AI for healthcare supply chain management

Gustavo Cruz

We all remember one of the biggest examples of healthcare supply chain management disruption: When Hurricane Maria devastated Puerto Rico in 2017, the island’s significant pharmaceutical and medical device industry halted. Healthcare providers worldwide were left stranded without key equipment, medicines, and patient-critical devices.  

Extreme weather isn’t the only risk heading for the healthcare industry. Geopolitical developments, labor actions, cyberattacks and other disruptions have the potential to throw healthcare supply chain management into disarray. Moreover, the industry has a harder time bouncing back due to multiple factors including siloed information along a highly complex supply chain, the limitations of batch-level processing, and complex regulatory requirements. These issues are dramatically magnified for time-sensitive clinical trial materials. 

For an industry as essential as healthcare, end-to-end supply chain visibility supported by artificial intelligence (AI) is now a requirement to ensuring product quality and patient safety. Without this, healthcare providers will always be at the whim of events outside of their control, limited by operations at their group purchasing operation organization (GPO), and unable to meet cGXP – current good manufacturing, distribution, quality, and other practices. 

Healthcare supply chain management symptoms  

Many hospitals and healthcare providers purchase through a GPO and have no idea where their supplies originate. They know the brands they buy, but, since they often buy from distributors, they usually don’t know where the actual manufacturing plants are, and, by extension, what risks those plants face. This disconnect creates a crucial time disadvantage, where healthcare providers only find out about shortages or delays when they happen. Healthcare operations simply can’t prepare proactively for disruptions.  

Shortages or delays are never ideal, but they become critical when they compromise lifesaving medical devices or specific medicine that cannot be substituted. For example, IV solutions, insulin pumps, and pacemakers were all impacted by Hurricane Maria. Knock-on effects are massive within the healthcare industry, as pharmaceutical and medical device markets depend on a relatively small number of suppliers per product.   

Microchip shortages have also had a very direct impact on the medical device industry, at times suspending the production of patient-critical devices. Medical device manufacturers that had advance notice of potential shortages have been able to source these critical components, becoming priority customers due to their level of criticality. This shift was much more difficult and costly for the device manufacturers scrambling to find replacement suppliers in the middle of the shortage.  

Even something as common as port worker strikes can affect healthcare products. While not directly connected to the healthcare industry, any transportation strike can disrupt the flow of medicines or medical devices to their end destination, potentially causing major issues for patients.  

It only takes one small disruption to destroy the healthcare industry’s delicately balanced supply network – and with it, product reliability and patient health. 

Current good healthcare supply chain practices  

Supply chain visibility is key to managing risk for any hospital, healthcare provider, or group purchasing organization (GPO). Using AI, digital mapping, and machine learning technology, today’s supply chain risk management systems can provide healthcare providers with insight into potential disruptions allowing for proactive planning. Healthcare operations can then source alternate suppliers for certain products or ensure extra resources in case of delays. And, earlier in the supply chain on the manufacturing side, sub-tier mapping of up-stream supply chain partners enables the identification of potential supply chain risks.  

Purchasing through a GPO helps healthcare providers maximize efficiency and lower costs by leveraging bulk purchases. While this is convenient, working with GPOs may leave patients in the lurch if all the GPO’s providers are facing the same shortages, delays, and difficulties. Therefore, GPOs have a responsibility to ensure that the distributors and suppliers they are working with have clear, ongoing visibility within their supply chains, as well as back-up plans to ensure resilience.  

For example, much medical manufacturing is often geographically concentrated. Effective risk management must identify and monitor the location of manufacturing plants and distribution centers, taking into consideration any climate, geopolitical, or social risks. These risks can range from natural disasters to shipping delays to strikes and more, all of which can significantly disrupt a medical supply chain. If the distributor or supplier doesn’t have any insight into potential risks – and therefore no capacity to efficiently respond to evolving issues – a GPO is unlikely to be able to respond quickly either.  

Sub tier supply chain visibility allows drug manufacturers to identify the need to pre-qualify secondary and tertiary vendors. Due to recent supply chain disruptions, the pharmaceutical and broader life-sciences supply chain has become focused on more robust supply chain resilience. Without real-time monitoring and data analysis, healthcare providers will never be able to build a reliable, resilient supply chain that ensures product quality and patient safety.  

Managing healthcare product risks 

Supply chain risk management is no longer the manual, labor-intensive process it once was. With the help of advanced analytics and AI, healthcare organizations can now have continuous visibility into the risks their upstream supply chain partners are facing and adjust accordingly.  

Supply chain risk management software pulls in data from myriad sources including suppliers, transportation companies, media coverage, weather conditions, and more. AI combines this data into one dashboard and adds risk scores that are tied to business goals and priorities. Human oversight ensures that data stays up-to-date and relevant.  

For example, long-range applied meteorology forecasting can alert GPOs to major climate events, giving them the chance to find alternate suppliers or warn their customers. Predictive AI highlights potential risks from a variety of sources, combing through and analyzing data to provide warnings of future supply chain disturbances.  

Having all this supply chain data on an integrated dashboard is revolutionizing healthcare supply chains, creating resilience throughout the industry and protecting products and patients from dangerous disruptions.  

Supply chain visibility within the healthcare industry is essential to patient safety. It’s time to prescribe real-time data, continuous monitoring, and AI-powered analysis to create resilient operations within this life-saving industry. Without these remedies, the healthcare industry will continue to be vulnerable to disruptions across the world, unable to pivot quickly – putting patients at severe risk. A healthy supply chain is instrumental to ensuring patient safety and product quality.  

Learn more about risks facing the healthcare industry today in our special report.

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