importance of supply chain visibility

Transforming Healthcare Supply Chains with Transparency & Visibility | Part Three: The Importance of Visibility.

This is the third blog of a four-part series. If you missed the others, catch up on Part One and Part Two.

By Scott Crow, Chief Innovation Officer and Co-Founder

To do better, you need to see further.

Most of our clients know the importance of supply chain visibility, and that controlled costs are critical to building a more resilient supply chain. But we know that, much of the time, costs are not transparent. There are product costs, hidden supplier fees, movement costs, and the costs of disruptions and delays. ERPs only contain product costs while most freight management providers cover movement costs. That leaves some pretty significant gaps to be filled.

In regard to visibility, is product status available from end to end? Did the supplier get the order? Is the order going to be filled? Short filled? Is it on backorder? Will it arrive in time for the patient case? Is the supplier delayed? Is the carrier delayed? At VPL, we’re filling those gaps with visibility that goes farther upstream than ever before.

Most freight management companies don’t see anything prior to movement. They don’t see the order so they can’t answer these questions, and there are few or no leading indicators predicting sourcing issues or disruptions in the supply chain. Disruptions like backorders or weather are surprises, but they’re also like Groundhog Day—everyone experiences them again and again. And it’s difficult to know which are viable sub-products in those situations and which of those are available and not delayed.  

Then there’s performance data. In our opinion, conversations with suppliers are not data-driven enough. Both health systems and their suppliers are missing KPIs to drive meaningful change. These KPIs could help with better contract negotiation, service levels, backup contracts, and changing the balance of power away from suppliers and back to the health system.

Data drives visibility, visibility drives data.

We believe that leveraging freight management data to solve for visibility is key to a stronger supply chain. With an eye on innovation, we’ve been asking the question, “What else can we get with this data, especially if we marry it to other sources of the available data from you and your suppliers?”

We’ve found that freight management data can help with issues around critical products, including things health systems typically order, are about to order, have open orders for or simply wish to monitor. Data can tell us if the supplier is filling orders on time, if they’re filling at full quantities, and if they’re allocating correctly. Supplier lead times and carrier delay KPIs let us know if just-in-time inventory is realistic for a given product. Data tells us if critical products are on backorder, if there are viable alternatives elsewhere, and the impact of the backorder.

And it helps us see if there are times of the year when carriers or suppliers perform more poorly, if health systems need to adjust safety stock or hoarding behaviors, and if weather events like hurricanes and tornadoes will impact the supply chain.

Last year, one of the nation’s largest IDNs told us that because they were armed with their freight data, they were able to uncover the impacts on both carriers and suppliers when the tornadoes swept through Tennessee in December of 2021. They were able to quickly determine which products and suppliers were affected and quickly source alternatives with little or no disruption to their patient care.

Check out our other resources.

Read Part Four: Overcoming the Pitfalls Once and for All.

Watch the 20-minute Pitfalls of Traditional Freight Management Services webinar to learn more about the importance of supply chain visibility.