Supply Chain Trends and Challenges. Provider & Supplier Perspectives.
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1 Supply Chain Trends and Challenges Provider & Supplier Perspectives
2 90+ Industry Partners Established in 1986 as a non-profit research center Our Partners: Arizona State University and Institute for Supply Management Our mission is to advance the profession of supply management through advanced research and unbiased benchmarking We have no hidden agendas: our meeting environment is vendor-free and consultant-free to encourage open, candid dialogue of experiences and ideas HSRC-CAPS RESEARCH Founded 2004 events RESEARCH Cross-Industry Unbiased Academic Rigor Thought-provoking Yet Practical MEMBERS 90+ A strong NETWORK of supply management professionals
3 15% of CAPS Research with Health Focused Members 3M American Red Cross Cardinal Cook Medical County of Santa Clara FedEx Honor Health HTPG Medtronic IBM Johnson & Johnson MedSpeed Siemens UnitedHealth Group
4 Organization for the Presentation
5 CAPS RESEARCH STUDY BACKGROUND AND METHODOLOGY
6 It Is not a supply chain It is a Network!
7 Study Background: What we had observed prior to the study regarding the network Collaboration with partners being reconsidered Mergers and acquisitions are ongoing and problematic Integration on the minds of supply chain consultants and regulators Growing recognition of the strategic nature of health sector supply chain/network but except for the star companies, progress is very slow PPI Management UDI application very uneven Great skepticism beyond true believers Analytics, big data, cloud computing other IT seen as a solution. Uncertainty about what analytics are needed. 7
8 What we had observed prior to the study Technological advances such as 3D printing was appearing frequently Threat of counterfeiting and cybersecurity in the supply chain Huge pressures on SC to be both strategic and tactical Pressure SC to react to and buffer from uncertainties in the market 8
9 A Plethora of SC Supplier Efforts Becoming More Demand Driven Pull-based Supply Chain Transformations are Hard Long Global Supply Chains Add Complications Postponement Finally Taming the Bullwhip Effect? Acquire POS data and incorporate into Demand Planning S&OP and a Single View of Demand Sharing Forecast data broadly: internal and external More flexible production lines/reduced set up Postponement define Visibility goals Visibility for global movements - Exception notification Intelligent alerts Real-Time Dashboards Beyond just outsourcing/ offshoring Asset reduction Move from fixed to variable cost Reduction in corporate value add VMI 9
10 Big Issues Facing Suppliers 10
11 Drivers have changed Provider need to deal with the episode of care & cost Distributor need to deal with the full ecosystem distribution needs GPO need to buffer against the coming wave of electronic exchanges and stakeholder expectations Supplier challenged to meet goals of both economic and clinical customers Source: KPMG
12 A two pronged strategy by providers, distributors and suppliers RECONSIDERATION OF INSOURCE VS OUTSOURCE OPTIONS CONSOLIDATE IMPACT OF RATIONALIZATION OF CARE STANDARDIZATION MOVE CARE TO HOME HOSPITAL > ACUITY>SKUs DISINTERMEDIATE 12
13 CAPS Research Trends Study Respondent Population Group Purchasing Organization (GPO), 7% Other, 7% Types of Organizations Represented Health care products and/or services Health care products distributor, 1% IT hardware, services organization, 1% 115 Respondents 91% Health care provider (hospital/idn), 63% Grateful to AHRMM for support in reaching respondents. Of respondents consider themselves to be supply management/procurement professionals
14 Requested Respondent look at own supply chain SUPPLIER S OWN SUPPLY CHAIN - Upstream - tier partners - Networks value & risk - Downstream to customer PROVIDER S OWN SUPPLY CHAIN - Downstream - To end-user - Upstream - Trading partner relationships - Emerging technology 14
15 Predetermined Areas for inquiry Economic Technology Management Supplier Relationship Management Integration Value-Based Purchasing Organization Healthcare Reform 15
16 Management trend and challenge items Entry Level SC Talent Global Sourcing Growth of UDI M&A Impact on SC Purchasing Services Succession Planning Supplier Rationalization SC Role in Managing Counterfeit Products Utilization Management SC Role with Patient Wearable Technologies Use of Data Analytics Use of Big Data Use of SC Performance Benchmarks 16
17 Organization & Reform Items Organization Trends Physician Leadership in SC Management Repositioning SC as a Strategic Function Reform Trends Ongoing Health Reform Potential Change/Repeal of the ACA 17
