STRATEGIC SOURCING & LOGISTICS via the National Guard, or other entities,
to help fill labor holes. The ports require more attention and oversight and should not be managed independently. The cur- rent backlog is so significant that without cleaning it up, the other initiatives really don’t make sense. argaret Steele, Senior Vice President, edSurg, Vizient Inc., labels the supply chain’s panoramic view as “all problematic and con- nects the dots from one hiccup to the next in a buttery effect that starts with raw materials. “Raw materials are stressed due to global demand, she observed. “The cost has increased sig- nificantly. y way of example, resin has increased considerably and that impacts a number of products. The suction canisters category is really struggling the two main suppliers of these products both are experiencing production constraints lead- ing to backorders. Additionally, the cost of the resin is such that they must focus on how to continue production without operating at a loss. Transportation challenges quickly follow, exacerbating costs, according to Steele. “The increase in raw materials is exacer-
Margaret Steele
bated by the cost of getting the product to the U.S., she continued. “With so many ships sitting idle for weeks, the strain on these materials continues to increase.Once they are ofoaded, the transportation con- tainer costs have increased from $,500 per container to reports of $0,000 per container and higher. In turn, transporta- tion from the ports has increased in cost as well. Wages and labor shortages continue to add to that strain on the supply chain. The challenges are real. es, there are instances of some panic buying, which adds to the strain, but the raw materi- als, transportation and labor issues are the problems to be addressed. Economic indicators proect the raw materials issue will see some relief in the coming months. However, transportation, labor shortages and increased wages will last much longer. The possibility of expired tariff relief on many healthcare products will only add to the increased costs. At press time during seasonal shopping
in December, Steele expresses concern about compounding problems. “With providers stockpiling key prod-
ucts to protect from future constraints, you have a real bottleneck, she added. “We believe proven redundancies in produc- tion, e.g., in the form of manufacturers
setting up a secondary plant or buying from secondary sources, combined with sourcing alternatives will help ease the impact of these challenges.
Managing the bullwhip Other supply chain experts point to demand planning and data reliabil- ity as key issues where providers and supply chain professionals need to improve as these are within their control. ike Henry, anaging Partner, Ron Denton Associates C, is one of those proponents. “Providers did a good ob with things
like burn-rate calculators for PPE during the height of the pandemic, but now we’re seeing shortages that cut across all product categories, Henry told HPN. “Improved coordi- nation and data sharing across the supply chain from raw materi- als to supplier to provider is critical to improve demand planning and to reduce the bullwhip effect. etter demand planning between the provider and supplier would be a good start, he continued. “At the provider site there continues to be limited visibility into what suppliesdevices are on hand, let alone have the ability to monitor usage and consumption in real time. Systems and processes need to be put in place to more dynamically track and forecast demand. and to respond to uctuations. Descriptive analytics are helpful, but they are a rear-view mirror. There needs to more focus on prescriptive analytics what do we need to do moving forward and predictive analytics understanding the impact of taking various actions. ames udwig, Vice President, Partnerships, Premier Inc., advocates strongly for demand planning and data reliability improvements. “COVID-19 forced
Mike Henry
more of an emphasis on end-to-end supply chain visibility and reinforced the urgent need to bet- ter understand demand surge and product avail- ability, udwig indi- cated. “With most product disruptions occurring as a result of poor demand signaling, effective demand manage- ment and supply network mapping are foundational components of supply chain preparedness. Expanded supplier mapping, risk scoring and AI-enabled data intelligence enables organizations to accurately
James Ludwig 14 January 2022 • HEALTHCARE PURCHASING NEWS •
hpnonline.com
identify the intersection of demand and supply, more effectively secure prod- uct and better ascertain potential risks, according to udwig. He cites Premier’s October decision to expand its partnership with Resilinc for a supply chain mapping footprint to encompass more than 1,00 suppliers and 15,000 sites with visibility down to the site, product and ingredi- entpart levels for the leading contracted suppliers. “Today, more providers are also lever- aging innovative models and partnerships that aggregate demand via committed buyers’ club’ purchasing strategies giv- ing manufacturers proper demand signal- ing, predictable revenue and the surety needed to ramp up production or enter new markets, he noted. “Suppliers get more accurate demand forecasting and committed purchases. Health systems get a guaranteed supply of critical products at a fair price. Alex Wakefield, CEO,
ongbow Advantage, however, cautions against concentrating on demand planning and forecasting at the expense of overall fulfillment and nimble operations. “The real challenge with supply chains
Alex Wakefield
today is that there is an over-reliance on the accuracy of planning and forecasting during a time that’s proven on multiple different occasions that we need to be able to be more agile in our operations and fulfillment, Wakefield said. “Planning is important, but it’s only half of the equation. What happens when trucks are ammed or warehouses are quite literally frozen ogistics teams have to be constantly looking at their operations within the day, really within the hour, and have the kind of constant real-time vis- ibility into intra-shift data that will allow them to pivot and communicate quickly and easily. Amazon usiness envisions a more
holistic approach fueled by creative appli- cations of automation, data and demand planning capabilities. “Since supply chains are inherently interconnected, and each link has breaking points that can cause disruption, priori- tizing one over the other is not the best approach, insisted Sandhya Dhir, Head of Healthcare Strategy and Development, Amazon usiness. “Rather, to mitigate the impact of disruption, each link of the chain needs improved technology for real- time access to data, so organizations can make quicker decisions. For example, by adding AI and machine learning models
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