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Healthcare supply chains recognized for COVID-19 resilience
Gartner's annual ranking of healthcare supply chain organizations highlights innovative processes and fast thinking.
Healthcare supply chains were not immune to the challenges created by COVID-19. Yet some proved to be more resilient than others, according to new research from Gartner.
In its 12th annual "Healthcare Supply Chain Top 25," the analyst firm ranked Johnson & Johnson's supply chain as No. 1 for the second year in a row. The report highlights healthcare supply chains that successfully controlled costs and improved patient outcomes for healthcare organizations, providing examples for other supply chain companies to follow.
Stephen Meyer, research director at the Gartner supply chain practice, said the pharmaceutical, medical device manufacturer and consumer packaged goods company set itself apart in its approach to finding innovative solutions to problems facing healthcare supply chains this year.
"There are two factors that I think Johnson & Johnson has done better than anyone which earns them the coveted top spot," Meyer said. "One is they embraced strategy in terms of execution. ... They were always good at developing compelling strategies, but now they're great at developing strategies and fantastic at making sure they're implemented across their various businesses globally. The second is they really don't have any peer when it comes to supply chain innovation."
CVS Health clinched the No. 2 spot, followed by Cleveland Clinic, McKesson Corp. and Banner Health in that order. Meyer said all 25 healthcare supply chains set themselves apart in 2020 based on factors such as inventory availability and profitability.
Ranking healthcare supply chains
Johnson & Johnson's focus on improving the supply chain itself earned it top marks in 2020, Meyer said.
While resources are often funneled toward product innovation, investment in improving efficiency of the healthcare supply chain can be elusive, Meyer said.
Stephen Meyer
"Unlike industries like retail, for example, where supply chain is more central to the value proposition of the customer, it can be hard to get resources to innovate on the supply chain," he said. "But Johnson & Johnson has excelled at that. They have been able to make compelling business cases such that Johnson & Johnson corporate will invest in the supply chain to bring them new capabilities."
Meyer said one example of that is Johnson & Johnson's 3D Printing Center of Excellence, a collaborative effort between the company and universities in North America and Europe to develop and commercialize healthcare products faster with 3D printing.
Outside of the top five healthcare supply chains, Meyer said companies like Stryker Corp., which was ranked No.17, also found ways to stand out in 2020. Stryker is a medical technology company that offers products and services in orthopedics, medical and surgical, neurotechnology and spine. The company is best known for making ICU beds, which became important early on in the pandemic when some hospitals were flooded with COVID-19 patients in the ICUs, Meyer said.
A challenge often facing new healthcare products is the slow approval process from regulatory bodies such as the U.S. Food and Drug Administration, Meyer said. With the impending pandemic, Stryker gained quick approval for an ICU bed that took less time to build.
"The typical ICU bed contains over 10,000 parts, which is a staggering number," Meyer said. "But what Stryker did is they went from design of what they call their IKEA bed because it has 90% fewer parts -- only about 1,000 parts -- they went from idea to approval by the U.S. FDA in seven days."
The quick approval could become a model for future healthcare products, according to Meyer.
"That kind of threw away a lot of these long-held beliefs that we need to move slow to guarantee product safety and efficacy ... [which] was really refreshing," he said. "I think it's going to be one of the positive impacts of COVID-19 as we move on."
To determine the top 25 healthcare supply chains, Gartner analysts looked at publicly available metrics such as inventory turns, the availability of finished goods a company keeps on hand, and return on assets, which analysts gathered from financial filings of the publicly traded companies.
Gartner analysts with healthcare subject matter expertise, as well as outside industry experts, are also polled to supplement the ranking, Meyer said.
