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How procurement leaders can adapt amid ‘constant change’

Proven procurement strategies to help healthcare leaders navigate supply chain vulnerabilities

Supply chain and procurement were, in many ways, more difficult in 2022 than they were at the height of the pandemic in 2020. To prevent any disruption to hospital operations, procurement leaders must continue to ensure that clinicians have seamless, uninterrupted access to needed supplies, as always. Today, they must simultaneously navigate workforce changes and tighter margins, along with more frequent supply shortages, product backlogs, and price fluctuations, too.

On a near-daily basis, organizations are having conversations with suppliers and supplier partners about the cost of raw materials, other costs or logistics, according to healthcare procurement leaders who spoke to Modern Healthcare Custom Media. And shortages run the gamut—it could be tourniquets one day and syringes the next.

These challenges are common across the acute care industry. The 2022 State of Business Procurement Report from Amazon Business finds that healthcare leaders can only plan purchasing in advance to a certain extent, and often, they need to “find, buy, and obtain critical supplies on short notice—all while soliciting approval from multiple stakeholders.”

According to the Amazon Business report, across industries, nearly 47% of business-to-business (B2B) buyers expect to manage more budget this year than last year. However, those that are experiencing decreases—which might often be the case for healthcare purchasers—are called to spend smarter.

Healthcare providers can easily miss key opportunities to optimize or consolidate spend. Traditional purchasing processes can be time-consuming and limiting, forcing healthcare buyers to compromise on important factors, including product price point and supplier certification status. The challenge is compounded by continued distribution of the workforce across home and in-person settings, as more purchasing might take place outside of the centralized procurement team or traditional procurement channels.

To succeed long term, healthcare providers must be creative and resilient with their purchasing and supply chain management strategies, leveraging tools and technologies that enable greater efficiencies. “In an industry where time is truly of the essence, the ability to order supplies quickly and with low stress allows healthcare providers to focus on what matters most—their patients,” said Todd Heimes, director and general manager for Amazon Business.


People and vendor partnerships

To stay competitive, procurement teams are continuously working with clinicians and nonclinical staff alike to find substitute items or service providers that meet the team members’ needs as well as clinical standards. This ongoing communication is essential throughout healthcare, an industry with hyper-specific product and feature needs. Procurement professionals must also be regularly educated on new technologies and trends, arming them with the right information to perform their jobs as effectively as possible.

Externally, teams can drive efficiencies by fortifying relationships with suppliers, focusing on transparency and finding solutions that are mutually beneficial rather than transactional. This is a strategy that many healthcare buyers are increasingly adopting to enhance supply assuredness and mitigate inflationary pressures.

It is vital to work with suppliers and partners to minimize any price increases and find opportunities to be creative. Suppliers can't absorb the full increase in the cost of raw materials and transportation logistics, leaving healthcare organizations with limited options. To distribute the burden and ensure that vendor relationships are mutually beneficial, healthcare organizations can use data and analytics. They can weigh the advantages and disadvantages of carving out costs in other areas, such as with expedited shipping or decreasing utilization of non-essential products.

It boils down to looking at “what relationships can we build, strengthen and further mature with our supplier partners,” one procurement leader said.


Leveraging data analytics

Under traditional procurement models, suppliers and distributors are typically hesitant to share data around business decisions. Unfortunately, resource constraints might keep healthcare organizations dependent upon these standard relationships which lack full transparency into buying decisions.

Given the need for a cost-conscious, data-driven approach to purchasing, some teams are working on expanding the scope of supplier business reviews. Rather than falling back on transactional exchanges of metrics, an organization can engage in dialogue with suppliers across its entire service footprint. Working with innovative partners in this way can help systems build a more robust set of data to gain much-needed visibility into the entire supply purchasing cycle, including total cost of ownership.

These necessary analytics then help organizations equip busy team members with relevant information on demand, enabling more informed business decisions. After all, technology-enabled visibility ultimately helps healthcare buyers identify and increase efficiencies, which is their No. 1 most important procurement improvement priority, according to the Amazon Business report.

For instance, visibility into organizational purchase history can reveal key trends and opportunities to optimize spend, such as supplier consolidation, bulk purchasing and tax exemptions. It is also critically important in today’s landscape to be able to compare order and payment history, monitor invoice receipt and track orders, shipments, returns, refunds and so forth.

Beyond expenditures, healthcare organizations are focusing on supplier sustainability and diversification, as stakeholders pay closer attention to community impact. This requires deeper insight into supplier credentials, but the information must be consolidated into easy-to-use reports and dashboards to avoid the time-consuming effort of tracking down disparate pieces of data.


Proven pathways to success

Dozens of hospital systems served by Amazon Business can attest to the advantages of an online procurement system capable of integrating with existing procurement and accounting technology.

These integrations provide efficiency and agility at scale by allowing supply teams to automate time-consuming tasks, identify and order supplies, and evaluate suppliers’ certification statuses, all within one place.

At organizations across the country, Amazon Business has made a significant positive impact on overall supply chain strategy. While offering the ability to make more informed decisions, it enables quicker turnaround from order to delivery – often with improved cost savings compared to traditional channels.

"E-commerce is helping us find the balance between supply chain efficiency and multiple sources for resilience," said Régine Villain, chief supply chain officer at Ochsner Health System in New Orleans. "There are requirements for these purchases…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."

Through Amazon Business and the access that it provides to hundreds of millions of products worldwide, buyers have the opportunity to save up to 10% with quantity discounts, and 10% with business-only prices. Business Prime offers free two-day shipping for eligible orders. These cost- and time- savings are a critical necessity for decision makers purchasing in acute healthcare settings.

For long-term success and growth, organizations are looking to eliminate inefficiencies wherever possible—and the key will be forging innovative internal and external relationships while making informed, analytics-driven decisions.

This article originally appeared in Modern Healthcare.

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