Supply Chain Enabled

Initial observations from our Health Systems Insights report

Published: January 11, 2023
Author: Lorcan Sheehan

In the coming weeks, we will be publishing the sixth report in our Health Systems Supply Chain Insights series.  Since 2012, we have worked with supply chain leaders in Health Systems to chart developments in how they manage the physical flow of products to support their patients’ needs and to highlight the challenges and opportunities that they face.

These are large, complex supply chains. Approximately 30% of our health budgets are being spent on materials such as medical devices, OR supplies, consumables, medicines, supporting equipment testing, and others.  Billions of dollars of product spend is managed across tens of thousands of SKUs. These SKUs are delivering patient critical supplies to distributed point of use locations across their health systems.  

In 2021, our report highlighted the specific challenges faced by Health Systems in the immediate aftermath of the COVID-19 pandemic.  Our latest report provides direct insights from supply chain leaders across 17 Health Systems into the challenges faced since then, and how they are dealing with many of the same disruptions facing the broader supply chain community.

Some examples include:

  • Spiralling logistics costs
  • Increased lead times
  • Reduction in supplier performance – more supply shortages and disruptions
  • Wage inflation
  • Challenges in recruiting and retaining supply chain team members
  • Changing attitudes to risk – resulting in requirements for higher inventory

These challenges are shaping capital and investment decisions within Health Systems, their use of technology, their procurement strategy and approach to suppliers, and the development of their own supply chain organisations.

In the report, we summarise the feedback on decisions that are already being taken by supply chain leaders. We also examine opportunities to drive further efficiencies and savings.   

Sustainability considerations are also emerging within Health Systems supply chains, with 70% of the health system supply chain leaders reporting that they had completed an initial assessment of what sustainability means in their organisation.  While many of these efforts remain in the early stages, we explore some of the practical sustainability actions being employed by participants.

Our research series has followed the development over time where many Health Systems are taking more direct control over their supplier relationships and management of the flow of materials through their own warehouses and distribution centres (Consolidated Service Centres – CSC).  

We have seen the number of these CSCs grow significantly since the start of our Insights Series in 2012, and our latest report will continue to chart the progression of the scope of services and products that Health Systems are managing through their own distribution assets, in parallel with their relationships with distribution partners.

Our Health Systems Supply Chain Insights series is completed in partnership with Jamie C. Kowalski, who is a highly respected healthcare supply chain veteran and leader in the US.  The report is provided free of charge to Health Systems that participate in the primary research.  Their participation in the research is conditional that their details and responses are kept confidential at all times. We are grateful for their participation.  As a result, we do not share individual participant or response information as part of our insights report series.

If you would like to learn more about our series, please register your interest below, and we will be in contact with you.

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