Increased Supply Chain Resilience Needed to Prepare for Next Crisis

July 14, 2023
A new report from McKinsey, identifies key areas that health system leaders can focus on in order to improve supply chain resilience

After COVID-19 exposed industry-wide supply chain shortcomings, it became clearly evident to health systems that improvements in supply chain resilience were needed to help withstand future crises that may occur. According to a new report from McKinsey, there are key areas health systems can focus on to improve supply chain resilience.

While health systems are used to dealing with minor everyday supply chain issues and/or shortages, none were prepared for the debilitating effect COVID-19 created. Even as pandemic-related supply chain disruptions decrease, health systems continue to be affected by shortages of critical medical and surgical supplies. In an effort to overcome current supply chain issues, and prepare long-term for another potential global healthcare crisis, many health systems are now “shifting their focus from managing acute, pandemic-related shortages to creating more resilient, efficient, and economically viable approaches to procurement for the long term.” 

When considering the best practices to build up resilience and mitigate supply chain risk, McKinsey acknowledges, “It isn’t possible for health systems to fully insulate themselves from all future supply shocks, given their unpredictability and varying levels of severity. But leaders could learn from their experiences during the pandemic and align strategies to minimize risk and bolster resilience going forward. Crucial to the effort will be striking the right balance between overinvesting and underinvesting in preparedness based on analysis of the potential risks—particularly in an environment of constrained margins.” 

Based on experience working with health systems and their suppliers, McKinsey asserts that health system leaders “can consider four initiatives to help their supply chains better withstand future shocks. These are: extending visibility into the supply chain; exploring product-specific strategies; developing relevant protocols, capabilities, and governance; and optimizing costs.” 

McKinsey summed up, “Health systems operate in an increasingly complex environment, and the supply chain function is no exception. We have seen these complexities and the resulting challenges play out in real time over the past three years. The four steps described could help create a more resilient and agile supply chain organization in the near term. However, the journey to resilience is ongoing and will likely take years to mature. Resilience has become an imperative for health systems; to best enable systems and their caregivers to deliver care effectively and efficiently, this imperative requires continued focus beyond the COVID-19 pandemic.”        

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