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6 Steps to a Better Healthcare Supply Chain Audit

By Avetta Marketing
March 09, 2021
8 minutes
Healthcare Supply Chain Audit

As you are well aware, a supply chain in healthcare can be extremely complicated—even in the best of times. However, toss in a worldwide pandemic and an unprecedented vaccination distribution race, and you’ve received a prescription for major supply chain delays, breaks, and complete shutdowns in your hands. 

Performing a healthcare supply chain audit can go a surprisingly long way in easing such heavy implications while, at the same time, controlling costs and ultimately improving patient outcomes. Chances are, your supply chain in healthcare already has an audit process. Unfortunately, it’s probable that your current audit process is lacking in visibility, data, and maybe even compliance. This is where Avetta steps in to help.

What is a supply chain in healthcare that has undergone a full audit? A superior one! We’ve listed six steps to performing a better healthcare supply chain audit so that it meets your goals for identifying weaknesses, making data-driven decisions, and remaining compliant throughout every stage of the product journey. 

1. Set Goals for What Your Audit Should Accomplish

The first step to meeting the goals you have for your audit is to make them! Generic or incomplete ideas like “be more resilient” or “increase speed to market” won’t cut it. You’ll find your supply chain floundering in a sea of uncertainties and reacting to every outside influence rather than sharp-shooting at a predetermined target.

The goals you set must be as specific as possible, be measurable via accurate data, and have a start-to-finish and every-step-in-between timeline. 

Here’s an example of an end goal and how a good audit can help you achieve it:

  • Build a more trusting relationship with supplier #3 by working with them one-on-one to prequalify them to meet our new, ambitious environmental sustainability policies. To better aim for this goal, the audit should be able to tell you:

 

  • If supplier #3 has a strong history of capability and compliance
  • What the risks are regarding supplier #3
  • The source of and costs associated with supplier #3’s materials

2. Create a Visual Road Map of Each Product

Because supply chains in the healthcare industry are so complicated and dynamic, having a visual can help sort it all out and ensure no step is overlooked. Between multiple suppliers of sourced materials and the patients using the products are many links that must each be examined. This can’t be done thoroughly enough without a set path to follow.

Some of the workflows that need to be included on the road map are:

  • Organizational 
  • Sourcing
  • Procurement 
  • Inventory
  • Manufacturing
  • Distribution
  • Invoicing

All of these workflows need to be road-mapped separately as well as together to get a clear view. An audit can help accomplish this by finding the missing pieces that aren’t being recognized, acknowledged, critiqued, or overseen completely. 

3. Know the Decision-Makers at All Stages of Every Product

There are many players all along the supply chain, and once you have the organizational workflow road mapped, then you can get to know all of the decision-makers for every product.

For example, for each product you may want to know the:

  • Analyst for Real Estate
  • VP of Facilities Development
  • Director of Capital and Services
  • Director of Clinical Management
  • Director of Supply Chain Operations (who may or may not be you)
  • Director of Process and System Performance
  • Manager of Accounts Payable and Travel

Once you know who these people are after performing the audit, you’ll be in a position to start building stronger, more communicative relationships with each major player in the playbook.

4. Look at the Costs of Each Component

Through either elimination of unneeded or outdated processes or technological advances, it’s amazing how a few small tweaks in costs along the chain of supplies can make a huge difference in the financial health of an organization.  

Take a hard look at these suggestions for making operations more economical:

  • Identify which products don’t have much real demand and which cost a lot to manufacture.
  • Increase standardization of products with high volume and low variability, as well as high margin to raise quality and satisfaction.
  • Communicate with all departments and end customers about how to cut waste and better match their needs. 
  • Establish strategic partnerships and openly share with them your cost information and any available joint product development ventures.
  • Improve data integrity and reduce variation so that a higher caliber of calculations can aid in decision-making.

5.  Identify Shortages and Risks

Perhaps the most obvious reason to perform healthcare supply chain audits is to identify what causes shortages, where the waste lies, and what risks are hiding out of plain sight. 

Audits identify any potential risks that could be waiting just around the corner. Let’s take COVID-19 as the most recent example. A good audit could have predicted that suppliers in China were going to temporarily shut their doors days or weeks before they actually did. How? Because an audit would have red-flagged both real-time and forecasted data that showed the risk of a global pandemic (and the ensuing shortages) growing before most humans could have predicted it.

In addition to future pandemics and political upheavals, believe us when we say that there are plenty of other risks to stay abreast of, including cybersecurity exposure. Kelly White, CEO of RiskRecon, wrote that “healthcare has one of the highest average rates of severe security findings relative to other industries.” 

Don’t let a pandemic, civil unrest, cybersecurity warfare, or any other black swan event sneak up on your supply chain. Conducting regular, deep audits can help your organization better deal with waste, inefficiencies, costs, and fallout before they become out of control and unmanageable.

6. Take Stock of Streamlining Databases and Software

Yes, doing all the previously mentioned five steps will improve your healthcare supply chain audit. However, that’s a tall order to coordinate and accomplish all on your own. It may even be near impossible, so that’s where streamlining all databases and software technologies into one cohesive, centralized system comes in.

Reducing administrative burden and costs at the same time, supply chain management software can help the healthcare and pharmaceutical industries continue to make life-saving innovations while effectively managing their risks. 

Without this technology, the patchwork of ever-changing regulations, underqualified contractors, and complex inconsistencies creates and escalates risk across the board. But when state-of-the-art technology supply chain management software is seamlessly integrated, you’ll get:

  • Complete visibility into supplier financial stability and sustainability practices
  • Consistent compliance even with temporary workforces
  • Distribution success into new markets
  • Properly trained and certified partners

A new year is always a good time to take an audit, but there is never a bad time to take a step back and audit your supply chain from top to bottom. Take these six suggestions to heart and start now!

 

 

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