How to Navigate Supply Chain Issues

Published in Complex Rehab on May 19, 2023

Ted MetcalfBy Ted Metcalf, Regional Account Manager, VGM & Associates

The DMEPOS supply chain was significantly disrupted by the COVID-19 pandemic, and the industry is gradually making its way back to a more typical state. Nevertheless, certain procedures that were developed out of necessity during the pandemic’s onset and peak have evolved into effective best practices. One of the most crucial lessons learned is the importance of close collaboration between providers and their trusted vendors, manufacturers, or distributors to ensure success.

Vendor Partners

Supply Chain

What Can Companies Do to Help Alleviate Supply Chain Issues?

Our vendor partners are a valuable resource to providers in helping alleviate supply chain issues. Many of our vendors have taken a commercial approach to understanding more about what the demand estimation is.

Demand estimation is the process of trying to understand what level of products they need and at what point to properly forecast. For example, let’s say a DME needs 50 hospital beds per month on average. If the DME works closely and is transparent with the distributor about what their needs are, the distributor can understand what the demand curve looks like. Then, they can buy ahead and forecast that supply chain into their software or ERP system and plan in advance.

Forecasting

Forecasting

Receiving equipment that is being shipped from overseas takes time that the distributor must factor into their demand plans. During the pandemic, the demand plan for equipment could take anywhere between four to eight months. Companies that wanted an extra 40 beds were unfortunately forced to wait. Now, the time it takes to ship equipment has gotten a little bit better, but there is still a time lag.

It’s important for providers to be transparent, to open their books, and show vendor partners what they are forecasting. When providers are transparent and show their forecast of the product levels they need, vendor partners can better understand how to plan, not just now, but for 60, 90, or even 120 days into the future. And they can build an inventory to supply that product at appropriate levels.

You do not need to have software to help you forecast.

How Can You Start to Build Forecasting Models?

You do not need to have software to help you forecast. To start building a forecasting model, you only need a simple spreadsheet and knowledge of what your numbers are. Look at the last 24 months of your orders, maybe pre-pandemic levels of product delivery/availability, and product deliveries. Then find an average per month and per quarter of what volume you ordered and delivered in a specific SKU to help develop a forecast of quantities of product you will need. You could also add in a factor of what opportunities you possess to find new business, whether that’s 5% to 20% of future opportunities.

For example, if you’re supplying beds to a local hospice provider, maybe you look at your numbers and see that you averaged 10 per month, or 30 beds per quarter. You can add in a factor of new business, say 20%, so you add another six beds. So, your forecasted number is 36 beds. Then, you can work with a distributor like Medline, McKesson, or Compass Health Brands and let them know that you need 36 beds and will need this to be factored into your utilization or buying habits. 

Distributors

You don’t need a fancy enterprise resource planning (ERP) system to help you forecast. You simply need to know what you’ve purchased in the past and what you anticipate purchasing in the future to help your vendor partners know what you anticipate purchasing.

Working With Multiple Vendors

When it comes to sourcing products, I always encourage our members to have a strong second and maybe a good third vendor partner secured. It’s good practice to have strong partners who can support you in times of need and assist if you need to make a quick delivery or help resolve a supply chain issue. Maintaining relationships with one to three vendor partners for your business will give you the support you may need.

If you do have supply chain issues and you're unable to source all the products you need, you will need to find a revenue cover

If you do have supply chain issues and you’re unable to source all the products you need, you will need to find a revenue cover. Talk to other vendors that have unique revenue opportunities. What other products fit well into the landscape of what you’re providing? These could be items that have HCPCS or cash retail items. 

Revenue Opportunities

If you’re providing DME, consider adding continuous glucose monitors, wound care, or retail items. An O&P provider could look at providing knee braces or bone growth stimulators. Don’t leave a stone unturned—talk to your vendors about what other product opportunities exist to be a cover for any type of revenue shortage you have.

Are You Using Distributors to Your Advantage?

Distributors have a unique ability to source and stock products, which makes them major buyers of DME equipment across the globe. Providers should use this to their advantage. Inventory costs are high, and they aren’t going to go down. High costs of product and limited space could be a problem. Use distributors to your advantage. 

READ THE FULL ARTICLE HERE

VGM Playbook Safeguarding Your Future in DMEPOSThis article was originally featured in the VGM Playbook: Safeguarding Your Future in DMEPOS. To read the full article and more like this, download your copy of the playbook today


TAGS

  1. dmepos
  2. playbook
  3. supply chain
  4. vgm

From Our Experts

Embracing Change: Our Journey Toward Diversity, Equity, and Inclusion thumbnail Embracing Change: Our Journey Toward Diversity, Equity, and Inclusion Diverse, equitable, and inclusive companies are better able to respond to challenges, attract top talent, and meet the needs of different customer bases. Soft vs. Hard Skills for Today thumbnail Soft vs. Hard Skills for Today No matter how they were looked at in the past, having people with good soft skills has always been as important to your profit as understanding your billing system. Unlocking the Future: Recruiting and Retaining the Next Generation of Talent thumbnail Unlocking the Future: Recruiting and Retaining the Next Generation of Talent Recruiting and retaining a younger generation of employees is a critical challenge for organizations seeking to stay competitive and innovative in today's rapidly evolving business landscape. Preventing Pressure Injuries: Your Guide to Pressure Injury Prevention Month thumbnail Preventing Pressure Injuries: Your Guide to Pressure Injury Prevention Month November is a significant month for healthcare professionals and caregivers around the world as it marks Pressure Injury Prevention Month, particularly on 2023 Worldwide Pressure Injury Prevention Day (November 16). Nurturing a Resilient Organizational Culture for Remote and Diverse Teams thumbnail Nurturing a Resilient Organizational Culture for Remote and Diverse Teams As business leaders, cultivating a strong and vibrant organizational culture across remote and diverse teams is essential for driving success and employee engagement. Revolutionizing Mobility: Dr. Pooja Viswanathan, Tyler Mahncke, and Reliable Medical Supply on the Future of Smart Wheelchair Technology thumbnail Revolutionizing Mobility: Dr. Pooja Viswanathan, Tyler Mahncke, and Reliable Medical Supply on the Future of Smart Wheelchair Technology In today's episode, Tyler Mahncke, V.P of U.S. Rehab, sits down with one of the top complex rehab technology providers in the U.S., along with Dr. Viswanathan, Founder and CEO of Braze, as they share stories about the success of this growing smart technology for power and manual wheelchairs. U.S. Rehab Announces Retirement of Greg Packer thumbnail U.S. Rehab Announces Retirement of Greg Packer Greg Packer of U.S. Rehab has announced his retirement as president, effective at the end of 2023. From Dreams to Life-Changing Beds: Tyler Mahncke, V.P of U.S. Rehab Chats with the CEO of Cubby Beds thumbnail From Dreams to Life-Changing Beds: Tyler Mahncke, V.P of U.S. Rehab Chats with the CEO of Cubby Beds In today's episode, Tyler Mahncke, V.P of U.S. Rehab, sits down with Caleb Polley, the CEO of Cubby Beds, one of the most innovative and fastest growing companies in CRT, as they share stories about the success of their life-changing bed solution for children with special needs.