Supply Chain’s Call for Demand Planning

The COVID-19 pandemic – with its resultant dire shortages of PPE and other essential supplies –made it abundantly clear that the visibility and predictability of the supply chain are essential for managing hospital operations and resources, guiding and achieving inventory optimization, preventing waste, controlling supply spend, and providing quality patient care.

Many supply chain experts have addressed the pressing need for demand planning and supply forecasting as a way to achieve these goals. In a recent article published in Healthcare Purchasing News, SMI members write, “In an ideal state, providers across the industry would be able to forecast accurately the supplies that they need for clinical care with great precision and adequate lead time…By minimizing the risk of disruption to the supply chain, sophisticated demand planning can support uninterrupted clinical care delivery at the front lines” (p. 52). Unfortunately, as many have noted, the healthcare industry as a whole is still far from instituting these strategies and lacks the technologies and standards to achieve these objectives.

At VUEMED, we use a procedure-based supply forecasting model, together with Key Performance Indicators (such as those tracking expiring/expired inventory and stagnating/unused items), and RAIN RFID UDI data capture technology, to optimize our clients’ supply chain, align their on-hand inventory with their actual clinical needs, and prevent unnecessary waste and spending.

Why is demand planning necessary?

Demand planning gives us essential real-time information – such as visibility in replenishment orders, POs received, on-hand inventory, and what is being utilized – to determine which supplies are required and when. We help our clients review their supply needs based on past consumption/purchases data and predict the required amount of supplies given anticipated procedure volumes. We base our supply forecasting model on type of clinical procedure; by doing so, we can take into consideration market conditions for specific procedure volumes, thus ensuring flexibility in managing the supply demand.

This kind of procedure-based forecast modeling also enables us to sense demand based on population health statistics, which can predict anticipated procedure volume changes. For example, if the population a hospital serves is known for having X% prevalence of cardiovascular disease, we can predict the number of stenting procedures in a given amount of time, and therefore the number of stents that will be needed.

What is needed to achieve effective demand planning?

It’s basically impossible to do supply forecasting if you don’t have accurate and complete data about past purchases and consumption, about which products are in stock or expiring, and so on. To achieve full visibility of the status of supplies, it’s recommended that hospitals adopt greater automation in both data capture and inventory management, especially in the supplies-intensive procedural environments.

RAIN RFID is one such technology that enables the continuous and automatic tracking of the movement and location of all tagged supplies, without the need for human intervention or cabinetry. A light overhead fixed infrastructure, consisting of RFID readers and antennas, turns any space – whether a supply room, procedure room, or warehouse – into a fully controlled inventory space using existing shelving.

VUEMED’s RAIN RFID solution, VueTrack-RF™, ensures the accurate data capture of every item coming in and going out of a hospital’s department, as well as used at the point of care. This data is then reported to the Cloud in order to be able to provide real-time visibility and trackability of medical products and supplies throughout the supply chain. The power of the Cloud lies in its ability to store, compute, analyze, and report tremendous amounts of data with easy user access, and to help turn data into actionable information. VUEMED then implements ERP and EMR interfaces to ensure efficient and streamlined processes for clinicians to capture and document the UDI data, for supply chain staff to efficiently manage inventory, reorders, and expirations, and for administrators to monitor overall utilization, costs, and contract compliance.

With a RAIN RFID solution in place, such as VueTrack-RF, hospitals have full and accurate data visibility, and can run reports within seconds that give them the data needed not only to manage their clinical inventory, but also to do effective supply forecasting. As Karen Conway wrote in Healthcare Purchasing News in August 2020, “COVID-19 has also increased appreciation for the need to invest in supply chain, with early evidence that providers with more digitized and automated supply chains fared better when managing supply shortages.” Indeed, without an automated inventory management system, the hospital supply chain will be hard-pressed to achieve effective forecasting and demand planning, which are so essential for controlling costs, managing supply risks, ensuring efficiency, and providing the best patient care.

Imagine what a shocking failure it would be if our grocery stores, retail shops, or Amazon didn’t have a robust demand planning system and accurate, real-time data to feed their model and inform their decision-making. Shouldn’t healthcare actually perform better than retail, given that people’s wellbeing and lives are at stake? It makes you wonder why the healthcare supply chain is still lagging. This is a race that it can’t afford to lose again – as the supplies crisis at the outset of the pandemic taught us – if only we are willing to listen.