Many locations in the United States that saw a high number of coronavirus infections early on, followed by a decline, are now experiencing a “second wave” of cases, according to Johns Hopkins. As we enter a second-wave of infections, the need for healthcare supplies will continue to grow. High demands for personal protective equipment (PPE) products and other items have called the healthcare supply chain into focus. Because this sourcing of PPE products remains a challenge, the supply chain is now in serious need of rapid response.
JIT (just-in-time) inventory delivery is a well-established model that frees up supply storage space in hospitals. It benefits hospitals by reducing the amount of space they must dedicate to carry inventory. Generally, warehousing and storage responsibilities rest on the distributor—which, in turn, frees up supply storage space in hospitals for more patient-centered uses.
However, the threat of decreased supply availability, and the potential for accompanying allocation practices by distributors, may create a distrust of the JIT delivery model. In its place, a just-in-case (JIC) mindset may temporarily prevail on the part of purchasers such as yourself. If you’re worried about finding adequate warehousing or storage space to overstock supplies in a JIC situation, there are some steps you can take. Let’s review what a COVID-19 resurgence means for hospitals—and how you can respond to a JIC approach.
“Just-in-Time” or “Just-in-Case”?
The COVID-19 resurgence may cause distributors to face product demands that exceed their supply availability. In turn, this may reduce distributors’ ability to provide hospitals with a JIT delivery option. If this happens, hospitals may be forced to increase their inventory storage space so they don't run out of supplies, which may result in additional costs for warehousing supplies.
Even in non-pandemic times, specific departments will often squirrel away items in closets and storage cabinets "just in case" they need something when storerooms are closed or inventory has run out. This mentality is sometimes shared by purchasers to over-stock supplies “just in case” distributors run out of stock, or caseloads increase beyond the volume agreement with distributors. There are some inherent downsides of a JIC scenario, including:
- The cost of excess storage space
- Over-spending on unneeded items
- The potential of harboring and having to destroy out-of-date items
While the just-in-case (JIC) scenario is more of a mindset, rather than a supply chain model, it represents a disconnect between what may be needed and what is actually needed. And as cases continue to rise, allocation and stockpiling are two supply chain dynamics with increasing importance.
Standing orders are mutual agreements that establish a specific volume of product during a specified time period. However, standing orders do not consider surge needs during public health events—such as COVID-19—which increase demand, or the effect of the event on product sourcing which may reduce the supply and worsen product shortages.
Allocation occurs when distributors lack the volume of product required to meet demand levels and must “allocate” available products to various customers at lower than requested volumes. In public health events, distributors may place regular customers on allocation and decline orders from new customers.
Most healthcare systems keep a modest inventory of healthcare supplies to anticipate future demand, and heavily rely on their distributors to provide the JIT product delivery. A JIC stockpiling scenario places emphasis on logistics and space optimization. Because even the most robust supply chains need safety stocks, stockpiling may be considered by some as an important part of these preparations as we enter the potential second wave of infections.
With the possibility of surges in demand and limited medical supply storage, stockpiling across certain parts of the supply chain may be seen, by some, as essential. Stockpiles can be used as a short-term buffer when immediate supply is unavailable or unreliable, but comes with additional costs, including:
- Leasing additional warehousing space
- Transportation costs to move product from the warehouse to the hospital
- Lack of product turnover resulting in loss and waste
- Increased personnel requirements to maintain, manage and move product
Preparing for the Future
As we enter an unpredictable, second-wave of COVID-19 cases, there’s already a lot that your hospital may be worried about. Being prepared for the unknown is an important part of any supply chain management program. It’s important to be able to rely on a distributor that will continue to provide products on a JIT schedule so that your hospital doesn’t have to worry about running out of supplies—and can even increase supply volumes if and when a rapid response event occurs.
Through networking and partnering—and finding warehouses to manage stockpile supplies—Concordance will help hospitals receive the supplies they need when they need them. Concordance has helped maintain inventory supply through vetting alternative products and smarter stockpiling. For example, StrategicStorage™ breathes life into the stockpiling of lifesaving, life-sustaining PPE and other medical supplies. This model incorporates the efficiencies of a large sophisticated box mover with the flexibility of a locally-based, hands-on, operational team.
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