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July 9, 2020

How Covid-19 is disrupting your supply chain (and what to do about it)

Daily Briefing

    In a recent episode of the Radio Advisory podcast, host Rachel (Rae) Woods talks to Brandi Greenberg, VP of life sciences and health care ecosystem research for the Advisory Board, about how the Covid-19 epidemic has impacted supply chain, what health care leaders should do in response, and how the perception of supply chain leaders needs to change.

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    Read a lightly edited excerpt below, then listen to the podcast to hear the full conversation.

    Rachel Woods: Looking forward, what are some of the big lessons that we've learned about the state of our supply chain because of Covid-19?

    Brandi Greenberg: That's the question that my team and I have been spending a lot more time on the last one to two weeks. And what we keep talking about is this growing sense that data is the new currency in supply chain. But it's a different kind of data than what suppliers were focused on before, which was providing evidence that their products were safe, clinically effective, and provided value. And that data isn't going away—but it's no longer going to be enough. Now, suppliers are going to be asked for data to prove that they actually have enough supply on-hand, and that their suppliers have enough supply on-hand, so the risk to a hospital or a health system can be mitigated in the event of a surge or a spike in demand.

    Woods: And I'm assuming that focusing on data is something that's going to require almost every stakeholder that's involved in supply chain. So, I wonder if we can actually go through those one-by-one. Let's start with device makers and manufacturers—what should they be doing in the future when it comes to shoring up enough supplies?

    Greenberg: We've been telling the manufacturers we work with that they need to spend more time figuring out how much data and what kinds of data about their own supply chain and manufacturing they are willing to share with customers and distributors. We're also telling a lot of the manufacturers that they need to think hard about where their manufacturing happens and where they might have some flexibility, should they find that more and more providers demand that a portion of their manufacturing be done in the United States or at least closer to home.

    Woods: And how does your answer change if we think about the future of supply chain for distributors and technology companies?

    Greenberg: I really think that distributors and technology companies have an opportunity, and it's to not just be the exchange platform or the middle man, but to actually be the trusted source of transparent data. They really have an opportunity to aggregate data and to be that source of truth when it comes to who has what and where it is produced across the supply chain to help providers not only buy what they need, but also to help health systems and potentially even state governments or larger regional purchasing coalitions allocate supplies to get that to the organizations that need it most.

    Woods: What does the future look like for providers, particularly maybe the chief procurement officer, at health systems? How might their role need to change?

    Greenberg: First and foremost, it's time to get them out of the basement. I think that the period of thinking about them as operational, as folks who helped move product around, negotiated price, and were rewarded simply based on budget—those days are over. They must be a strategic advisor to the CEO, the CFO, and the head of strategy. You cannot grow, you cannot make the financial and strategic decisions that you need to make as a provider or organization in today's environment unless you have effectively partnered with your supply chain leaders.

    Woods: This reminds me of the conversation that I think every leader in health care is having right now. Everyone is asking, "What could or perhaps should be different about my part of the industry post-Covid-19." And it sounds like this might be the big change for supply chain.

    Greenberg: I sure hope so. Very often I feel like supply chain is one of those functions that is everybody's problem but nobody's problem. Yes, there's always a head of supply chain, a head of materials management, but the truth is that supply chain touches every nurse, every doctor, every patient. You need those supplies where you need them when you need them in order to provide great patient care. And I think we need to start understanding that supply chain is a vital part of care delivery.

    Woods: If supply chain is going to get a lot more strategic, I'm curious, what advice would you give to supply chain leaders at health systems, so chief procurement officers, with how they handle supply chain right now versus maybe six months from now?

    Greenberg: Two pieces of advice: First, I would be bold and I would think about the data that you need to do your job better. Now, I know we have very limited capital and limited cash in our organizations, but now is the time to at least start to familiarize your executive team with the data and the data sources that you need to do your job better.

    Second, I think they need to find more allies. I think that supply chain needs to work more effectively with not just finance, but medical leaders, service line leaders, and nursing leaders so that they can start to build understanding and empathy with each other to figure out how to solve the supply chain problems more collaboratively.

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