Managing the Shadow Supply Chain

If you have been in supply chain long enough, you probably would identify with this: It’s 5 p.m. on Friday, you are cleaning up your email, ensuring you have everything from the week covered. You might be allowing yourself to think about which games to watch this weekend. Then the phone rings. You look at it for a moment, a little tempted not to answer, but you know you will because you care, even if it is likely going to be something that will keep you at work awhile. Someone needs a supply for a case on Monday morning or over the weekend.

Welcome to the “Supply Chain Witching Hour.”

No matter how tight your shop may be or how good your metrics, usage reports and people are, you are going to get that Friday call. That is the nature of what we do, because what we do is not 100% predictable and never will be. Anyone who is looking for the same thing to happen the same way every day need not apply. However, we can reduce these events and the overall cost of doing business by using them as opportunities to improve. We need to sit down and ask, “Why did this happen?” and “How can we prevent its recurrence?” This is not a blame game but a means to optimize systems and processes, and, most importantly, engage with our customers. This can offer opportunities to change the role of the supply chain team and the role of supply chain customers.

In essence, this is about addressing what I call the “Shadow Supply Chain.” This is a set of individuals who perform supply chain work but do not report to supply chain leadership or have the same expertise or experience of supply chain professionals. They are focused more on the “want” than the “need”; costs tend to be a secondary concern. For them, inventory/utilization management is focused on “not running out.” Their myopic goals are based on site, department or individual physician needs.

In many cases, the Shadow Supply Chain is often responsible for some of the highest-spend areas. Just consider what is going on in your OR, radiology and cath/electrophysiology study departments. Supply chain may deliver the supplies, but who is managing the day-to-day inventory? More importantly, who is managing the day-to-day relationship and device requests of the physicians, and who is negotiating purchased services contracts? To be clear, this is not the same as value analysis or physician committees. This is day-to-day engagement within the department, developing strong bonds with the physicians and managing the activities of the vendors. Seems obvious, right? Except we first have to ask ourselves why these roles exist within these departments? What brought them into being and keeps them rooted in place?

At the core, the answer has to do with trust. Does your customer trust you to manage the devices that most affect their relationship with the physicians? Do the physicians trust that you will manage to their needs? Do you, the department leaders and physicians see supply chain as part of the team? In many cases this trust must be earned over time and with a proven track record. Supply chain must demonstrate that it can manage inventories more effectively, help control costs, and work with physicians and the vendor community to help facilitate the needs of patient care.

Although some of this can be done with planning, projections and presentations, a great opportunity to engage and change hearts and minds is when that phone rings and a crisis happens. Questions start being asked, such as why a needed supply is not available, why that problem occurs frequently and why a department is over budget.

Breaking down the event after the fact, opens opportunities to show how supply chain expertise can serve as internal consultants to address and prevent these kinds of issues. In addition, I believe that managing the Shadow Supply Chain will:

• Free clinicians (who often do this work) to address patient care
• Provide a single point of direction/guidance
• Enhance customer service/responsiveness
• Reduce variation across the system
• Reduce introduction of new products
• Improve quality
• Reduce cost of goods, equipment and services
• Reduce risk
• Reduce system-wide resources needed to manage supplies

Some who read this will say they have already gained control of these areas. If so, congratulations! However, have supply chain resources been completely embedded in departments or are they just managing the stuff? Has the staff become victims of Stockholm Syndrome and begun to feel that keeping the doctors happy at any cost is the priority? Managing these areas is not just about lean inventories and contract compliance. It is about developing a daily rigor around managing the true needs of the department instead of managing the “wants.” At times this means helping to expedite a new request that makes sense, in lieu of keeping a new product out. It also means developing a relationship with and the respect of the staff and physicians in these areas.

How can using supply chain principles result in fewer resources and accomplish better outcomes? Begin with the high-impact areas that, if better managed, could make a real impact for the organization. If you try to replace the clerk on 5N who orders office supplies, you are likely to be successful but unlikely to manage real change. If two different resources are managing the OR and cath lab inventories, can you do the same thing with one set of resources, while at the same time managing physician requests, standardization, contract compliance and vendor activities? Typically one trained supply chain talent can replace several “shadow” resources, recognizing that some shadow resource work may be spread across several other functions. Regardless, departments will be relieved of work and should be asked to fund some of any additional costs associated with any added supply chain resources needed, which should be less than current costs.

In the end, as supply chain engages in a wider and deeper way, it raises its value proposition, enabling even more opportunities to shine for the organizations it serves.

Joe Colonna is the Vice President of Supply Chain at Piedmont Healthcare, Atlanta.