What is Healthcare Supply Chain Resilience

Supply chain disruptions are an unavoidable reality for healthcare organizations, but recent challenges have underscored the importance of resilience more than ever. Natural disasters, FDA holds on critical products, and manufacturing issues with essential medical supplies have left many hospitals scrambling. However, healthcare systems that invested in consolidated service centers (CSC) have fared much better, maintaining a steady flow of necessary supplies even as others faced shortages.

For hospitals and healthcare providers, supply chain resilience isn't just about managing costs—it's critical to patient outcomes. Modernizing supply chain infrastructure, adopting advanced technologies, and rethinking procurement strategies are essential steps toward ensuring continuous care, regardless of external disruptions. This article will explore the key dimensions of supply chain resilience, from the strategic importance of centralized facilities to the role of technology and collaboration in minimizing risks.

Let's delve into best practices that can help healthcare organizations build more resilient supply chains, ensuring they can meet the demands of patient care no matter what comes their way.

What is supply chain resilience?

A resilient supply chain can mitigate most disruptions and minimize those that do occur. A lack of supply chain resiliency has a wide-ranging effect, not only on supply chain sections, but on the overall business, threatening the health of the organization itself.

Supply chain disruptions take several forms. Pandemics, natural disasters, and geopolitical tensions spring readily to mind, but other threats lurk in the form of unanticipated market trends, new competitive forces, and changes in customer buying behavior. The rigid “resist and recover” model must expand to include modern supply chain technologies and processes that allow supply chain leaders to accurately forecast, anticipate, and respond speedily to both risk and opportunity.

For example, when a tornado went through Joplin, MO and devasted the city and destroyed a hospital, the hospital organization was able to load and roll trucks within three hours from its CSC to set up a temporary hospital to serve and treat those with injuries. There are similar situations in the aftermath of Hurricane Helene in the southeast U.S.

Creating resilience is a multi-faceted approach.

Technology streamlines processes for optimization with flexibility

Opaque supply chains are over. Today’s supply chain management platforms offer complete transparency, and copious data for decision making to enable organizations to anticipate potential issues proactively. Trade policies and tariffs, resource protectionism, sustainability policies, labor actions, and armed conflicts are all current and rising threats, says S&P Global. Supply chain resilience isn’t just nice to have. It’s an absolute necessity.

So, how does technology streamline processes?

Automation drives efficiency. Humans are relieved of time-consuming and error-prone tasks that new technologies perform accurately and effortlessly. For example, warehouse automation can use data to issue purchase orders, populate invoices, and send order confirmations and tracking information to customers. Automation identifies cost-effective routes and carriers for shipments and facilitate inventory replenishment.

Advanced analytics power data-driven decisions. For supply chains, as with other businesses, data is the lifeblood. Data is available at every point of your complex supply chain. Tech-powered algorithms and predictive methods enable quick decisions to get ahead of disruptions. These insights, for example, can make the difference between proactively scaling inventory to meet a period of high demand or losing that business to competitors.

Collect data with IoT devices. IoT (Internet of Things) devices have become indispensable for managing a resilient supply chain. Sensors can be used in warehouses, shipping containers, and finished products to transmit usable data, such as the location and condition of goods, weather, traffic, etc. All can be monitored in real time so problems can be swiftly mitigated.

Strategies to build a resilient supply chain

You need a resilient supply chain. How do you achieve it? These four areas are a great start:

• Create visibility, which can only be achieved with a supply chain management platform
• Utilize scenario planning. By running scenarios, you’ll be able to see and evaluate options by adding and removing constraints so you can understand the cost, risk, and outcomes to guide decision-making. You get a high-level, future-facing view that offers more relevant insights than historical data so that you can drive your business forward
• Stress test. Using a digital replica of your supply chain, a stress test is data-driven to quantify your supply chain’s ability to absorb, adapt to, and recover from a disruption. You get invaluable visibility into the impacts of disruptions, and quickly identify how to recover and survive
• Supplier diversification. Relying on a network of suppliers instead of a single source is essential for supply chain resilience and agility. You can quickly switch strategies and adjust when the unexpected happens. A 2022 Ernst and Young Study found that 62% of industrial companies have significantly changed their supplier base since 2020 to become more resilient

By employing digital twins, artificial intelligence, and real-time data in manufacturing, you can anticipate issues and reduce production downtime.

Collaboration is crucial

Examining and fine-tuning your supplier base is critical for supply chain resilience. If you want true supply chain excellence and optimization, you also must focus on collaboration. Collaboration improves operational efficiency and informs decisions around inventory, production, and distribution. In the modern supply chain, collaboration means sharing data in real-time and clear communication every step of the way.

Collaboration enables joint problem-solving and accountability and improves forecasting to bring resilience. A great example is a large vehicle manufacturer, which gives suppliers clearly defined targets and performance metrics built into contracts, holding vendors responsible for continuous improvement in quality, cost, and delivery.

Overcome challenges to resilience strategy implementation

Change can be difficult, especially if there is resistance. This means leadership must be all-in on supply chain resilience strategy implementation. Buy-in must come from all company levels so everyone understands objectives and goals and the need for change.

Other barriers arise from the need to redesign organizational structure, including people resistant to change and faulty communication processes. To overcome this, communicate openly and often, and highlight the benefits. Empower stakeholders, including suppliers. Enhance engagement by describing mutual goals – quality improvement, cost reduction, improved efficiency, and mitigating risks.

It's vital that everyone is involved in the process and understands expectations. Leverage the expertise of both your team and your suppliers to create meaningful metrics and provide support and feedback to further the cause of continuous improvement.

Case Study: Ryder and BJC HealthCare

Building a solution from the ground up begins with listening to and understanding the needs of the organization. Ryder customized an end-to-end supply chain and transportation solution for BJC Healthcare, an organization that serves 14 facilities and more than 3,200 beds, Ryder began by finding a centralized location for the warehouse to serve the entire network. The more than 400,000 square foot, ambient temperature facility was designed from the ground up and includes 1.3 miles of conveyors, 44 dock doors, and houses 17,000 SKUs. The warehouse is a central supply center that includes medical devices, pharmaceuticals, and day-today supplies, and includes automation and proprietary technology platforms.

Ryder’s fully integrated solution includes employees from logistics engineers and operators to warehouse workers hired, trained, and managed by Ryder. Ryder also manages outbound transportation through our Ryder Dedicated Transportation Solution. This includes customized vehicles ranging from tractor-trailers to box trucks, and drivers hired and trained by Ryder specifically for the healthcare organization.

The solution is designed around fully engineered sequenced loads that are powered by Ryder’s warehouse management system (WMS). Orders are picked by low unit of measure (LUM) and put into totes that are destined to a par location—stock rooms within the hospital system. Through the WMS, each tote is labeled specifically where it is placed on a pallet, and where a pallet is placed on the truck.

For example, supplies needed for surgeries are on the top of a pallet located at the tail of the trailer. This allows workers who are unloading pallets at the hospital to place those more critical items on the carts for delivery first, instead of items that are not needed immediately.

Preparing for the supply chain of the future.

Resilience, as defined by the Cambridge English Dictionary, is “the ability to be happy, successful, etc., again after something difficult or bad has happened.” It’s further defined as the ability for something to return to its usual shape after being bent, stretched, or pressed. All of this requires flexibility, adaptability, and strength.

The resilient supply chain is one of continuous improvement. In this new age of supply chain operations, leaders should focus on the following priorities, per McKinsey. Number one is resilience. Second is agility, and third is sustainability. No one has a crystal ball, and anything can happen, so leaders must keep their eye on the ball and be ready for anything by developing a sound resiliency strategy.