Get supply chain leaders out of the basement

I remember it vividly. I was asked to meet with a supply chain executive at a healthcare provider. As I made my way to his office, what struck me the most wasn’t the lack of windows or the damp air. It was how many times in my career that I’ve met with supply chain leaders in basement offices exactly like it.

As I talk to healthcare organizations about developing more resilient supply chains for these unprecedented times, I’ve been thinking a lot about this experience. What does it say about how these organizations value supply chain leaders if they hide them far away from the executive suite?

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More than a cost gatekeeper

Consider the traditional focus of supply chain leaders in most healthcare organizations. In addition to providing “what’s needed when and where it’s needed,” their focus has been on cost savings. In a survey^[1] we conducted of finance, operations and supply chain executives, 81% agreed that supply chain management is seen as a cost management function within their organizations. And 82% expected an expansion of the supply chain organization’s scope to facilitate cost management.

I’m not arguing that cost management shouldn’t be a key emphasis. It absolutely is considering the tight margins and budget constraints in healthcare today. In fact, I’ve written about the importance of strategic cost management.

However, as the healthcare ecosystem has evolved in recent years, forward-looking healthcare organizations have been building intelligence into their organizations. They have encouraged supply chain leaders to be cost gatekeepers and information architects. Digital capabilities make this shift possible. With digital, supply chain leaders can design and manage actionable data—from demand planning to distribution—without being overwhelmed by the vast amount of data that’s available. They can improve customer centricity while saving costs in the process.

But here’s the problem. Investments in enabling digital technologies for the healthcare supply chain have been underwhelming. Just 30% of our survey respondents invested in big data analytics in the supply chain. And only 36% cited cloud as a top supply chain investment to achieve strategic priorities.

Facing a real-life reality check

This underinvestment in enabling technology for the supply chain was a red flag at the time we conducted our executive survey. Months into a once-in-a-century pandemic, it’s a flashing, red light.

The pandemic revealed the immeasurable importance of the healthcare supply chain—and its extreme vulnerabilities. Too many healthcare systems felt the impact of supply shortages, poor visibility and unreliable suppliers. COVID-19 has been the proverbial wake-up call. Among its many tough lessons, this one is simple: Healthcare organizations should have invested in more technology for the supply chain sooner.

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Building supply chain resilience

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Answering the wake-up call

There’s no real value to doing any more Monday morning quarterbacking here. However, what we can do is look forward. Healthcare organizations have the opportunity now to act on this wake-up call. They’ll need to do so urgently considering the post-pandemic reality we all live in. In other words, the healthcare supply chain has never had to be so resilient. The good news is that the leaders I talk to know this. They recognize the need to invest in and apply technology and build skills to help treat patients, keep employees safe and protect public health. All while increasing efficiency and reducing costs.

One way to start this process is by getting supply chain leadership “out of the basement.” The way I see it—and maybe why those basement offices stick with me—is that healthcare organizations cannot heal the supply chain without elevating supply chain leaders to have a meaningful voice in decision-making.

A striking 92% of our survey respondents believe that it is important for supply chain leadership to be part of the key decision-making team. In addition to the unique skills and perspectives they offer, supply chain leaders can help cut through one of the biggest obstacles my clients find to implementing new technologies—providing a clear and strong return on investment.

It’s everyone’s business

As important as elevating the role is, supply chain leaders can’t—and shouldn’t—transform the supply chain alone. The supply chain impacts all of the business. That’s why the entire executive team should work together to build new resilience into it. In fact, our survey respondents emphasized the value of collaboration in achieving organizational goals.

I’ll leave you with one last thought: A few months ago, Accenture published a perspective that explores  post-pandemic human truths that experiences need to address. One of these truths is that every business now needs to be (and essentially is) a health business. I think the same logic applies to this topic. Think of it like this: In healthcare organizations, everyone is in the business of the supply chain. And no one should be in the basement.

^[1] Accenture Supply Chain Survey 2019