Healthcare’s supply chain challenges aren’t going away—in fact, they’re becoming more unpredictable. Here’s how organizations can respond to ongoing disruption with precision, agility, and resilience.
In this article we discuss:
The pandemic’s worst impacts may have receded into memory, but healthcare’s supply chain shortages are an ongoing challenge. In fact, 89% of procurement leaders say rising costs have impacted the industry over the last year, Deloitte found.
As executives come to terms with the “new normal” of constant disruption, 60% say the supply chain will remain a focus for their organization, according to Deloitte research—a 13 percentage-point increase from the height of the pandemic. The consensus? Disruptions are inevitable, so resilience is key.
Building resilience begins with developing supply chain protection processes. This involves digitizing operations and replacing legacy supply chain systems with modern cloud platforms, as well as embracing AI to improve efficiencies and reduce risk.
Beyond buffering organizations from supply chain disruptions, digital transformation can bring significant additional benefits. According to a study from the Center for Global Enterprise, digital supply chains drive a 50% reduction in supply chain costs, 20% reduction in procurement costs, and a 10% increase in revenue.
OhioHealth, a nonprofit system with 15 hospitals and more than 200 ambulatory sites of care, has been on this transformation journey with Workday for 2 years and has already notched attention-grabbing results. “We are at about 7% [of overall platform spend] in terms of annualized savings, believe it or not,” says OhioHealth’s vice president of supply chain.
OhioHealth’s Workday journey offers three key insights into how healthcare systems can future-ready their supply chains.
Inefficient spreadsheets and disparate systems prevent supply chain executives from effectively partnering across departments. A cloud-based platform for managing sourcing, however, allows leaders to see the entirety of operations from the platform’s transaction data—not just purchasing or spending aggregations. By introducing real-time data that creates a full view of the value stream, a platform approach drives improved purchasing decisions and greater cost control.
At OhioHealth, supply chain leaders are not only leveraging central visibility to identify savings opportunities—they’re also using it to create a cutting-edge algorithm that evaluates risk, and updates purchasing as inventory and needs shift. Among other elements, the algorithm evaluates products’ clinical importance and viable alternatives.
“By having this visibility tied directly to items, we create strategic alignment with our distributor and vendor partners around the risk we see with their product mix,” says OhioHealth’s director of supply chain optimization. Then, based on this joint understanding, “we are creating a stocking criteria that searches inventory and automatically triggers a request to our vendors to create a new PO, should the need arise.”
With modernized supply chains, health systems see better automation, improved efficiency, and more stakeholder engagement that drive savings and ensure spending and inventory control, says Keith Lohkamp, Workday senior director of healthcare industry strategy. To augment this value proposition, organizations need to look to platforms that already encompass AI and machine learning (ML).
If AI and ML are not at the core of their platforms, healthcare providers won’t be able to keep up, let alone get ahead. As an example, Mutaz Shegewi, research director at IDC Health Insights, predicts that by the end of 2027, 1 out of 5 large hospitals will rely on AI to improve everything from costs and operations to care coordination.
Even as AI evolves at a head-spinning pace, strong use cases already exist. A cloud platform that offers a true end-to-end solution should be able to use AI to automate procurement processes and check transactions and requisition status.
“While there’s still many use cases that are being theorized or identified, the capability of having AI within the platform itself really helps us start to identify manual processes, redundancies, and where we might have efficiency plays,” says OhioHealth’s director of supply chain optimization.
By investing in a fully integrated platform, OhioHealth elevated a process- and technology-focused supply chain strategy that reduces “the individual heroics required to solve problems that are becoming commonplace in our industry,” says the director of supply chain optimization.
Creating a single source of truth jump-starts a virtuous cycle of improved performance that ultimately elevates the supply chain function. It begins with increased insight into supplier performance, better substitution management, and overall excellence at supply chain blocking and tackling that yields major cost savings.
By investing in a fully integrated platform, OhioHealth elevated a process- and technology-focused supply chain strategy that reduces “the individual heroics required to solve problems that are becoming commonplace in our industry.”
At OhioHealth, adopting a platform approach created such significant savings that executives across the organization took note. Physician leaders were able to see real-time supply chain data and make better decisions that allowed clinical departments to become better stewards of resources. From there, opportunities have continued to grow.
“In fact, we’ve done such a good job managing supply chain information into one source of truth, including in coordination with our clinical enterprise, that they’ve deemed supply chain the owner of non-labor spend in our company,” says the vice president of supply chain. “It allows us to put new opportunities in front of our operators that we’ve never seen before.”
Workday solutions offer the intelligent data core and AI capabilities required to elevate today’s healthcare supply chain operations. From flexible demand and supply planning in Workday Adaptive Planning to the ability of Workday Strategic Sourcing to provide visibility throughout the entire process, Workday can help healthcare organizations build a comprehensive source-to-pay solution that includes source-to-contract, procure-to-pay, and stock-to-replenish.
In turn, this creates better automation, improved efficiency, more stakeholder engagement, and increased inventory and cost control—all the elements of not just a resilient and agile supply chain, but also of a resilient and agile organization.
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