Supply chain executive
In the fall of 1973, one of America's most treasured industries was brought to its knees by the toughest competition of them all. This competitor wasn't another company. It was far more dangerous than that. This competitor was a better supply chain—which caught this industry so flat-footed that it never has quite recovered, even though the problem began more than 40 years ago.
Let me set the scene. The Organization of Arab Petroleum Countries1 had just declared an oil embargo2 on the United States. Suddenly, America was paralyzed by an energy crisis. As gas prices began to skyrocket, American automaker sales plummeted. Consumers were trading in their gas-guzzling muscle cars for more efficient Japanese models.
The Japanese were masters at building them, and the secret was their supply chain.3 Long before The Toyota Way4 became a benchmark for modern-day lean manufacturing, the Japanese were delivering world-class products with precision, just-in-time (JIT) inventory controls. And they were expert at using disciplined quality control and management practices. So when they saw an opportunity to get a bigger foot in the door in America, they stepped right through.5
To respond, American carmakers had to quickly create a leaner supply chain that delivered far better products much faster. But they had a long way to go. See if any of the following problems sound familiar to you, as you think about the healthcare supply chain:
What can we do, working together, to avoid the mistakes that the auto industry made? How can we improve the health of the healthcare supply chain?
So how do we make that happen? It won't be easy, because there are hard constraints standing in our way. For example, where and how patients access care is evolving rapidly. The pressure to improve quality is relentless—and growing. The role of the sales rep is changing, from assisting in the OR to creating more value elsewhere. And most critically, costs and cost structures are changing as rapidly as healthcare itself.
The answer is as simple as it is powerful: stop maintaining your own warehouses. And avoid paying the high price of shipping LTL (less-than-truckload) with traditional trucking companies. Instead, collaborate with other manufacturers, gain new efficiencies and save substantially with every shipment.
For high-dollar physician preference items, it means:
The future isn't coming. It's right here, right now. As an industry, we are either going to lead—or be left behind. It's time for all of us in healthcare to work together. Our challenges are no less daunting than what automakers faced in the 1970s. If they can change, so can we. So can you.
1 http://www.investopedia.com/terms/o/oapec.asp 2 http://history.state.gov/milestones/1969-1976/oil-embargo 3 http://www-personal.umich.edu/~afuah/cases/case3.html 4 http://www.toyotaway.com/ 5 http://www-personal.umich.edu/~afuah/cases/case3.html 6 http://www.mckinsey.com/insights/health_systems_and_services/strengthening_health_cares_supply_chain_a_five_step_plan