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The COVID-19 pandemic has had devastating effects on nearly every facet of life. As a society, we’ve had to embrace a whole new way of living that was unfathomable just two years ago. The virus has stretched the healthcare industry to the brink and led the global supply chain to crack under pressure as businesses struggle with product shortages, shipping delays, unprecedented demand and skyrocketing costs.
This confluence of events has created a perfect storm for the healthcare supply chain, which is experiencing disruptions that are creating a humanitarian and societal emergency on a global scale. So why is the system breaking down when it is needed most and what can be done to course correct during these tough times?
Read on for perspectives from two healthcare supply chain experts who will share insights on what led to this pivotal moment and how they think the industry can recover while learning from the past.
Looking Back to Move Forward
Prior to the pandemic, the healthcare supply chain was operating under stress and not keeping pace with the evolving healthcare industry. Hospital systems were laser-focused on providing exceptional care at a lower cost and optimizing vendor relations to cut budgets. The medical supply chain was often overlooked as a critical component and an opportunity to drive efficiencies.
“The pandemic escalated many of the issues that the medical supply chain was already experiencing,” said Gerry Romanelli, CCO of TRIOSE, a full-service hospital and healthcare supply chain solutions provider. “It’s like when a car engine is stressed and you start driving 100 miles per hour — that’s when the engine goes.”
Prior to the pandemic, many hospitals were only purchasing the supplies they needed at hand, rather than buying in bulk and storing supplies for the future. This became a critical issue when COVID outbreaks spread across the globe, creating a PPE shortage. Now, hospitals are being forced to rethink how they order and store supplies to avoid dangerously low inventories when demand surges.
“We’re in a situation now where if hospitals don’t stockpile, they may face shortages,” said Natalie Jones, Vice President of Sales at TRIOSE.
Rising Shipping Rates Disrupt the Industry
At the beginning of COVID, supply chain workers became essential first-responders who were depended upon to deliver supplies and goods around the world. But this came with a heavy price tag — shipping costs soared, adding even more tension to the pressurized supply chain.
“Two years ago, you would pay up to $2,000 for a container shipment from somewhere in Asia to a West Coast port in the U.S.,” Romanelli said. “After COVID, the same container could cost well over $20,000.”
Many factors contributed to the COVID shipping rate hikes including:
- Changes in consumer and business buying behaviors
- Truck drivers retiring and a shortage of new drivers to backfill positions
- COVID outbreaks at shipping ports that resulted in shutdowns
- Equipment and container shortages because of unloading delays
- Pallet shortages due to rising lumber prices
These issues have been leading evening news cycles and have put a spotlight on the supply chain like never before. And don’t expect the situation to get better any time soon — supply chain disruptions will continue through 2022, according to Drewry’s Container Forecaster report.
Leveling Up for Tomorrow
As the supply chain moves forward on a path toward recovery after two tumultuous years, there are some strategies healthcare systems can embrace to regain control and stay agile. Adopting a proactive approach is key to staying flexible and being prepared to operate in the volatile supply chain.
“What we are seeing in the healthcare space has never happened before,” Jones said. “If hospitals don’t have current agreements with carriers, they need to go get them now to lock in their rates and prices. These agreements help control costs and drive efficiencies in the supply chain at a discounted rate.”
By working directly with carriers or partnering with companies like TRIOSE, hospitals and healthcare networks can consolidate their spend, work with experts who have pre-existing relationships in the freight industry and avoid peak-season surcharges (and other fees) that are expected to reach an all-time high in the next year.
“Those with spending power get discounted rates that they can then pass on to their clients and patients,” Romanelli added. “That’s why it’s so important now to not go at it alone and instead, work with partners who can leverage opportunities for savings.”
To weather the supply chain storm, full-service supply chain solutions and strategic partnerships are more crucial than ever. With the right partner, hospitals and healthcare systems can be more efficient, save money, stock essential supplies — and overcome supply chain uncertainties.
Gerry Romanelli joined TRIOSE, Inc. in 2016 and currently serves as Chief Commercial Officer. Romanelli’s 30 years of experience in transportation and logistics shape his understanding of the latest products, services, and standards in the market. Romanelli is responsible for designing and implementing the business development strategy at TRIOSE, leading the sales, marketing, and customer service teams.
Natalie Jones was recently promoted to vice president of sales at TRIOSE, where she manages commercial sales activity and channel partnerships, as well as growing strategic customer accounts and partner relationships. In her seven-year tenure at TRIOSE, Jones has fostered a culture of excellence and accountability at the company by consistently setting and surpassing business goals and objectives. Notable accomplishments include establishing and launching a channel partnership with McKesson, opening TRIOSE’s first field office in Houston and playing an instrumental role in the organization’s implementation and adoption of a standard sales methodology.
For more information about TRIOSE Inc., click here.