Reshape Recap: Healthcare's Tough Supply Chain Lessons

At the first in-person Amazon Business Reshape event, Stephanie Lang, Director of Commercial and Healthcare spoke with Régine Villain, Chief Supply Chain Officer at Ochsner Health System maintaining a resilient supply chain in the midst of multiple health crises.

In a keynote session titled Why Being Resilient Is Not Enough: Healthcare’s Tough Supply Chain Lessons, Régine spoke about her experience leading supply and procurement efforts at Ochsner Health System through multiple crises, including Hurricane Ida in 2021 — the second most damaging storm in U.S. history — and throughout the COVID-19 pandemic. She further shared her approach to supply chain resilience, healthcare's rising adoption of e-commerce, and her vision for the future of healthcare business buying.

Image: Hurricane Ida caused over 100 fatalities and resulted in $75.25 billion in damage. 

Amazon Business: “The Great Aggregator”

The wreckage from Hurricane Ida in Louisiana decimated supply chain systems throughout the state. In the aftermath of the storm, the staff at Ochsner not only lost access to their regular shipments of supplies and equipment, but they also struggled to source a wide variety of supplies to support aid and recovery efforts within their local community. As the largest community health provider in the state, the pressure was on the Ochsner Health System team to continue providing excellent care while aiding in community recovery and outreach.

Unwilling to place additional demands on local suppliers like Walmart and Target — where members of their community were also turning for their individual recovery supplies —Régine and the Ochsner team turned to Amazon Business.

"We knew of Amazon Business as both the 'great aggregator' and logistics leader," said Régine. Faced with the scale and immediacy of their need, "I made an emergency call for help." At the time, Amazon Business was still learning how to do bulk deliveries, but that did not stop us from working with multiple suppliers to source a wide variety of items that were not available through normal channels. "In all," said Régine, "we were successful at getting the wide range of supplies on truckloads to the locations where we needed it."

Image: Ochsner Health System worked with Amazon Business to provide relief supplies for their local community

From Just-In-Time to Resilience

While Hurricane Ida was a dramatic, paradigm-altering event, it was not the first time Régine and other healthcare procurement teams had turned to Amazon Business in a time of need. The COVID pandemic was another extreme event that saw health systems turning to e-commerce for core operational supplies when traditional supply chains broke.

"Before COVID, the primary objective was to have supplies 'just in time,'" explained Régine. This meant reducing complexity by relying on a single-source supplier for the lowest possible costs. The COVID-19 crisis soon exposed the limitations of that model. "Shortages of PPE and ventilators made it very public and personal," she recalled. "It’s scary for people to realize the front-line responders or those from which they need care don’t have the right supplies."

Régine explained that the healthcare industry's commitment to single- or dual-source awards to vendors led to a paucity of competition. This created a huge supply risk when things went wrong, leading to shortages of critical supplies as back orders became commonplace.

"For healthcare, back orders literally mean life and death," explained Régine. "Amazon Business was a critical resource during the pandemic for back ordered medical supplies. Healthcare providers were talking to all the typical distributors; their teams were calling manufacturers directly and still having limited to no success." 

Embracing E-Commerce

This breakdown of traditional supply channels is why Régine is shifting more and more of her buying strategy toward e-commerce, specifically through Amazon Business. "Amazon Business is leading that frontier which will give many industries more sourcing options for supply resiliency, along with increasing speed to market. The transparency of customer feedback ratings and detailed page information helps with first-time buying."

This shift is part of larger industry trends toward e-commerce as a source of supply chain resilience. In the 2022 State of Business Procurement Report, we found that by the end of 2022, 68% of buyers plan to make at least 40% of their purchases online — up from 56% in 2021. While most business are comfortable with e-commerce for non-contracted spend, continuing to shift more contracted spend to the new generation of e-commerce buying will help industries evolve to protect against back orders, unblock inflexible supplier transitions, and remove burdensome competitive-bid processes.

"E-commerce is helping us find the balance between supply chain efficiency and multiple sources for resilience," said Régine. Indeed, in 2021 alone, 95,000 healthcare organizations purchased medical supplies Amazon Business. That does not mean the shift will happen immediately, however. "[T]here are requirements for these purchases," she cautioned, "and it’s important that we work with Amazon Business to be clear on those requirements. This is everything from the right supply specifications, price, delivery needs, back-end support, and so forth."

The Future of Healthcare Business Buying

In addition to increasing their use of Amazon Business for non-contracted spend, Régine and her team are also working with Amazon Business on purchasing they can send directly to the residences of their patients to improve accessibility and health outcomes. Through Amazon Business, they also hope to expand the share of purchases made from local businesses. "It is critical for us to always invest more into our community," Régine noted.

Finally, they are also interested in a partnership to help bring community donations to the hospital. In this model, the Ochsner Health System would promote the opportunity for the local community to buy supplies on Amazon Business and deliver it to them to distribute to the community. "As an organization, we’re focused on improving the quality of care to all populations in Louisiana. We call this equality of care. Donations through Amazon Business can help us meet our goals in this area," Régine explained.

Amazon Business is proud to work with Régine, Ochsner Health System, and all of our industry partners to improve business continuity and supply resiliency while reducing costs to provide more purchasing flexibility.