The Humanitarian aid organizations have been doing a remarkable job tackling poverty, hunger, and healthcare problems. According to the World Health Organization (WHO), child mortality rates alone have fallen by 49% from their 1990 level, saving the lives of approximately 6 million children under the age of five. While some organizations are making significant strides by helping distribute vital medicines and healthcare products, there is still a lot more to do, including pushing public and private sectors for better outcomes which often starts with how products are moved from manufacturer to patient.
Complexity and opportunities
The humanitarian healthcare supply chain functions as a vital lifeline for many people, where target service levels are revered as the “holy grail.” The thing about service levels in health care/humanitarian aid is that failure to meet the patient’s need could prove fatal.
According to a USAID 2018 report on Global Healthcare Supply, those organizations that procured $301 million and delivered $187 million in health commodities, saw an increase of $43.8 million and $11.3 million respectively over the first quarter. They also:
- Achieved 73% on-time delivery in a quarter
- Improved on-time in-full delivery (OTIF) rate to 67%
- Reduced overall cycle time across health areas and fulfillment methods by 5%
Inventory overload and obsolescence
Traditionally, humanitarian aid/development organizations have focused on shortening the overall cycle time, i.e. the time between someone asking for medicine or equipment and the time it takes to fulfill their request. But the typical ways of tackling this challenge lead to other problems.
A common way to reduce cycle time is to ensure that sufficient stocking levels are maintained at various nodes along the supply chain to satisfy target service levels. However, this leads to building up massive stock levels causing “bull-whip” surge along the supply stream. The problem is magnified when you factor in the need to manage inventory based on expiration dates.
Another approach is to increase the number of warehouses and distribution centers (DCs) along the supply line and either push the inventory downstream as much as possible or rebalance along counterpart DCs. The idea here is to break down the problem into smaller sub-problems so supply chain professionals can design an “optimal” solution in their own silos.
This approach is very expensive and fraught with risk. Worse, it multiplies the complexity and overhead in the supply chain by creating unnecessarily high inventory levels, and makes it more difficult, if not impossible, to optimize the entire network due to fragmented information.
A lifeline for supply chain optimization
With the advent of new technology, pharmaceutical companies are able to cut significant time between research and development innovations and the mass production of latest lifesaving drugs. Similar advances in supply chain technology, such as multi-party cloud networks, enable new supply chain management strategies allowing businesses to share information, plan and collaborate on the same platform, while leveraging advanced technologies like machine learning and intelligent agents to help optimize and manage business processes. Healthcare and humanitarian organizations can get supplies to patients and those in need a lot faster and more efficiently, by predicting demand and by optimizing and operating the supply chain at near-theoretical limits.
With a real-time network, those in healthcare and humanitarian supply chains are able to improve forecasts and lower inventory levels, ensuring more reliable supply while lowering costs. More importantly, it puts them in a position to quickly onboard new product lines that can potentially make a life-altering change for the end-consumer.
Due to the sheer size and scale of global healthcare supply chains, a network view is invaluable. These supply networks are often globally distributed, so it truly takes a “30,000-foot” network view to address the problem holistically. But how does one achieve this? Often, it involves setting up a supply-demand matching process that can run perpetually to help supply chain professionals shorten the cycle time process.
Unlocking the demand signal
The collection of consumption data at the facility or clinic in-country where care is being dispensed, is the most effective starting point. After-all without a sophisticated system to capture this information, it is impossible to produce an accurate forecast and plan for the future. Multi-party networks overcome this problem by using sophisticated demand planning and pattern recognition algorithms that take into account many factors, to produce accurate forecast projections. These projections allow global health care supply chains to better orchestrate planning activities upstream. Also valuable is the ability to switch seamlessly between various sources of signals (for example, Consumption or Orders or Shipments) to produce appropriate forecast projections.
Data-driven supply planning
Procurement specialists and supply planners are understandably challenged when trying to determine the optimum stock levels by product at different nodes in the supply chain. Part of the problem is caused by the lack of consumption data to drive the forecast, so planners rely on past orders. This method is inaccurate and leads to poorly positioned inventory. The other part of the problem is due to the lack of visibility into stock positions at different Distribution Centers. Without a multi-party network, it is both difficult and cumbersome to aggregate information across different facilities into a common system. A network enables a global perspective, provides current inventory levels, and can recommend the optimal levels.
One of the most important features of a multi-party business network is its real-time single version of truth. This feature enables organizations to quickly configure real-time dashboards and widgets for displaying data from across the network. In this way, planners and managers can select the most relevant and current information and orchestrate supply chain activities much more effectively.
Lowering logistic costs
Perhaps the last and most significant hurdle is the efficient management of 3PL carriers who move inventory across the supply chain to satisfy the demand. Dramatic cost savings are possible when the logistics team can reconcile loads and minimize the movements across the supply grid. With the right technology, service levels can increase while driving down costs. Using real-time data, keeps the supply chain as agile and responsive to patient demand as possible.
A real-time, multi-party network helps healthcare organizations do just that. It shortens cycle times and enables dynamic supply-demand matching, ensuring better performance at lower cost. Let’s face it, change and problems are a fact of life. A network that provides immediate visibility, synchronizes all parties around real-time shared data, and allows them to collaborate in real time to fix problems, can be lifesaving.