18 Relationship and Value-Based Purchasing Items Supplier Relationship Management Building Trust with SC Partners Changing Role of Supplier Reps Value-Based Purchasing Focusing on Triple Aim Goals Don t fool yourself Improving Data Transparency Across the SC Managing the Cost of Supply SC s Role Across the Episode of Care. 18
19 FINDINGS 19
20 Top and bottom trends (providers & suppliers) The Top Trends 5.73 Expectations for Savings from Supply Chain Performance Managing the Cost of Supply 5.67 The Bottom Trends SC Role in Managing Counterfeit Products 3.51 Involvement of Payors in Supply Chain Decisions Use of Data Analytics Impact of 3-D Printing on Supply Chain
21 . Prevalent Economic items: Important by 80% of either supplier or provider PREVALENT ECONOMIC ITEMS* PERCENT PROVIDER FOCUS PERCENT SUPPLIER FOCUS Expectations for Savings from SC Performance 96% 96% Managing the costs of supplies
22 . Prevalent Integration Items PREVALENT INTEGRATION ITEMS* PERCENT PROVIDER FOCUS PERCENT SUPPLIER FOCUS Achieving Information Technology Integration Integration of SC Throughout the Organization Managing Physician Preferences Items Physician Alignment SC Goals Integrating Sc Data with Clinical Data
23 . Prevalent Management, Organization and Channel Partner Trends. PREVALENT MANAGEMENT, ORGANIZATION AND CHANNEL PARTNER ITEMS* PERCENT PROVIDER FOCUS PERCENT SUPPLIER FOCUS Use of Data Analytics Use of SC Performance Benchmarks Repositioning SC as a Strategic function Building Trust with Supply Chain Partners *A prevalent item is one scored as important or very important by at least 80% of either supplier or provider respondents 23
24 . Prevalent Value-Based Purchasing Items. PREVALENT ITEMS PERCENT PROVIDER FOCUS PERCENT SUPPLIER FOCUS Building Trust with Supply Chain Partners Improving Data Transparency Across the SC Managing the Cost of Supply
25 Top and Bottom Rated Items Suppliers Top Items Building Trust With SC Partners Expectations For Savings Use Of Data Analytics Bottom Items SC Role In Managing Counterfeit Items Involvement Of Payors In SC Decisions Impact Of 3D Printing Providers Top Items Expectations For Savings From SC Managing The Cost Of Supplies Use Of Data Analytics Bottom Items SC Role in Managing Counterfeit Items Global Sourcing Impact of 3D Printing 25
26 What Is Not Important Or Of Uncertain Importance SUPPLIERS Impact of 3D printing on SC 8% NA 20% DK Focusing of Triple Aim Goals 8% NA - 12% DK Physician Leadership in SC Mgt 4% NA 12% DK PROVIDERS Impact of 3D printing on SC 3% NA 16% DK Supply Base Reduction 0% NA 14% DK Change/Repeal of the ACA 3% NA 7% DK 26
27 27
28 Clinical Integration as a Management Theme Integration of Supply Chain throughout the Organization Managing Physician Preference Items (PPI) Physician Alignment with Supply Chain Goals Integrating Supply Chain Data and Clinical Data 30
29 Externalities and the unknown as management themes Global Sourcing Growth of Consolidated Service Centers Mergers and Acquisition (M&A) Impact on Supply Chain Performance Ongoing reform Repeal of the ACA 31
30 Persistence is Not Reflecting Progress Repositioning SC Function The Persistence of Classic Issues Supply Chain Performance Metrics Managing Cost 32
31 Integration Items Hang Together Managing Physician Preference Items Integrating Supply Chain Data and Clinical Data Multiple Dimensions to Integration Integration of Supply Chain throughout the Organization Physician Alignment with SC Goals 33
32 Industry Evolution items Hang Together Global Sourcing Mergers & Acquisitions Industry Evolution & Externalities Growth of Consolidated Service Centers 34
33 SC Is Inward Looking Ongoing Healthcare Reforms Use of Big Data Little attribution to Importance to the Unknown Change/Repeal of the Affordable Care Act 35
34 ARE WE DIFFERENT FROM OTHER INDUSTRIES? 36
35 Health is different on a number of key metrics 37
36 SCM Managers deal to ensure that clients have exactly what they need and that they can afford it A delicate balancing act Finding and sourcing new and better products Reducing unnecessary inventory Ensuring continuous product supply Paying suppliers the right amount Making it easy to access products Solving product availability problems 38
37 SC Role Orchestration to Connect the unconnected Big Data SC Repositioning SC Orchestration Role Metrics Managing Costs 39
38 How to move off the cost issue? 40
39 The Challenge Cognitive Transactional POs 3 Bids and a Buy Category Management Cross Org. Integration Predictive
40 To get there: Consolidate PO activity Outsource tactical activities to make room for strategic Improve integration within the organization Invest in new roles big data Analysts & data scientists artificial intelligence 42
41 Need to make the cloud work for us 43
42 44
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