Distributors are working tirelessly to ensure product gets to providers.
The warning bells began to go off in January. Back in January when COVID-19 started to build, there was an impact to the production of personal protective equipment (masks, gowns, face shields, gloves products), because a high percentage of those products are made in China. McKesson anticipated the product disruptions that would happen as a result of the situation in China and began to plan accordingly.
“It’s a relatively long supply chain and it takes some time for those products to be made and then get to the United States,” said Joan Eliasek, senior vice president of Customer Experience for McKesson. “So we knew then that there would potentially be a shortage of supply.”
In a podcast hosted by The Journal of Healthcare Contracting, Eliasek discussed McKesson’s efforts to support caregivers and communities during the pandemic. Topics ranged from allocation of med-surg products and why that’s happening to how McKesson and other large national distributors are working with the government to get products into the hands of providers.
Maintaining supply amid a pandemic
Once it was determined that product supply would be disrupted due to conditions in China, distributors were forced to employ allocation strategies. Allocation is a methodology to spread a limited supply of product across a wider group of essential purchasers. This is accomplished by placing temporary limits on the quantities any particular purchasing entity can purchase at any given time. It is commonly based on historical demand. Looking back over a defined period of time, distributors would then make that amount of product available to customers.
There were several reasons for this. “One is to make sure that it’s a signal so customers understand there’s a potential supply issue, that the historical amount of supply that’s been available may not be available in the future,” Eliasek said. “It’s a signal to our customers to conserve and to make sure that when they’re using these products that they need to be using them effectively.”
Allocation is also a way for distributors to maintain the supply chain and have product available for customers when they need it. “A lot of our customers don’t have a lot of space within their facilities,” said Eliasek. “Their facilities are dedicated to caring for patients, and so they might have a small supply closet or they might keep products in a cabinet somewhere. They don’t have space to put weeks’ worth of product. They rely on us to maintain those products and keep them in our distribution centers. And so when we see that there’s a possibility that product won’t be available, we use this allocation methodology, which is not perfect but does help us maintain products so that our customers will have it as they continue to use it.”
Another reason distributors use allocation is to ensure products don’t get shipped to an e-commerce provider or reseller looking to profit on the opportunity that’s created when demand increases.
Collaboration and adaptation
Eliasek said one of the positive developments amid the pandemic has been seeing how distributors are working directly with the White House and FEMA. “All of the key distributors in the industry are working very closely with FEMA,” said Eliasek. This includes daily calls so that FEMA officials better understand the supply chain, the product that’s available, and ensuring products get to areas deemed COVID-19 hotspots. In those areas, distributors are coordinating with FEMA, as well as government agencies such as state and local departments of health.
Within their own internal organizations, distributors have had to adjust to a new reality. At McKesson, all office-based employees with the exception of a few running operations are working from home. McKesson made investments in technology and systems for its customer service reps to be able to field calls from customers remotely rather than a call center. Reps are using “safe zone protocols” where they do as much as they can from home unless they need to resolve a specific issue onsite for customers.
McKesson also put measures in place to protect employees at its distribution centers. For instance, historically private fleet drivers may have gone into a facility to deliver product or put the product away in a storeroom. With a new safe zone delivery policy, drivers come to the dock, but don’t go inside the facilities to limit the exposure they have to particular patients. There are new cleaning procedures for McKesson trucks, and PPE equipment is being issued to drivers such as wipes and gloves.
At the warehouses, workers have their temperature checked as they start a shift, follow social distancing guidelines and wear masks and gloves. They also have been asked to self-monitor their temperature to help identify anyone who has a high temperature isn’t in the facility and potentially coming into contact with anyone in the building, said Eliasek. “So there are a lot of things that we’ve put in place to make sure that those folks are safe. And we have a fair amount of training to help them understand what needs to be done, and really all of that has been driven by CDC recommendations.”
Committed to the providers
Despite the challenging environment, there are reasons for optimism. Eliasek said the McKesson team is working tirelessly to find product and to make sure the integrity of the supply chain is in place. Conditions in China are improving with more product flowing out. “While the demand is much, much higher than before, there are certainly new sources of these supplies that are becoming available,” she said. “And so I feel confident that over time we’ll be able to have more product available and be able to meet the customers’ needs.”
Eliasek said she received an email from one of McKesson’s inside sales reps that illustrated the commitment distribution has in response to COVID-19. The rep was shopping at a grocery store next door to one of McKesson’s customers when a McKesson truck pulled up. Without revealing he worked for McKesson, the rep told the driver he appreciated what he was doing. “I’m not the hero here,” the driver responded. “These healthcare providers are the heroes. I would work 24 hours a day if they asked me to because it’s so important that these products get to these end users so they can do their jobs.”
Eliasek said that’s a sentiment everyone at McKesson feels, “that we will do whatever we can to make sure that these providers have what they need. We’d love to be able to give them everything and we’re trying really hard to get it more of the product and get it available, and we’re starting to see a light at the end of the tunnel as far as that’s concerned.”