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Building supply chain resiliency
Warehouse operations at Cardinal Health

12/03/2021

Since the onset of COVID-19 in early 2020, nearly every aspect of the global healthcare supply chain has been disrupted, creating shortages or potential shortages of everything from personal protective equipment (PPE) to medical devices to prescription medications. In addition to worldwide shipping delays, the supply chain was further challenged by a system overburdened by consumer demand, explained Josh Dolan, SVP of the Pharmaceutical Segment supply chain at Cardinal Health. “Suddenly, consumers realized they could buy everything they needed online – and they did. That led to tremendous backlogs for shippers.”
 

Well before the pandemic began, Dolan and his team of supply chain experts were innovating to create long-term improvements in the supply chain, increasing its agility and resiliency and building greater visibility end-to-end. The work was made more complicated by the pandemic, which in turn created greater urgency for supply chain transformation, Dolan said.
 

“Our highest priority, always, is getting medications and supplies to the patients who need them, when they need them,” Dolan said. “It sounds simple, but it often isn’t, and it certainly hasn’t been simple throughout the pandemic.”
 

Dolan and several colleagues recently participated a panel discussion with the Healthcare Distribution Alliance (HDA), with the following key takeaways.
 

Creative solutions keep products moving
“The tremendous increase in volume that began to pass through our warehouses early in the pandemic continues, even 20 months later,” said Jason Cook, Director of Warehouse Operations and Third-Party Logistics (3PL) Services at Cardinal Health. “Everything has changed: everyone is dealing with the challenges of a national labor shortage, especially carriers who need more drivers – and drivers need more time, because COVID-related safety protocols mean their wait times at pickup and delivery points have increased.” 
 

Cook’s team has focused on how they can flex to get the job done. For example, they’ve implemented overnight shifts and weekend shifts. Warehouse operations at Cardinal Health 3PL are now 24/7, except for Saturdays, Cook said, and “we have a SWAT team on call so that if we have to move fast on a Saturday to get a temperature-sensitive product off the road and out of the truck quickly, we can do that, too.”
 

Cook’s team is also experimenting with nontraditional delivery days. Most manufacturers ship for Monday, Tuesday or Wednesday deliveries, but, Cook said, “for some of our customers, deliveries later in the week might work just as well. If we can deliver a product on a Thursday or Friday and still satisfy a customer’s needs, we take some of the strain out the first half of the week. This doesn’t work for everyone or every time, but when it does, it’s a big help.”
 

Before the pandemic, Cook said, warehouse teams had annual mock drills to ensure emergency readiness. “Since the pandemic, those drills have become even more important – we have learned we have to prepare for anything and everything. So instead of annual drills, we have frequent sessions to run through worst case scenarios. Our goal: No matter what the emergency, everyone on the team knows what to do, who to call and who to partner with in order to keep the product moving to the patient.”
 

Digitizing the supply chain is more critical than ever
“We started the work to build a cognitive supply chain about 2½ years ago,” said Katie Blohm, Cardinal Health’s Director of Logistics Product and Solutions. “A cognitive supply chain is one that uses artificial intelligence, automation and machine learning to help us predict potential disruptions – and allows us to make decisions in real time to mitigate any disruptions.”
 

Blohm’s team is focused on developing, designing and delivering new supply chain solutions that drive efficiencies, reduce defects and control costs, and ultimately provide better customer experience. The disruptions of the past 20 months have solidified Cardinal Health’s digitization strategy, she said. “AI and data allow us to predict and react quickly. They make our supply chain more flexible, so that, in the event of any emergency, we’re able to make nearly instantaneous decisions based on what our customers need.”
 

Over the past year, Cardinal Health has dramatically increased visibility in its supply chain, allowing stakeholder to access real-time data about inventory, delivery and potential disruptions, thanks to a partnership with FourKites, a leader in supply chain visibility.
 

“Visibility unlocks all aspects of supply chain, by allowing us to predict any problems and respond quickly,” Blohm continued. “It also allows customers to know exactly where their products are and when they can expect them.” Such visibility is particularly critical in the healthcare supply chain, she said. “Patients’ lives may depend on it.”
 

Focusing on the final mile can mean greater efficiency, savings and improved service
Final mile delivery is the last step in the supply chain, when the product moves from a transportation hub to the healthcare provider or at-home patient. For final mile delivery,  drivers arrive at a transportation hub to pick up products, wait while warehouse workers scan the orders and load them, then head out to customers.
 

This often is the most time consuming and costly step of the entire delivery process, said Casey Sattler, Director of Final Mile Logistics at Cardinal Health. “Maximizing capacity, efficiency and on-time deliveries all at the same time is challenging. It’s been particularly difficult over the last 20 months.”
 

When COVID hit, overnight the company pivoted from not having enough work for final-mile truckers to having too much, he said. “We faced a huge bottleneck in all of our networks, and that continues to be a challenge.”
 

That’s where partnerships with delivery companies become critical. Sattler pointed to partner Skelton Truck Lines, a high-risk, high-value transport system that delivers temperature-sensitive pharmaceuticals to healthcare providers. “Working with partners who can quickly step in and help get products on the road is a huge advantage,” Sattler said.
 

When truckers are experienced in handling disruptions with agility, so much the better, said Bruce Bailey, a Skelton sales executive. “Disruptions are common place for truckers. On any given day, they are likely to face road construction, traffic congestion or a bridge outage that will slow them down. The pandemic increased disruptions exponentially. Because our truckers are so experienced, well-trained and well-prepared, they know how to respond and keep products moving.”
 

Frequent communications with both truckers and suppliers is essential, Bailey said. “We are in fairly constant communications with our truckers. We can’t know exactly what the conditions are that they’re working in unless we’re talking directly with them. And we check in with suppliers much more frequently than we did before the pandemic. In order to keep our drivers moving, we need to know what’s going on with suppliers this week – not this month or this quarter, but now – so we can quickly make any appropriate adjustments to our schedules and loads.”
 

Sattler added, “One positive resulting from pandemic-related disruptions is much more collaboration across all the players in the health ecosystem. We’re all working together – stitching things together in new ways – to make the supply chain work as efficiently and effectively as possible.”
 

Preparing for the worst helps prepare for delivering the best
Cook said, “We’re all better prepared for disruptions now than we were in early 2020. We’ve focused on rapid response and proactive communications with manufacturers, customers and our teams.
 

“We don’t know what the next disruption will be, but we know we’ll be ready.”
 

Adds Dolan, “All of us are focused on continually transforming every aspect of the supply chain. It’s a journey – not a one-year journey, but a multi-year journey. Every day we make improvements, and that ultimately translates to better, more timely care for patients.”
 

Editor’s note: Please read CEO Mike Kaufmann’s note urging collaborative action across the public and private sectors to address disruptions in the healthcare supply chain.