Mitigating Pandemic Supply Shocks
Updated: Mar 28, 2020
Mitigate Pandemic Supply Shocks by Integrating Infection Forecasts with Healthcare Provider Supply Planning
In recent years many participants in the healthcare provider supply chain have moved to a lean JIT (Just-In-Time) replenishment strategy to increase efficiency and reduce costs. This works well until supply demand shocks occur as a result of a pandemic. This new unplanned demand can overwhelm the supply chain and subsequently impact patient care delivery without a process to manage it. In addition, the pandemic may persist for an extended period with recurring outbreaks until the infection is contained or a vaccine is widely deployed. Even the best supply plans will not eliminate shortages from the extreme demand. However, an integrated supply planning process with demand driven by pandemic infection forecasts assists providers to keep operating with a higher level of patient care effectiveness. If the outbreak lasts a lengthy period, the integrated supply planning process is an invaluable tool to manage operations on a continuous basis and implements rapidly when focused on the most critical needs.
The infection forecasts, especially during the initial outbreak, contain a significant amount of uncertainty but are still useful and improve as researchers increase their understanding of the pathogen and collect data to update their forecasts. The integrated supply plan provides greater visibility into future needs allowing additional mitigating measures to be taken. It identifies potential supply shortages at a lower level of granularity that weren’t realized by the existing process. For instance, down to the level of cotton swabs needed to conduct many laboratory tests. The plan is also shared with distributors and manufacturers who can more effectively respond when provided with additional information that is data driven. In addition, alternate sources of supply or substitutes can be identified when shortages are discovered for specific products.
JIT Kanban and reorder point supply replenishment has been widely deployed across healthcare providers. These methods calculate replenishment levels based on historical usage, which is relatively consistent normally, but the methods become ineffective during large, rapid demand changes. Pandemic infections have spread at an exponential rate until effective measures are implemented to slow the transmission. This results in corresponding large demand surges for specific supplies and equipment related to the medical procedures required for diagnoses and treatment.
Mitigate the effects of demand spikes by integrating the pandemic forecast with a time-phased supply plan based on a medical procedure bill of materials (BOM) and physician preference cards (PPC). This enables the supply plan to be dependent on the forecasted demand instead of historical usage. The BOM and PPC contain the details of all the items required for a particular procedure. If the BOM doesn’t exist yet, begin by building the most critical procedures first. For example, the pandemic forecast model may show the number of infections in a city or region doubling every five days with 20% requiring hospitalization and 5% requiring ICU level care. The 20% being treated for moderate symptoms generally have a consistent set of procedures and supplies required while the 5% requiring ICU care have a different set of procedures and supplies needed. Planning accuracy can be increased by including additional regional demographic attributes such as population age and associated underlying health conditions to better understand potential medical procedures needed. In summary, the pandemic forecast will drive demand for specific medical procedures which in turn drives the demand for supplies and equipment all of which is managed by an integrated supply planning and execution process.
Based on the level of automation, there are three approaches to generating a supply plan from an pandemic forecast. Generating a comprehensive time-phased supply plan is best accomplished by utilizing a software engine that automatically incorporates the pandemic forecast, BOM, current inventory levels, and outstanding purchase orders. Virtually every major enterprise resource planning (ERP) system has a supply planning module that can be installed and implemented to accomplish what is required. For near-term needs based on supplier lead times, the plan outputs supply requisitions that are directly converted into purchase orders.
Implement an interim manual process when time is critical or technical resources are not available. To implement rapidly, focus first on the critical procedures, equipment, and supplies related to the pandemic. Spreadsheets (or similar tools) are used to store the BOM, imports of pandemic forecasts, inventory, and purchase orders. Worksheets are added to calculate the supply plan from the stored data. Periodically the required data is imported, and the supply plan is updated. The resulting supply plan is generated using additional resources and less frequently than what is practical with software but still offers vital information needed to ensure critical supply needs are fulfilled.
If a supply planning module is not available, implement a semi-automated process that simulates the calculations of a planning engine. Digital agents (or software programs) are developed to help build the initial BOM and import the pandemic forecast, inventory, and purchase orders. The data is imported into a spreadsheet or database that is structured to calculate the time-phased supply plan. In addition for near-term needs, a digital agent inputs supply requisitions into the procurement system. The generated plan is similar to the one produced by the planning engine except without the automation and requires additional human and digital agent resources to operate.
A supply planning process which is integrated directly with pandemic forecasts at the detailed material and equipment level is critical to mitigate or prevent persistent shortages. Since the nature of pandemics require coordination across healthcare providers, sharing the data-driven plan with both suppliers and government agencies will help ensure needs are prioritized appropriately.
Although the integrated supply plan increases visibility to future needs of medical supplies and equipment, it can be further expanded to include other critical needs such as medical resources and facilities. Once the infection forecast is linked to the medical procedures, resource plans for doctors, nurses, and technicians are estimated over the period of the forecast. Similarly, the infection forecasts contain information on the number of patients with their severity and average recovery duration enabling estimates for space requirements and hospital beds. Once critical supplies and equipment needed for the pandemic are included in the integrated supply planning process, expand the scope to include key affected manufacturers in the infection zone who are providing any critical product unrelated to the pandemic. Shortages could develop for supplies caused by production shutdowns or cutbacks.
In addition, the integrated planning approach applies to any type of patient population forecast not just pandemics. For example, patient demographic data is used to forecast age-related disease conditions that are then associated with specific medical procedures and related supplies, equipment, and resources. In addition, the shortcomings of JIT replenishment is augmented by an integrated supply plan that provides visibility to supply requirements further ahead where reorder quantities and levels can be adjusted or replaced with requisitions based on the supply plan.