The escalation of supply chain resilience in health systems has become counterproductive

The resilience of supply chains has become a key concept in healthcare purchases, as the reality of pandemic (and pandemic) ensuring necessary supplies has proven to be problematic. Hospital procurement professionals are increasingly experiencing the after-purchase or limited availability of critical equipment used in the program – service line leaders are suffering from the disruption of providing appropriate patient care capabilities.

How did health care end up in such a horrible place? How to fix the situation? Healthcare facilities have been under cost pressure for years as suppliers raise prices and introduce new technologies, often proprietary designs, which do not allow switching to other suppliers’ products. It turns out that efforts to improve delivery models by reducing changes in employee and cost efficiency are not enough to offset these models. Many healthcare organizations have been successful in reducing costs in the supply chain, but in terms of the elasticity of the supply chain, it is expensive.

The most efficient supply chains are not resilient; they are built to minimize costs. According to Douglas Hannah from Harvard Business Review, “Efficiency in seeking supply chain efficiency makes our healthcare system more streamlined and more global. However, this efficiency comes at the expense of resilience, and hospitals and healthcare providers now rely on fragile global supply chains, relying on 'Black Swan'Evestion Covid's Covid 9.

There is a trade-off between reducing costs and supply chain resilience – this trade-off shows itself in times like pandemics. Health systems put a lot of responsibility for the vulnerability of supply chains due to their search for cost reduction.

Standards of healthcare supply chain resilience must be used to ensure that healthcare providers can provide ongoing care to patients, and that most healthcare providers have taken initiatives to improve their ability to deliver consistently and reliably. However, health systems continue to push higher standards, and most RFPs today contain requirements for supply chain resilience measures.

The need for suppliers to resilience in healthcare supply chains has reached problems. A large portion of the market is excluded from participating RFPs when its RFP providers require suppliers to map their suppliers and suppliers’ suppliers and create complex demand management monitoring practices for all their product lines. It's not because their operations are risky in terms of resilience. As far as small vendors are concerned, they don’t have the resources to build such systems. For large suppliers, the complexity of their product portfolio and its massive scale make this an impossible task. There is a real risk that with higher standards of supply chain resilience, health systems end up choosing suppliers, not because they offer the best products at the best price, but because they meet formal resilience standards.

At the same time, extremely strict and arguably unnecessary standards (i.e., elastic standards that occur only from standards) greatly increase operating costs. This is a problem for all vendors of all sizes. Furthermore, trends in elastic standards tend to include supplier disclosure of information that is seen as proprietary and critical to organizational competitiveness. This increases business risks to all suppliers.

Elasticity standards are important to balance cost-saving and elastic supply chain goals. However, both suppliers and providers are responsible for the vulnerable nature of the healthcare supply chain and both parties must compromise on establishing a better balance. Health systems must actively listen and they must be aware of the dangers of creating elastic measurement systems that are the dangers of favoring some suppliers over others for false reasons.

As health systems continue to increase supply chain transparency to suppliers demand, supplier mapping, supply risk mapping, business continuity, interruption response, demand planning, etc., they seem to be protecting their ability to avoid disrupting patient care through supply chain management. However, they are effectively weaponizing the “supply chain resilience” of some suppliers and increasing the business risks and costs of all suppliers.

New supply chain resilience standards are emerging as healthcare purchases try to choose suppliers that can help hospitals reduce the impact of supply disruptions. These needs can be balanced with reasonable beliefs about the demand for suppliers.

Image: Getty Images, Ismagilov

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