January 3, 2022
By Marlin Doner, VP, Data Analytics, Marketing, & Product Strategy; Prodigo Solutions
As we conclude 2021, we are once again being reminded that although much has been accomplished over the last year there is still more work to be done to overcome this pandemic. As supply chain disruption continues, we are now seeing the impact of friction in the global supply channels that feed our economy for everything from food products to automotive parts, electronics, and medical supplies. This is different from the shortages we saw early in the pandemic due to unprecedented demand spikes for specific products like Personal Protective Equipment. It’s now impacting the flow of goods across our entire economy.
As we saw in 2020, where supply was restricted, and demand was elevated, prices increased dramatically – that’s basic economic theory being lived out in our current healthcare experience. Although the product shortages we are experiencing now may be for different reasons, the impact in 2022 is going to be upward pressure on our costs that will require us to re-evaluate how we source, purchase and deliver the goods we need. I am optimistic however, that as healthcare supply chain leaders stepped up over the past 18 months to overcome challenges, we are going to see new ideas evolve in 2022 that will help us through this post-pandemic recovery.
So where should we go? As we head into 2022, several strategies are playing out in front of us.
Expanding supply chain’s span of control. Span of control or spend under management, are strategies that bring more categories of spend under supply chain’s visibility and responsibility. Examples include pharma, purchased services, capital equipment, research, and lab supplies. Historically, these non-traditional categories have either been directly managed within the functional departments that consumed the supplies and/or services [e.g., pharma, research, and lab supplies]; or have been too difficult to administer through a traditional sourcing event due to variability of demand [e.g., capital] and the complexity of matching the contract to the invoice amount [e.g., purchased services].
So, what are we seeing? Increasingly, supply chain is being asked to get involved in the procurement processes for these non-traditional spend categories. More financial controls are required now that margins have been eroded due to inflationary cost pressures and lost revenue sources. Leveraging best of breed procurement tools allows these purchase categories to flow through the same work processes as more traditional commodity supplies. Although tools like Prodigo’s Marketplace may not manage the entire spend footprint in each category there are relatively simple steps to take to begin providing more discipline on who can place orders, what vendors are approved to provide services, as well as, gaining more transparency into the requisitions and approvals for purchase commitments in these categories. Within Marketplace, you can design special request forms based on the category of purchase [e.g., capital, service, research, etc.] that defines the data attributes that need to be included in the requisition as well as controls the available vendors for specific categories. As well, you can extend the Marketplace directed buying experience to Mobile devices and shoppers who exist outside the ERP workflow. These orders can then be routed to approved buyers who can review and process the requests through the standard ERP integration interface with Marketplace.
Today, we see approximately 47% of services and capital requests processed through our Marketplace. In 2022, we are investing in additional functionality to increase the scope of request types and product categories controlled through our procurement platform.
Building responsible and sustainable supply channels. This includes both assessment of what is acceptable risk from globalized sourcing; as well as, determining what we consider to be an acceptable environmental footprint for our supply chain. Examples include evaluating inventory thresholds, governance/control over approved sources and products; as well as, considering vendor diversity and the location of manufacturing facilities. We’ve been forced to take a critical look at some of the pre-pandemic strategies that were exposed during the pandemic – lowest cost products from offshore, just in time inventory planning, inconsistent or incomplete vendor credentialing and manufacturing accountability.
So, what do we do? Focus on demand planning that aligns supply with demand by improving vendor transparency into inventory status and demand anomalies. Additionally, you need to implement risk assessment of both vendors and manufacturers where you source supplies. By developing standard scoring criteria you’ll be able to assess the resilience of your supply channels. Metrics such as on time delivery rates, back-order rates, and product substitution rates all point to possible gaps that will hinder your service levels as supply chains come under pressure. Finally, evaluate sustainability across your supply chain. This extends beyond traditional financial measures such as cost to serve and the cost of items to scoring mechanisms for social responsibility such as vendor diversity and the environmental footprint of your supply chain [e.g., carbon footprint, packaging waste, and end of life disposal].
Although quantifying risk and measuring supply chain footprint is difficult there are some relatively easy steps to take to begin driving improvement across all areas of sustainability – financial, socio-economic and environmental. These include evaluation of products, packaging, waste streams, manufacturing sources, etc.; then, directing requesters to purchase the preferred items from sources that have been approved for use. Prodigo is positioned to give real-time decision support for supply chain procurement; using data-driven insights to direct user behavior at the point of service.
Today, Prodigo’s directed buying experience is powered by patented search technology that directs requesters to preferred options – all through a modern e-commerce shopping interface. Requesters want to do the right thing, often they just need access to the information. Prodigo enables transformation of the modern digital supply chain; using data-driven decision support to improve outcomes by controlling the point of service and enforcing compliance across the Procure to Pay lifecycle.
Integrate distributed care networks. Virtual care and homecare have become more important through the pandemic. Consumer preferences for a virtual experience and care delivery models have evolved more in the past 18 months than the past 18 years of the virtual economy. Where e-commerce was once an add-on channel to most bricks and mortar retailers, now the most valuable companies, by market capitalization, are the ones that lead with virtual customer engagement and employ a physical presence where it is needed to enable the flow of the physical goods from manufacturer to consumer. We see this trend evolving now across healthcare.
So, what is next? From the virtual doctor visit to in home provisioning and delivery of care, supply chain will be the key enabler to ensure that the right item, from the right source, at the right price is delivered to the patient when it is needed. This will require supply chain to extend its reach beyond the walls of the hospital and the financial controls of the ERP system.
Prodigo is ready to help you care for your patient, not just in the hospital, but also as they transition care to their home. Prodigo’s Mobile Marketplace provides users with permission-based requisitioning tool that provides them access to prescribed item formularies that are approved for their care. These requests can then be routed to case auditors to review and approve the goods be shipped to the patient. As well, these orders can be integrated into existing revenue cycle work streams to ensure accurate revenue recognition and cost reimbursement.
None of this can be accomplished with status quo technologies and a hope for different results. As you consider your 2022 priorities, you’ll need tools that are purpose-built to address healthcare unique technology and data requirements, as well as, deliver the modern user experience that your supply chain “customers” have come to expect. As a trusted technology partner for many of the leading healthcare providers, Prodigo has developed proven solutions to address today’s healthcare supply chain challenges and will continue to power our customers’ digital supply chain transformation.
About Prodigo Solutions
Prodigo Solutions is a healthcare technology company that improves provider’s financial control and reduces supply chain cost. Prodigo Solutions’ technology was purpose-built for healthcare by supply chain experts to deliver tangible results across a continuum of care. Customers who use our systems purchase more than $20 billion annually for the more than 600 hospitals they operate.