 

“GPO expertise and contract offerings can also help organizations maintain business continuity, even when supply chains are stalled.  ”

A MODERN APPROACH TO SUPPLY CHAIN PLANNING

Pre-pandemic buying strategies must be reassessed in today’s reality of rising costs and global supply chain shortages. Best practices for buying and maintaining inventory may also need to be updated when considering potential shortages and unstable pricing.
 
Optimizing procurement, inventory and supply chain data better positions organizations to have visibility into ordering and deliveries. That visibility helps uncover shortages or delays to enable better planning. 

Partnering with a GPO enables even greater visibility, along with options to change contracts, if needed. GPO expertise and contract offerings can also help organizations maintain business continuity, even when supply chains are stalled.

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