Supply Chain FAQs

November 9, 2020  //  FOUND IN: Updates & Resources

Last updated: 4:30 p.m., Nov. 9

Q: What is the status of the global health care supply chain?

A: There has been an exponential increase in demand for products like PPE due to COVID-19. This includes demand from non-traditional and traditional health care customers. While suppliers are working diligently to ramp up production, manufacturing is constrained by their current capacity. As an example, it takes a significant investment in capital and 18-24 months to stand up a new manufacturing line for nitrile gloves.

There is also currently a high dependency of offshore production, which can cause delays. Historically, large global events generally lead to many new players entering the market adding more touchpoints and potential delays. We anticipate that the global supply chain will continue to adjust to meet demand. Our teams continue to work every channel to source high quality products to ensure safety for our patients, families and work force.

Q: What is Michigan Medicine doing to ensure we have enough product?

A: Given the disruption in the health care supply chain posed by COVID-19, our teams have identified additional suppliers of effective material, enhanced our forecasting to account for surge risk and changes in clinical care standards, and overall volatility and risk in the global market. Our primary strategy is to make effective purchasing and supply management decisions to ensure sufficient supplies to keep staff safe and to care for our patients.

Q: How prepared are we for a potential next surge?

A: With patient and employee safety as top priorities, Supply Chain Services continues to plan — in conjunction with UMHS leadership, Safety Management Services (SMS) and Infection Prevention and Epidemiology (IPE) — to assess the current state and identify options to address ongoing supply needs for COVID-19 and other patient care services. Supply Chain teams have been planning for additional surge activity since the first wave. We monitor raw materials, global and national manufacturing changes, and work collaboratively with our supplier community to understand risk and changes in the market. We have initiated programs and new purchasing agreements that guarantee access to key products and have enhanced our forecasting models to account for uncertainty.

Q: How do you know how much inventory to keep on hand?

A: We use a scientific approach to forecasting how much product we need. We look at standards of care, variation in patient and case volumes, seasonal adjustments, historical use and distribution channels including lead times from point of manufacture to point of use. As clinical practice changes are implemented and other information is discovered, we adjust our forecasting.

Q: Why don’t we own more inventory (days on hand)?

A: The health system has a strategic agreement with our distributor, Owens and Minor, for “Just In Time” inventory. This means that inventory is delivered to clean supply locations in time for use. Whether we own the inventory or have our distributor own the inventory on our behalf, product is picked to deliver to clean supply rooms on a regular schedule to ensure clinical teams have what they need, when they need it. Our strategy is to have approximately three days of inventory in clean supply rooms, which are replenished daily to bring quantities up to par levels.

Q: Why are our reported numbers different relative to other hospitals?

A: This is in part due to inventory strategy. Some hospitals practice a self-distribution model which means they hold all their own inventory. Some hospitals use a vendor partner for “Just In Time” deliveries like us. Numbers also vary due to number of hospitals in a health system, number of beds in a hospital and activity in the hospital.

Q: Why do the days on hand and quantities on hand fluctuate?

A: Utilization of product changes day-to-day, as do the quantities that arrive daily. The dashboard reports real-time owned inventory, so it changes as any activity occurs. Some levels may change drastically with the receipt of bulk orders or distribution of large quantities, such as for the Continuous Eye Protection project.