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The climbing of resilience of the health systems supply chain has become counterproductive

The resilience of the supply chain has become a key concept in the purchase of health care, because the pandemic (and post-countryic) realities of obtaining the necessary supplies have proven problematic. More and more often, hospital purchasing professionals are experiencing rear or limited availability for key devices used in procedures – and range of services are experiencing disturbances in their ability to provide care for appropriate patients.

How did health care end up in such a terrible place? And how to repair the situation? For years, health establishments have undergone cost pressure, as suppliers have increased prices and introduce new technologies, often proprietary conceptions that do not allow products to other suppliers to be made. The efforts to improve delivery models thanks to the reduction of staff and profitability changes have proved to be insufficient to compensate them. Many health establishments have succeeded in reducing costs in the supply chain, but it has reached a significant price in terms of resilience of the supply chain.

The most effective supply chains are not designed to be resilient; They were built to minimize costs. According to Douglas Hannah in Harvard Business Review, “the search for efficiency of the supply chain has made our health system leaner and more global. But this efficiency took place at the cost of resilience, hospitals and health care providers now dependent on fragile world supply chains vulnerable to the disturbances of “black swan” like COVID-199 “. “”

There is a compromise between the reduction in costs and the resilience of the supply chain – a compromise which is shown during the disturbance, such as the pandemic. Health systems bear a substantial part of the blame for the fragile nature of the supply chain due to their search for cost reductions.

The resilience standards of the health care supply chain are necessary to ensure that health care providers can provide continuous care for their patients, and most health care providers have taken initiatives to improve their ability to deliver in a coherent and reliably. However, health systems continue to put pressure for higher standards, and most DPs today contain long sections with requests for resilience of the supply chain.

Requests for resilience suppliers of the health care supply chain came to a point where they have become problematic. When suppliers of their DPS require suppliers to have mapped their suppliers and suppliers and create complex demand monitoring practices for all their product ranges, a large part of the market is excluded from participation in DP. It is not because their operations are risky in terms of resilience. In the case of small suppliers, they do not have the necessary resources to put such systems in place. For large suppliers, the complexity and size of their product portfolios make it an impossible task. There is a real risk that, with resilience standards of the higher supply chain, health systems will eventually select suppliers because they offer the best products at the best price, but because they meet formal resilience standards.

At the same time, extremely strict and undoubtedly useless standards (i.e. resilience standards for standards) considerably increase operational costs. This is a problem between all suppliers, large and small. In addition, resilience standards tend to include the requests that suppliers present information considered as owners and essential to the competitiveness of the organization. This increases commercial risks to all suppliers.

Resilience standards are important to balance the objectives of the cost and resilience supply chain. But suppliers and suppliers share responsibility for the fragile nature of the health care supply chain, and both parties must make compromises in the creation of a better balance. Health systems must actively listen to and they must be aware of the dangers of creating resilience measuring systems that promote certain suppliers rather than others for bad reasons.

When health systems are constantly increasing requests to their suppliers of transparency of the supply chain, supplier mapping, risk mapping, business continuity, disturbances, planning of demand, etc., they apparently protect their ability to avoid patient care disruption through the management of the supply chain. However, they actually armament the “resilience of the supply chain” against certain suppliers – and increase trade risks and costs for all suppliers.

While the purchase of health care is struggling with the way of selecting suppliers who help hospitals reduce the impact of supply disturbances, new standards for the resilience of the emerging supply chain. These must be balanced with what can be considered reasonable in terms of requests imposed on suppliers.

Image: Getty Images, Ismagilov


Lars Thording, PhD, is vice-president of marketing and public affairs at Innovative Health LLC. He has training in the academic world, the advice and leadership of the industry. He has been responsible for the launch of many disruptive solutions on the market through health care, insurance and technology. Originally from Denmark, Thording taught universities in Denmark, Ireland and the United States. He is currently Vice-President of Marketing and Public Affairs at Innovative Health, a company for the reprocessing of medical devices specializing in electrophysiology and cardiology technology. Lars is currently signing on the board of directors of the association of Medical Device Reprocesors.

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