Supply chain is slightly removed from patient care. Because of this, Rachel Cunningham, Director of Operational Excellence, Piedmont Healthcare, wants to connect her team to the person or people at the end of all the decisions they make.
“I came up in manufacturing, transportation, and then moved into healthcare,” she said. “So that’s really a big difference between supply chain in healthcare and supply chain anywhere else — there’s a human being at the end of all this.”
Working in the automotive industry, it was going to be annoying if supply chain didn’t get an engine out on time. But no one’s life was threatened in that scenario. Healthcare is different. “So, I think that’s really the balance or the philosophy that my team has, is just keeping that human being at the center of everything that we do,” she said. “Understanding that not only the human being that benefits from making sure that we have the right price in the system and being charged the right price, but also the human being that has to clean up after our messes when we don’t do something right.”
Cunningham uses the Bullwhip Effect as an example. The Bullwhip Effect states that every small decision makes a larger impact the further down the line it goes. Cunningham and her team know that the people doing the work on the ground — those seeing patients, refilling pars, etc. — will have to pay the biggest consequence when something goes wrong. “That’s our philosophy around keeping the cost efficiency and quality in tandem,” she said. “Don’t let perfection get in the way of progress, but keep in mind that somebody else is cleaning up your mistakes.”
Operational effectiveness at Piedmont Healthcare encompasses things like analytics work and new technology. Cunningham and her team are the bridge between supply chain data and action within supply chain. She leads the business/systems analytics team, which handles all of Piedmont’s ERP integration and all the vendor information. She also manages continuous improvement projects and any other projects that come our way. “So, any new fun stuff we want to roll out, that tends to roll through me.”
On the most pressing challenges in supply chain
Cunningham: First, the number of stakeholders that are involved in just about every decision we make now has grown. Silos are a luxury of the past. We can’t afford them anymore. Every decision must be made in tandem with our clinical teams and our finance team.
Second, we’ve come to understand that just judging by price isn’t a fair comparison of how we are doing anymore. We’re really focused on total cost of ownership, or a cost-to-serve model. Just because we have a price increase doesn’t necessarily mean it’s a bad thing. It may increase revenue. A big challenge has been seeing that full picture and making sure that we’re encompassing everybody that needs to be in all of those discussions.
The final challenge is supply chain continuity or just making sure that we have the right products in the right place, especially around all the challenges that we’ve had since COVID. We’re luckier than most. We self-distribute, which is a huge benefit to us. We have a distribution center where we’re able to keep a lot of our commodity items so we can mitigate quite a bit of risk. But I think every health system is in the same boat of all going after the same products at the same time, and when they go on a shortage or when there’s a recall, we’re all still looking for the same products at the same time.
On the value of good, clean data
Cunningham: One of the big initiatives for our systems analytics team is around our data cleanup and match exceptions. We’ve put a lot of work in the last few years into data cleansing and data integrity. One of the mottos that we keep at Piedmont is “right product, right place, right time at the right price,” because that is what supply chain is all about.
We’ve done a ton of work around this in the last couple of years, and we were able to improve our match exception rate. When you’re going through the system, if something has to be touched by human hands because the automation didn’t work, that’s a key way to think about a match exception. For example, if your invoice price didn’t match, or the part number didn’t match. Something made it so someone had to take it out of its automated process and actually touch it.
We took our match exception rate number from 20% of our overall purchase orders to less than 3%. I’m very proud of the team for that. They’ve put in a lot of hard work, and we’ve been able to maintain that for over 18 months at this part.
That’s coupled with astronomical growth. Piedmont has doubled in size twice in the time that I have worked here. So that’s been a really big thing for us to be able to do that amount of data cleansing on top of day-to-day maintenance.