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It’s an interesting time in the healthcare industry, and for the supply chain specifically. Each of the following market factors is thrusting the supply chain to center stage and calling on all of us to up our game in the face of more complex operations. These factors include:

 

  • The advancement of new technology, from drones and robots to artificial intelligence and distributed ledgers
  • Increasing margin pressure
  • New and changing traceability regulations
  • Numerous mergers and acquisitions


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I was recently interviewed by Modern Material Handling for the article Health Care Embraces E-commerce Trends. In the article, it is clear that supply chain practices in healthcare have come a long way in the past five to ten years. Historically, the margins in this specialized industry have compensated for lack of advanced supply chain capabilities. Now, though, the industry is no longer standing still due to the increasing pressures on margins, traceability and customer demands.


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I recently wrote an article for Becker’s Hospital Review Health IT & CIO Report titled “Offloading IT Headaches to the Cloud is a Win for Healthcare”.

 

It is remarkable how far we have come in the last two years. If I would have written this article then, it might have been titled “Overcoming the Fear of Cloud in Healthcare”, because not too long ago, the benefits enabled by cloud technology were also shrouded in fears over perceived security risks; concerns such as “Where’s my data?“, “Can someone steal it?“, “How do I know it is safe?“. We have all heard and read the stories in the news. But clouds are secure (arguably even more secure than on-premise deployments) because they are deployed, monitored, and managed with security by design.


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In the January-March 2018 issue of APICS magazine, APICS CEO Abe Eshkenazi contends that if supply chain leaders bring business success then that makes them business leaders. Mr. Eshkenazi goes on to state “organizations that consider their supply chains as strategic and competitive assets outperform the market”.

 

Indeed, superior supply chain performance does drive business success in very measurable ways.  How can supply chain justify and measure process improvement initiatives using a metric that finance can relate to?  As cash management is a top priority for finance, sharing the Cash Conversion Cycle (CCC) metric allows supply chain and finance to speak a common language when measuring business success.


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There has been a lot of focus on optimizing the supply chain for order fulfillment.  The on-going efforts to perfect the ‘order to cash’ process have yielded great rewards.  But what about returns?  Automation has reduced the number of returns due to errors however the world must move from a linear to a more circular economy and this will impact the entire supply chain.

 

The notion of a circular economy is really quite wonderful.  Imagine an industry that produces no waste or pollution, and where products are designed for safe and non-intrusive disposal.  Imagine an industry where 100% of unconsumed or partly consumed products are returned for re-use.


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Source: MIT Sloan Management Review

In my last post, I introduced the longitudinal study that MIT Sloan Management Review has been conducting over the past five years. From 2010 to 2012 they indicated that 67% of those surveyed believed that analytics gave their organizations a competitive edge. In 2013, that figure stabilized at 66% revealing the so called ‘Moneyball Effect’ where leaders lost their competitive edge that they once enjoyed because followers matured and made analytics core competencies. In 2014, that trend continued, falling to 61%.

 

But why?


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Forecastability is an important word in demand planning.  Oddly, the word forecastability is not listed in the Merriam-Webster dictionary nor is it found in Wikipedia.  However Wiktionary describes forecastability as “A measure of the degree to which something may be forecast with accuracy”.  That something could be an item used in the production of a finished good or the finished good itself.

 

In healthcare that something could save a life. Prudent healthcare providers must ensure the availability of products that play a critical role in a hospital setting. This is good news for the patient. Unfortunately, the bad news is that the strategy for achieving desired fill rates ties up huge amounts of capital. In fact, there is so much overstock that a company called Hospital Overstock has made a business out of buying excess inventory from hospitals and clinics. Sadly a lot of inventory is lost, damaged, expired or becomes obsolete.


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In the movie Big, Tom Hanks plays a child trapped in the body of a 30-year-old who challenges the status quo at a toy manufacturer. To the audience it all makes sense as the movie progresses – think like a kid when selling stuff to kids. How revolutionary! Yet the audience also relates to the adults who pretend to know what kids like.

 

For me, the big thinking in this movie is demonstrated by the creativity of a child whose mind is unencumbered by preconceptions.

 

Dr. David Schwartz, the author of a book entitled The Magic of Big Thinking, attempts to define big thinking. He explains that visualization adds value to everything and that thinking big means training oneself to see not just what is, but what can be. Author Malcolm Gladwell writes, “A visionary is a person that takes a white piece of paper and re-imagines the world”. The Internet is full of success stories of such visionaries.

 


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In 2013, Gartner conducted a survey on Big Data Adoption in Supply Chain Industries and found that adoption has been flat and is lagging behind the overall adoption rate of other industries such as banking, insurance, and retail to name a few. Gartner ascertained that these characteristics pertaining to the Supply Chain industry are attributable to an inherent lack of understanding of what Big Data truly is and a fundamental lack of the required skill sets. This, in essence, is the challenge facing the Supply Chain industry.

 

In parts one, two and three of this four part series on Big Data, we looked at what makes data “big”, how it can benefit organizations that apply the right analytics, and the implications of doing so, respectively. In the closing segment of this series, we focus our attention on examples of how elements of Big Data can be leveraged. The challenges identified by Gartner translate to opportunities regardless of your organization’s analytical maturity level.

 


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The recent Becker’s Hospital Review Annual meeting in Chicago was invigorating and thought-provoking, with many presentations from CEOs of many leading healthcare systems. I wanted to share an overview of three breakout sessions that spoke specifically to Healthcare Supply Chain.

 

Can’t Deliver Care Without Stuff: Emerging Strategies for Supply Chain Management was a discussion with Brent Johnson, VP Supply Chain and Chief Procurement Officer at Intermountain Healthcare in Salt Lake City, UT. Brent comes from outside the healthcare industry. When he came into healthcare supply chain at Intermountain he was shocked at how, as an industry, healthcare managed its supply chain so casually, because “you know, outside healthcare, supply chain is seen as STRATEGIC to the organizational performance.”


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