Why the supply chain model failed in time – News Couple
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Why the supply chain model failed in time


The shortage of Personal Protective Equipment (PPE) is a direct result of one of the largest supply chain management disruptions in recent history – the COVID-19 pandemic. This shortage isn’t just bad news for hospitals and retailers, but it can often mean the difference between life and death for health care workers and their patients.

Even before COVID-19, the business model of highly coordinated international supply networks was under strain. Increasingly uncertain political environments and the looming effects of climate change have raised concerns about the structure of global supply chains – and the ability of organizations to respond.

The just-in-time supply chain model, currently used by many health systems, is not only detrimental to suppliers, but also costs organizations time, money and security at a time when they need it most. Rather than continue to survive, organizations would be well served to focus on a direct supply model that allows more control to proactively manage the supplies they need and mitigate the impact of major disruptions in the supply chain.

Lack of safe stock? lack of readiness

For example, when building a hospital, most healthcare systems originally plan to provide large storage space, but when it comes to finalizing plans, they choose to maximize revenue and ensure quality patient care, so they end up reducing the space for supplies Significantly. Hospitals end up receiving daily or weekly deliveries to keep stocks in stock, rather than buying and getting shipments in bulk.

So what happens when there is disruption in the global supply chain and those regular small deliveries are put off? Medical professionals do not have the supplies they need and patient care suffers. It sounds terrible, but it’s the truth. Now more than ever, we are seeing health systems that rely heavily on third parties, such as distributors and Group Purchasing Organizations (GPOs), adversely affected by their inability to proactively plan.

The pandemic has caught the attention of many healthcare CEOs who now understand how important the supply chain is in mitigating supply risks and not compromising patient care. While the COVID-19 pandemic is a stark example of what happens when organizations don’t self-distribute, we’ve seen other major disruptions caused by hurricanes that can wreak similar havoc.

Take more control of your supply chain

Most health systems now have the scale and scale to build their own self-distribution model. It is no longer sufficient to rely on distributors in a timely or even non-stocking manner for vital supplies. It is much better to develop direct relationships with manufacturers who can deliver the large quantities of supplies your organization needs at a much lower total cost.

It’s the same model that makes other industries such as automotive, high-tech and retail so efficient. If you can purchase items in bulk, thus lowering the manufacturer or distributor’s delivery costs, the savings will result in greater cash holding.

There is also a control element that comes into play. When something unexpected happens, organizations that have built this relationship with manufacturers will have a better view of the manufacturer’s inventory and will be able to talk to the manufacturer directly rather than going through an intermediary. Manufacturers are more likely to fulfill customer orders before distributor orders.

There is a direct relationship between the supply chain and an organization’s ability to care for its patients. While we all hope COVID-19 will prove to be a black swan event, the pandemic has also highlighted the fact that our globalized world should prompt organizations to focus on building a direct supply model that prepares them to work directly with manufacturers to secure products in bulk. So as not to be surprised during the next catastrophe.

Going back to the example of the healthcare industry, hospitals and clinics that truly focus on the health and well-being of their patients now realize that the supply chain must be at the center of their efforts. All the work these organizations do to deliver the best quality and results to their patients means very little if they lack the supplies and equipment to provide this care due to easily avoidable supplier issues.

By being able to build a direct supply model focused on internal distribution, health systems will be more resilient and better equipped to survive the next supply chain disruption that comes their way while continuing to serve patients with the level of excellence they deserve.



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