PRODUCT & SERVICE LINE REPORTS
from a different vendor, in different sizes,” Fantom explained. “Because they are not aggregating their order, they are not able to access the best pricing versus buying one bulk order from one vendor. If each location is ordering a different size or brand versus standardizing, they are introducing vari- ances in care delivery and increasing costs. “This is also where understanding your facility’s consumption comes into play,” she continued. “If your facility is ordering mul- tiple brands and sizes but using one size or brand more often, eliminating smaller sizes or underused brands could be a cost-saving option that also opens up more room for the inventory of supplies that are more critical to operations. Finally, depending on who is plac- ing the order and if the facility’s individual locations are on your GPO roster, you may be missing out on additional cost savings by finding tiered pricing offered by your GPO.” Jeff Willink, Senior Director, Direct Sourcing Strategy and Continuous Improvement, S2S Global, a Premier Inc. company, points to geo- graphic production limita- tions as the fulcrum. “The COVID-19 pan- demic illuminated our
Jeff Willink
nation’s overreliance on international gloves manufacturers - particularly with production of the bulk of the world’s sup- ply concentrated in a single region,” Willink said. “Since early 2020, demand for gloves increased dramatically while at the same time, COVID lockdowns and geopolitical issues drove a massive shortfall in supply. In fact, via a January 2021 survey, Premier members cited access to exam gloves as the No. 2 greatest challenge to care for COVID- 1 patients after clinical staffing.” The aftershocks spiraled out from there. “Challenges to accessing gloves were compounded by massive shipping delays, increased lead times and container short- ages, all of which contributed to unprece- dented supply shortages and pricing levels,” he continued. “The spike in demand also temporarily led to raw materials scarcity, creating shortages up the supply chain. All of these issues provided an avenue for bad actors with counterfeit products to enter the market.” Premier estimates that glove demand globally has exceeded production capacity by nearly 40 percent since the beginning of the pandemic.
Riding the waves like a pro, not hodad
Finding useful and reliable solutions to pandemic-driven and related supply chain problems has been priority No. 1 during
the last two years. While everyone may not agree universally on any single option, they generally agree that competition should take a back seat to customer ser- vice and communication should conquer confusion. “The most impactful method to best miti- gate supply crises in this ever-changing world is the transparency and partnership between customers and suppliers to cre- ate meaningful value,” insisted Tronex’s Lewis. “There must be a true spirit of partnership to understand the nature of manufacturing lead times, manufacturing diversification, buffer stock, change in usage patterns and clarity of information passed between each partner to ensure preparedness and contingency planning, particularly how such aspects impact what is sustainable financially. This is especially true when it comes to gloves and dispos- able PPE in general.” HPN also offered supply chain experts in manufacturing, distribution and contract- ing a list of seven potential solutions for preventing, if not alleviating glove short- ages that occurred throughout the last few decades extending back to the 1980s with “other” as an option. [See the chart on page X for the choices.]
Leading the charge? More effective
and efficient use of IT (e.g., for tracking and tracing comprehensive sourcing and consumption/usage data via product data standards adoption and implementation; discovering counterfeit products). Steele emphasizes that “efficient and accurate communication around manu- facturers’ on-hand and available inventory andor allocated quantities for a specific provider” will make a difference. Nearshoring production/sourcing opportunities (relying on suppliersven- dors in an adjacent/bordering country) came next.
“Healthcare providers need manufactur- ers to keep costs down while at the same time improving access to available prod- uct,” Steele said. “With nearshoring and onshoring, manufacturers and suppliers can create additional points of production and storage of finished goods without having to navigate international waters.” But Steele acknowledges the challenges with onshoring production/sourcing opportunities (relying on suppliers vendors that return manufacturing/dis- tribution services back to the country from which they originated), which was third. “While onshore production might be costly and still highly reliant on inter- national-based raw materials, the act of onshoring and using a third-party logistics company for storage of stockpiled finished
12 June 2022 • HEALTHCARE PURCHASING NEWS •
hpnonline.com
goods could provide an improvement over previous sourcing methods,” she noted. Switching manufacturers, distributors or
group purchasing organizations (GPOs) for contracting and other services was listed fourth, but Steele expresses concern about that option.
“Assuming inventory allows, this is a reactive measure to dealing with supply bottlenecks,” she noted. “[Another] sug- gestion would be to dedicate 15%-20% of purchases to a domestic alternative to provide additional supply resiliency.” Domestic production/sourcing opportu- nities only was one of the early pandemic recommendations but only reaches No. 5 now in hindsight.
“Assuming the availability of raw materials and cost equivalent labor/pro- duction, this is a viable solution to create redundancy and resiliency in the supply chain,” Steele added.
Nearing the bottom? What most every-
one ended up doing: Backordering and hoarding when and where possible. “Third-party logistics companies and/
or provider consortiums built around pan- demic stock might offer a way to improve resiliency while mitigating cost and risk or obsolescence/expiration,” Steele advised. “This solution doesn’t come without addi- tional challenges, however. According to a Health Industry Distributors Association (HIDA) whitepaper from uly 2020, it’s estimated it would take 13-15 tractor trail- ers to fulfil a 0-day stockpile of assorted supplies for a 350-bed facility.” At the bottom, largely due to the amount of effort, planning and investment? Hospitals and health systems investing in/setting up their own manufacturing and/or distribution companies to serve themselves/each other.
“This solution is largely scale-dependent for offsetting production cost,” Steele said. Still, Mölnlycke’s Schmid emphasizes the fundamentals as top priority, urging the “standardization and streamlining of glove suppliers and selection and the increase of safety stock across all steps of distribution – hospital, distributor, supplier, factory.” Cardinal Health’s Squeo offers a trio of tips to keep providers on track for supply availability. The first? “Utilizing an effective inven-
tory planning and storage strategy – for daily and long-term needs – with a supply chain partner that can help a facility cycle through product to minimize expiration risk,” she said.
Next up: Renew, if not rebuild trust but recognize the cost for domestic production. “While bringing manufacturing to the U.S. will help mitigate the issue, consider
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