Here’s How Johnson & Johnson Medical Devices Companies Streamlined Intermountain Healthcare’s Supply Chain to Win 2018 Supplier Award
Unfortunately, supply chain problems in the healthcare sector aren't a rare event. Intermountain Healthcare is a not-for-profit system of 23 hospitals and 170 clinics, based in the U.S. state of Utah. With close to 2,300 employed physicians and advanced practice clinicians, a health plans group under the name SelectHealth, and other medical services to cater for, logistical issues are something that Intermountain certainly doesn't welcome.
So, when the organisation had problems with stock-outs for crucial surgical supplies, it turned to its supplier, the Johnson & Johnson Medical Devices Companies (JJMDC), for help – and the solution put forward was both comprehensive and holistic.
A Worrying Problem
For Intermountain Healthcare, stock-outs or depletions in its reserve of certain surgical products from JJMDC were becoming a disturbingly frequent occurrence. The organisation had been using its own tactics for dealing with these incidents, as Heber Everitt, Demand Planning Manager at Intermountain Healthcare explains, "Traditionally, our solution was to increase our safety stock and carry more inventory. But that strategy was no longer working and was impacting overall efficiency."
Intermountain serves thousands of patients each year, so administrators wanted to act quickly to restore confidence with its supply chain and surgical personnel, and in the supply chain integrity of JJMDC products. Intermountain approached JJMDC to develop a joint strategy for identifying process improvements that could improve customer service and prevent stock-outs while improving the overall efficiency of the supply chain.
Since Ethicon Inc. sutures were at the heart of the depletion problem, Intermountain wanted the combined effort of the two organisations to focus on optimising the supply chain logistics of this particular surgical item.
A Holistic Approach
Understanding what fuels demand within a health system's supply chain is a complex matter. It requires sophisticated and accurate data, and the establishment of trust and transparency between many stakeholders, including suppliers, distributors, and clinicians.
The team called on a powerful resource from JJMDC – a system known as CareAdvantage. CareAdvantage is a holistic approach designed to help healthcare systems realise better care by aligning JJMDC's broad capabilities to the needs of individual customers. By reducing costs, improving outcomes, advancing patient satisfaction, and developing a healthier workforce, its methodology looks to achieve the healthcare system ideal of providing total care to all.
The process begins with listening to the customer to establish and understand specific objectives, priorities, and challenges. To this end, the team from JJMDC and Intermountain, conducted a series of fact-finding meetings with clinical supply chain specialists at the healthcare system's various hospitals, to identify pain points that interrupted the flow of essential supplies.
The JJMDC team spent time on site within the health system, studying product flow, mapping processes, and quantifying system-level supply dynamics. This empowered the team to fully understand the challenges that Intermountain was facing, and how it was currently managing its suture inventory.
Both Intermountain and JJMDC recognized room for improvement in their processes, and the need to take a more proactive approach to improve data gathering, transparency, and communication.
An Established Methodology
The two companies used the Gartner Five-Stage Demand-Driven Maturity Model as a roadmap to guide them in better aligning their processes and systems. The model provides a standard series of steps for identifying what stage of maturity a supply chain is currently at, and for improving supply chain sophistication:
1. React: At this first stage of maturity, systems are disconnected, and processes are often manual, with business units operating autonomously in silos.
2. Anticipate: For stage two, moves to create standardised processes and centralise some supply chain functions bring improvements in productivity and operational efficiency. Capturing and reporting on logistics and supply chain activities occur on an organisation-wide level, enabling the supply chain to better anticipate demand.
3. Integrate: The focus now shifts to integrating processes and systems across the overall supply chain, and observing how logistics and supply chains will affect customer service and procurement.
4. Collaborate: This stage focuses on fostering collaboration and visibility beyond the level of simple transactional services across the value chain network. This requires a shared supply chain management vision between partners and recognition of the trade-offs between profitability and customer value
5. Orchestrate: The supply chain now acts as an enabling environment for an ecosystem of partners. With information flowing across the supply chain network in real time, there's better visibility, which helps organisations make fact-based decisions in a timely manner.
A Comprehensive Solution
To solve the stock-out problem, the two organisations took steps to improve end-to-end customer service and operational efficiency, which also helped raise the maturity level of their supply chain.
They began by tracking the on-time performance and consistent weekly delivery of shipments. They then improved how supply chain information flowed between the two organisations. They also revised their business planning processes and implemented prediction accuracy measurements, which allowed them to assess and then improve the accuracy of their demand and supply forecasting.
Finally, Intermountain implemented a "dock-to-stock" system, where deliveries of Ethicon sutures would be sent directly to their distribution centre dock for storage. This lean process helped to eliminate lead times.
An Integrated Supply Chain
All of these actions led to improved efficiencies at the distribution level and enhanced transparency among all supply chain partners. As a result, Intermountain and the Johnson & Johnson Medical Devices Companies advanced the maturity level of their supply chain to stage 4 (Collaborate) of the Gartner scale. Both organisations have set their sights on achieving stage 5 (Orchestrate) in the very near future.
JJMDC won the 2018 Collaboration MVP Award, which Intermountain gives annually to honour suppliers for their innovation, cost and quality outcomes, corporate social responsibility, and supply chain excellence. JJMDC was lauded for its excellence in helping Intermountain solve for price discrepancies and logistical improvements, as well as cultivating an environment that led to a number of meaningful post-contract, value-add opportunities over the last year.
Supply chain optimisation is set to be a hot topic at LogiMed 2019, taking place this October at the NHow Hotel Rotterdam, Rotterdam, Netherlands.
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