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PPE Shortages Disrupting Hospitals Nationwide: Portrait of a Broken Healthcare Supply Chain

A recent article in the Washington Post highlighted the massive shortages of PPE that are now decimating hospitals nationwide, as the number of new cases of Coronavirus goes through the roof.  The Post notes that:

“Health-care workers on the front lines of the coronavirus pandemic are encountering shortages of masks, gowns, face shields and gloves — a frustrating recurrence of a struggle that haunted the first months of the crisis.Nurses say they are reusing N95 masks for days and even weeks at a time. Doctors say they can’t reopen offices because they lack personal protective equipment. State officials say they have scoured U.S. and international suppliers for PPE and struggle to get orders filled. Experts worry the problem could worsen as coronavirus infections climb, straining medical systems.”

This is a condition I warned would happen a few weeks ago in one of my earlier posts on June 25.  Much of the blame is being placed on the Trump administration in the Post article, and certainly a good deal of this is warranted.  However, the article also points out that hoarding of PPE at hospitals is also partly to blame – and this in turn is a function of a healthcare supply chain system that is fundamentally broken.  The communication between states, hospitals, and healthcare suppliers is one that is not well integrated, largely due a complete lack of transparency in the system.

Many of the companies I have interviewed recently, including a number of healthcare providers who are members of a healthcare supply chain forum, have identified that data asymmetry and missing supply chain data is a common problem that exists in the supply chain. Often this is because of a mindset in the market that does not want to share data for fear of revealing competitive information.  Both suppliers and customers point to each other as the source of the problem.  Executives were quick to react and point the finger at the other party, noting how they either were “not responsive”, or alternatively, “didn’t give us the right information”.  An important solution to this problem is to identify the gaps in information required to make better decisions, and then to prioritize these gaps and identify the type of information required, where it comes from, and to map out a process to collect and disseminate sources of PPE and country of origin for critical materials to all parties who are seeking to mitigate risk.

The results of our research and interviews point to some obvious gaps that first need to be closed, but the biggest gaps we identified are around the ability to acquire accurate and timely information on current production status, inventory balance levels across all types of inventory states, quality review status and material receipt confirmation, understanding of country of origin.

Executives believe that performance on many supply chain metrics could be improved dramatically through real-time data and multi-enterprise collaboration.  Executives expect 20-40% performance improvement resulting from:

  • Reduced manual data entry by enabling direct enterprise system-to-system data flows
  • Improved agility across supply relationships to respond to variable, global demand.
  • Decreased finished goods, WIP and raw material inventory levels.
  • Performance on out-of-stock and perfect order (on-time, in-full) metrics.

Significant benefits also lie in several additional business areas including reduced production cycle times, reduced working capital levels and increased confidence in product quality. For planners especially during future pandemics or crises, this data can help ascertain the adequacy of domestic supply chain to address US needs and capacity required to be established over the coming years.

To achieve these potential benefits, there is a need for companies to systematically address the underlying root causes for poor supply network performance.  The characteristics of the solution must address the following issues:

  • Connectivity: Creating an integrated supply network connecting companies, facilities and user teams.
  • Data: Gaining access to the key production and supply chain data in a timely and precise fashion is not a simple task.
  • Visibility: Providing overall and detailed visibility across supply relationships and across the production lifecycle from order/forecast to final product delivery
  • Collaboration: Enabling joint value creation and better decision-making by providing an operational environment for multi-enterprise collaboration on shared business processes in the supply chain

Although it is too late to do anything about the current crisis, perhaps future efforts will focus on creating alignment among states and federal resources to develop common interconnected systems.