Building a system-wide approach to supply chain operations requires data, technology, and good vendor relationships.
Motz Feinberg started his new vice president of supply chain role at Cedars-Sinai at an interesting time: June 2020, a few months into the pandemic. He not only had to jump in during the PPE crisis, but also as Cedars-Sinai was evolving as a larger, more connected health system.
"I was brought on to build out the health system-wide capability," Feinberg says, overseeing the end-to-end supply chain for four primary hospitals with more than 2,000 beds, and a medical network of more than 200 physician offices and 14 ambulatory surgery centers. Feinberg's team is charged with strategic sourcing to deliver patient care to all facilities and units, responsible for analytics, contracting, analysis, logistics, and warehousing.
While he came from Kaiser Permanente, Feinberg's prior experience was outside of healthcare, managing supply chains in industries ranging from aerospace to confections. "The supply chain in healthcare is probably where supply chain was in other industries 20 years ago," he says. "It hasn't matured at the same rate because there wasn't a need to."
The pandemic provided that need, and health systems nationwide pivoted quickly to meet the demand. "Across healthcare, we're all here for the same mission: to ensure patient care," he says. To keep eyes on the mission, Feinberg shares an aerospace analogy with staff: aircraft on the ground (AOG). When a plane is grounded and needs repair, it can't make its flight schedule or production delivery date until that repair is completed. The occasional missing parts cause a delay, and aerospace staff scramble to make sure that AOG is taken care of, he says.
In the hospital, the patient is the AOG. Missing supplies mean delayed care, and the need for these supplies is daily, not occasional. "We need to make sure we are doing everything to take care of them so they are not in the hospital longer than they need to," he says.
The scramble to ensure available supplies creates a different dynamic in healthcare, he says, one allowing the organization to innovate quickly. With supply chain problems "in other industries, the only thing you risk is revenue loss," while in healthcare the patient is at risk.
Looking at the big picture
The Cedars-Sinai supply chain's top priority is to "feed the beast," Feinberg says. If the hospital needs are not met, the supply chain team is not doing its job. "This whole process we developed, and the supporting infrastructure, data, and communications paths, they're all about ensuring we're feeding the beast."
He relies on guiding principles for his health system's supply chain transformation. That includes putting service at the forefront of every team member action, including emails and phone calls. It means leveraging data-driven decisions, and developing teams that can use these technologies and tools. The team should always deliver results and add value from a supply chain perspective. "It's not always about saving dollars," especially in this pandemic age, he says. It's now also about supply assurance. Lastly, the goal is to assure that supply across the entire medical network. This addresses the strategic goal of leveraging the system's scale and becoming a unified health system from a supply chain perspective.
Like many health systems, early in the pandemic, the media narrative focused on PPE, which only included a few dozen items. "The reality is there were over 200 different supplies [to treat COVID-19 patients] we had to secure early on that were not just masks," he says. The department is currently managing 20,000 to 30,000 individual items to support the health system, which is difficult in the currently challenging global supply chain.
Just before Feinberg arrived, Cedars-Sinai began reassessing and changing how they are using their logistics network and warehousing capabilities. They began transitioning from a bulk distribution model to a low unit of measurement (LUM) model right as the pandemic hit. This allowed the them to initially turn their warehouses into PPE storage. Some of those stockpiles remain, as California passed a law regulating how much PPE a hospital must maintain.
The LUM approach shifts inventory risk to the distributor, but it also means the health system lacks control over this inventory. Cedars-Sinai began sharing the warehousing space as a system-wide resource for back-up supplies. "It's not a hybrid [inventory] model," Feinberg notes, "but it's for all the high-risk items we're identifying." Compared to pre-COVID, the volume of these high-risk items has quadrupled, but the warehousing allows them to mitigate the LUM model risk by retaining their own inventory back-up. "It became a way for us to proactively manage the global supply challenges that are still with us."
Technology and visibility for inventory planning
During the pandemic, the Cedars-Sinai supply chain department developed several predictive models to proactively identify potential at-risk supplies. This allows them to source products sooner, to ensure patient care. "That model helped us maintain fill rate levels in partnership with our key suppliers," Feinberg says. If items are potentially unavailable, the staff can look elsewhere in their network or with other vendors. The staff looks at the signals daily, but built the algorithm rules so individuals can look at a few hundred of the most important supplies, rather than thousands of items daily. "That's still four to five times more than we were dealing with before the global supply chain challenges came to the forefront," in summer 2021, he says. "Before that, things were manageable with fairly simple tools."
Feinberg's department developed dynamic interactive dashboards to show spending across categories, departments, and vendors. This provides a better understanding to source things differently, and shows potential opportunities to consolidate spending across the health system. The technology also includes graphical tools showing fill rates and lead times. This can be used across all vendors to automatically show which supplies may have refill issues, so the staff doesn't have to scramble.
In addition, Cedars-Sinai adopted a concept common in retail: collaborative planning, forecasting and replenishment (CPFR). "That process is about taking an even longer view so you are helping your suppliers and distributors to better plan their inventories," he says. In general, the health system maintains little inventory in the care facilities. Some systems have their own warehousing, but they do not cover everything needed. Since distributors carry most of the inventory, it's vital to have accurate processes and data sharing to help the vendors plan, so they can better serve the health system.
While it's hard to find many positive things about the pandemic, as a supply chain professional Feinberg is encouraged that people now know what the role does, and they are listening. "Historically supply chain has not been and never will be at the forefront of healthcare," he says, "but it's gotten a lot more attention."
Deborah Abrams Kaplan is a contributing writer for HealthLeaders.
Even when using a low unit of measure model, it's important to maintain a backstock of critical items.
Missing supplies means delayed patient care; plan ahead with predictive analytics.
The supply chain adds value not just by saving money, but by assuring supply.
Borrowing supply chain concepts from other industries can apply to healthcare as well.