When Variation Belongs in the Healthcare Supply Chain

Variation in a health system's supply chain is not automatically a problem, and standardization is not automatically the fix. In my 25 years as a supply chain executive, I have learned that the real skill is knowing which variation to keep, manage well and pay for on purpose, and which variation to eliminate.

I call the first kind purposeful variation. Pediatrics, IV supplies, respiratory and urology are areas where patients may need products outside the standard range, from the smallest infant on the unit to the largest adult on the floor. Those items may move rarely, and they often are not restocked. I’ve chosen to keep these off sizes in my warehouses and central stores anyway, knowing some may expire before they are used, because when that patient shows up, the product needs to be available. I have been called a hero for decisions like that. The alternative can be a clinician trying to solve the problem in the moment for a patient who cannot wait.

Where variation earns its place

That is very different from what I would call “tradition wearing a lab coat”: a drug or supply item that remains because one physician prefers it, one hospital has always ordered it that way or nobody has built the case to change it. That variation carries real operational cost. Every additional vendor can mean another contract, renewal cycle, price change and relationship to manage. Reduce a glove category from four vendors to one and you eliminate three contracts, three renewal cycles and three points of failure. This kind of variation nearly everyone knows but few choose to actually implement.

I understand why supply chain leaders compare healthcare with manufacturing or retail distribution. If a national distributor can standardize on pencils, paper and USB chargers, it is tempting to ask why a health system cannot agree on a single surgical glove. But we are not assembling window frames or packing dog food. We are taking care of patients, and that has to be the starting point for every variation decision.

The practical test is whether the variation traces back to a service the hospital actually delivers, such as pediatrics, IV supplies, respiratory care urology or the like, where specific patient needs fall outside the standard range. If the exception traces back to habit, preference or a reluctance to change, it deserves more scrutiny.

Pharmacy makes that distinction especially clear. From the supply chain side, a product swap can look simple. From the pharmacy side, it may require a clinical equivalency review, storage changes, a different dispensing workflow or committee approval before anything moves. Treating that process as resistance instead of understanding the constraint is a good way to lose trust. Pharmacy can make the opposite mistake too, treating every existing process as untouchable simply because pharmacy is complex. Both sides need enough context in the other's world to distinguish a real requirement from a habit nobody has challenged.

Inventory reduction requires the same judgment. Less inventory can improve performance because there is less to manage and less money tied up in stock. Cut too far, though, and you lose the buffer that protects clinicians when demand shifts or supply becomes constrained. The goal is to carry what the operation genuinely needs, for reasons the organization can explain.

Visibility keeps variation purposeful

Once a health system decides an exception belongs, it still has to manage it. Leaders should know where that inventory is, how much they carry, how quickly it moves and what risk comes with keeping it.

I like to describe supply chain as a duck gliding across a pond: smooth on the surface while the legs underneath work nonstop. A product conversion can be executed correctly at the sourcing level while weeks of the old item remain in a central warehouse or on a hospital floor. Everything can look great in Excel until it is 2 a.m. in the hospital and the item is not where someone expects it to be. At that point, people are likely to improvise, call the storeroom and find whatever will get the patient what they need.

Those gaps are where purposeful variation can become unmanaged variation. Teams may hold extra stock because shortages are constant, replenishment feels uncertain or nobody can see what is already available elsewhere in the system. The extra inventory becomes a security blanket rather than a deliberate choice.

Health systems that get this right are not necessarily the ones with the fewest SKUs. They are the ones that can explain, category by category, why their exceptions exist, confirm those reasons are still valid and manage the inventory around them deliberately. That is the discipline that matters: knowing the difference between an exception a patient needs and tradition wearing a lab coat.

For more on purposeful variation, standardization and the realities of pharmacy-supply chain collaboration, watch our latest webinar, “The Operational Truth About Pharmacy and Supply Chain.”

Ryan Rotar is vice president of healthcare market strategy at Tecsys, with 25 years of experience leading healthcare supply chain operations.