STANDARD PRACTICES


Demand planning and forecasting: Healthcare’s time has come


by Karen Conway, Vice President, Healthcare Value, GHX


laborative demand planning forecast- ing and replenishment that has proven valuable in other industries. The critical shortages of personal protective euip- ment and other supplies needed in the fight against COD- have eposed the weaknesses of a supply chain where information on eisting inventory levels and consumption is not routinely shared between suppliers and providers and forecasts are more art than science. The concept is not new to healthcare. n


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 the ffi cient ealthcare Consumer esponse C report cast light on the value of standardied data and automa- tion to support demand planning among other things. The C effort was based upon an earlier fficient Consumer esponse C study conducted in the grocery and consumer packaged goods industries. The primary obectives of C initia-


tives regardless of industry are better customer response D a more effi cient supply chain. iven the opinion that too much reliance on Lean manufacturing and ust-in-Time distribution eacerbated the supply shortages with COD- some may uestion if effi ciency and effective response are mutually compatible. ut oth- ers like uben Taborda who eperienced the benefi ts of C fi rsthand beg to differ. Taborda currently serves as senior director for ospital and Distributor Supply Chain Solutions with ohnson  ohnson but he previously worked on C initiatives when he was with the retail side of the company. e says both obectives can be achieved but only with investments in data standardiation and digitiation automa- tion and system integration. The return on those investments he says is the ability for manufacturers to better meet changing customer demand whether for  or a sophisticated medical device. Currently both hospital and manufac-


turer supply chains struggle with know- ing what products are where and in what uantity where they are moving and most importantly when they are used.


hey say, “Timing is everything,” and perhaps the time has fi nally come for healthcare to embrace col-


s a result it is very hard for manufac- turers to accurately predict demand and deliver product when and where it will be needed at least not without a lot of workarounds. That was the case in the retail world Taborda says until trading partners began collaborating on inventory management and demand sensing. almart led the change by making investments in bar-code scanning and linking those systems with its enterprise resource planning  system. s a result almart is able to provide suppliers with visibility into not only how much inventory it has on hand but also point-of-sale consumption information. s other retailers followed suit manufacturers have been able to generate more accurate demand forecasts based on actual sales versus estimates from purchase orders and shipping information. Taborda would like to see similar capa- bilities in healthcare which he says can deliver benefi ts across the supply chain. anufacturers can improve fulfillment rates and minimie the amount of epen- sive inventory that is held in the fi eld or delivered to hospitals ust in case it will be needed. roviders on the other hand can be more confi dent they will get sup- plies when and where they need them and minimie the amount of product that epires before use. To achieve this vision Taborda says trading partners need to automate supply chain processes and collaborate to achieve data standardiation and digitiation so everyone is calling the same thing the same thing and is able to share standard- ied data in transactions. These capabilities are foundational to data sharing between trading partners and the ability to replenish supplies based on actual demand. Taborda says more collaborative rela- tionships are also critical ust because the data eists does not mean trading partners will be willing to share unless they see the benefi ts for their own organiations. Once again the timing is right. hile collabora- tion has been elusive in healthcare that appears to be changing. s we discussed in the une issue of Standard Practices COD-  has led to increased collaboration across


54 September 2020 • HEALTHCARE PURCHASING NEWS • hpnonline.com


functions within organiations and across the various stakeholder organiations even those who typically compete with one another. COD- has also increased appre- ciation for the need to invest in supply chain with early evidence that providers with more digitied and automated sup- ply chains fared better when managing supply shortages. The uestion now is whether providers and suppliers  both of which have suffered fi nancially during the crisis  will think beyond immediate fi nancial constraints to consider how to make investments similar to those made by their retail peers. ven if those investments need to be delayed until non-COD care volume and revenue return to some semblance of normal this is a perfect time for supply chain stakeholders to build the business case for industry-level collab- orative planning forecasting and replen- ishment. n recent years we have seen individual organiations like ercy in St. Louis invest in capabilities to capture and share standardied consumption data with manufacturers. nfortunately when it is ust one organiation there is not enough information for suppliers to change their approach to demand management. They need data from enough providers to fore- cast demand at scale and make necessary adustments to production levels. In the midst of significant hardship, COD- has also served to align health- care stakeholders around a common pur- pose. e are indeed all in this together and together, we have the capacity to more effi ciently and effectively deliver value to patients healthcare workers and the orga- niations upon which a high functioning healthcare system depends. HPN


Karen Conway works to advance the role of the supply chain as a critical enabler in the pursuit of a value-based healthcare system. As Vice President, Healthcare Value for Global Healthcare Exchange (GHX), Conway explores how the supply chain and improved data qual- ity and visibility can support understanding of what increases value for patients and to those organizations that develop and deliver healthcare products and services.


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