Byon June 22, 2020
The unprecedented demand for health and safety supplies in response to COVID-19 caused disruptions throughout the healthcare supply chain. Supply shortages and unpredictable fulfillment and delivery meant many purchasing teams had to identify new sources of supply to quickly outfit front line workers.
The need for agile procurement tactics and new strategies that best balance value and cost will likely continue as the public health crisis endures. In order to address supply risks with fewer resources, healthcare procurement leaders can reconsider strategic sourcing, invest in digital solutions that drive efficiencies, and leverage data to optimize costs and simplify buying.
Plan for the unplanned with simplified sourcing
Reliance on traditional healthcare supply chains during the pandemic meant many organizations lacked access to essential supplies. Supply sources often weren’t as agile or responsive as the industry needed them to be. When distributors, GPOs, etc. – what Deloitte calls the “middle-men” involved in health care supply chain related transactions – could not meet demand, accountability shifted to providers (hospitals, health systems, etc.). Many of these procurement professionals did not have the necessary relationships with alternative suppliers when their endorsed suppliers failed to meet demand. An inability to transition to or even identify alternative suppliers left many scrambling.
“It’s been really challenging to get the appropriate personal protective equipment (PPE) for our staff." said Dara Koppelman, Chief Nursing Officer for Mary’s Center, a nonprofit healthcare and social services provider in Washington, D.C.
With an online store like Amazon Business, providers can consolidate alternate and non-contract spend through a single purchasing channel, saving time when responding to critical care needs. In response to the pandemic, we leveraged our global supplier network and current sellers to source more than 100 million products for healthcare workers and those on the front lines. Supplies have been sent to over half of the top-100 hospital systems in the country.
"While it has been difficult to get these supplies quickly with other vendors, through Amazon Business' COVID-19 Supplies store, we’re getting what we need quickly, such as N95 respirators, surgical masks, gowns, face shields, gloves, and even sanitizer and disinfectant wipes. The supplies we are getting from Amazon Business are high quality, and at reasonable prices,” Koppelman continued.
Digital transformation drives efficiencies
Some healthcare organizations, already beleaguered from the pandemic, now also face budget cuts. At EvergreenHealth Medical Center, the first US hospital to identify a COVID-19 outbreak, expected revenue is down $20 million. Unplanned spending on personal protective equipment (PPE) and related costs at the center totals more than $3 million. UW Medicine, also at the forefront of the national coronavirus response, faces a $500 million shortfall with looming staff cuts and furloughs.
When asked to do more with less, increasing operational efficiencies becomes even more important. The need for cost optimization and agility has focused attention on the need for simplified, smart procurement. Digitizing your supply chain can’t wait for another public health crisis. Automating processes such as product identification and workflow approvals can improve inefficient, manual processes, allowing buyers to focus on more high-value work.
“I have six requesters who order an absolute ton of low-dollar and low-risk items—many under $10,” says James LeRoy, Director of Strategic Sourcing and Value Analysis at Seattle Children’s Hospital. “It would have caused my team an incredible amount of extra work to circle back and approve each transaction…I love that Amazon Business eases the purchasing process for our staff so they can focus on their value-add work.”
Knowledge is power
When leaders are asked to rapidly rethink their supply strategy and identify cost savings opportunities, data, unlocked from digital transformation, can empower even the most risk averse. For many, this crisis has spotlighted a fractured and incomplete data landscape, which continues to prevent some purchasing teams from making clear, quick decisions. Data and insights may help.
Non-contract and alternate buying behavior is unpredictable in general; at worst, it’s unnoticed or unbudgeted. As non-contract spend increases, so does the need for alternate suppliers. By moving addressable spend to a multi-seller store and endorsing a single, strategic alternate supply partner, you can gain insights into your organization’s purchasing patterns. One Amazon Business customer, a senior living organization, has used such insights to begin quantifying their COVID-19 response purchases, reimbursable under the terms of the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
A single channel of data can help you identify opportunities for reducing costs and optimizing spend. With tools like Amazon Business’ analytics and custom order fields, for example, you can quickly drill into insights you might not see with traditional reporting methods.
“There is so much we will need to tackle in the days, weeks, and months ahead – for our patients and their families, for our community and for our care providers and other critical staff who are working so tirelessly to stem the tide,” said Julie S. Butler, Vice President, Children’s Hospital Foundation. “Amazon Business’ support is a bright light in this time of crisis.”
We’re here to help you prosper through uncertainty by supporting agile procurement strategies. Access more resources to help you optimize costs, gain control, and adapt procurement at scale as you define your new normal.