Recently, we hosted (virtually) the 4th Annual Consolidated Service Center Summit, and explored the role CSCs play in this COVID era. We had guests from Intermountain Healthcare, Novant, Intalere and many more to discuss all things CSCs.
I’ve been tracking IDNs conducting some sort of self-distribution for the last 20 years. I believe self-distribution is a sign that the IDN has prioritized strategic sourcing. It doesn’t mean they are faster, better or smarter, just that they crave more control of their sourcing. It certainly signals that the C-suite is in support of the Supply Chain Leader.
Historically, every Supply Chain Leader I’ve spoken with has a financial justification story on how the CSC created a net gain for the IDN. That always seems to be an imperative for the C-suite to make the investment in land, warehouse and office space, and FTEs to move forward with a CSC. I’m starting to think the last 8 months has softened that imperative.
So many IDNs are going to be conducting some re-distribution activity due to the fear of running out of PPE. I’ve heard of many IDNs having already leased significant square footage so they can procure, store and rotate PPE. They don’t mention, however, that this is a cost saving adventure. In fact, it’s easy to see they are often paying a premium to gain this peace of mind.
There is such a wide spectrum of activities an IDN can do when getting into self-distribution. They can simply buy, hold and re-distribute to their hospitals on the easy end of the spectrum. On the complex end is true distribution of buying in bulk, breaking bulk, offering assortment and fulfilling hospitals and alternate sites alike. The two ends of the spectrum are light years apart in complexity.
The dream they all used to be chasing was control. Control of variance, process, access and inventory levels. That all changed in March. Now the dream is festered in a fear of not being able to protect employees, clinicians and communities by running out of PPE.
Like challenges that came before us, we will work though this, I am confident in that!
Wishing you a healthy end to 2020.
