Bringing the Future into Focus

In a perfect world, the healthcare supply chain would be simple. Health systems would be able to order the best products they need to take care of their patients and have those products on hand whenever they need them.

But one look at the healthcare supply chain, and all of the very real and potential disruptions it’s facing, and it’s clear nothing about it is simple. That’s why SCO Magazine sat down with Medline Chief Operating Officer Steve Miller to talk about the state of the supply chain, what challenges leaders are facing, and how partnership can help everyone from physician offices to large hospital systems achieve better outcomes for their patients.

Q. What do you see coming ahead in the next year, in terms of supply chain challenges for healthcare systems?

A. I think the supply chain challenges aren’t all that different than what we have faced in the recent past. Our healthcare customers continue to be challenged with a crisis of complexity, and a big part of what we need to be able to do here at Medline is help them solve that. That includes, first and foremost, to be able to ensure that they get what they want when they want it, and in the right condition. And that sounds very simple, but it takes a tremendous amount of work from our teams in order to be able to make that happen.

Q. I imagine it’s difficult to address supply chain issues while you’re trying to take care of patients.
A. I say this to our teams a lot: If you go in to see a doctor, what do you want them focused on? You want them focused on you and making sure you’re getting the best care. What you don’t want them focused on is thinking about supply chain, and how are we going to get this product to ensure that it’s here in time? That’s not their primary expertise, just like you wouldn’t want me performing heart surgery on you. But what we can do is be really, really good in the supply chain space, to make sure our customers don’t have to expend energy and be distracted by the supply chain, and allow them to really just serve the patient.

Q. When you say they’re facing a crisis of complexity, what is contributing to that crisis?
A. It’s everything from the way in which health systems get reimbursed—which is very challenging for them–to the way in which costs impact their ability to operate. So our ability to take cost out of the equation for them, by us doing something more efficiently than they’re able to do, is a direct win for them from a financial standpoint. The supply base is incredibly fragmented and can be challenging. Today if hospitals try and do this on their own, they run the risk of getting shipments from all manner of different suppliers, which creates complexity and inefficiency for them. And one of the things that we offer through our prime vendor relationships is kind of a one-stop shop. We simplify the process so it’s one less thing for our customers to have to worry about.

Q. Talking about wanting physicians to be able to focus on the patient, I saw a recent report that almost half of providers now have to cancel or reschedule procedures due to product shortages. I imagine that’s not going away anytime soon. What do you tell hospitals dealing with that crisis?
A. You know, this is where Medline is a real differentiator and competitive advantage for our customers, and different than any of our competitors. We’ve made an incredibly conscious and strategic choice, and we have the financial strength to be able to do it: We invest in levels of inventory that far exceed any of our competitors. And what that means is, we don’t necessarily need that extra inventory on a day-in day-out basis to service our customer. Honestly, we could operate and service our customers at significantly lower inventory levels, but we don’t, because we know there are disruptions in the supply chain. Suppliers have challenges. There may be wildfires out west, or a hurricane in the southeast, or labor disruption at the ports, and in those moments when suppliers may not be able to deliver products to us, we’re still able to deliver products to our customer because of the inventory levels that we carry. And we can weather those proverbial and real storms during periods of time while supplier bases get back intact, or operations in a particular region get back intact. And time and time again, we’ve been able to serve our customers at times when our competitors haven’t, and we’ve been able to help out others who aren’t our customers in times of great need to make sure that patients are cared for with essential products.

Q. So that’s good advice for supply chain leaders, right? Find partners who carry that inventory, and can ride out bumps in the road?
A. That’s right, you need it during times of disruption. But we also offer, on a day-in, day-out basis, the best total value to our customers at the highest levels of service. And so, it’s great to be available in those times of need, but if you’re not taking care of the basics on a day-in, day-out basis, it’s also a non-starter. So, you really have to be able to do both, be operationally excellent and resilient.

“We have a very clear plan that we can source any one of our sites that goes offline or gets knocked out for any reason. And that’s not something you can just decide to do the week before when you see a hurricane is coming.”

Steve Miller

Medline COO

Q. You mentioned the fires and the hurricanes. We’ve seen so many different weather events across the country in the last year. How do supply chain leaders plan for something like that?
A. You don’t always know what’s going to happen and when it’s going to happen, but what you do know is, inevitably, there will be disruptions. And so, it really starts with your overall strategy, and designing a network footprint with intentionality. For example, we have a distribution center down in the Nashville, Tennessee area, and about five years ago a tornado came through and actually hit a corner of our warehouse, creating significant damage to the facility as well as tremendous damage in the area. Those are times when communities really need us. And what we were able to do, based on the world-class footprint that we have, is immediately begin to deliver products to our customers in that area from outlying distribution centers, because we’ve got distribution centers in North Carolina and in Georgia, in addition to Tennessee and Mississippi. This is where I say the intentionality of having a strategic design is so important. We have a very clear plan that we can source any one of our sites that goes offline or gets knocked out for any reason. We have the ability to source our customers from other locations. And that’s not something you can just decide to do the week before when you see a hurricane is coming. That’s an intentional commitment and investment that Medline has chosen to make.

Q. What tips do you have for leaders who want to be strategic, but find it’s difficult because they’re underwater with all the complexity they’re already facing?
A. You know, honestly, you said it earlier: Find a really great partner where that’s primarily what they do, and they are experts at it—partners who focus on the supply chain and executing across whole end-to-end supply chain. And when you do this, you get both expertise and you get a level of focus, so you’re distracted from some of the other realities and priorities of what it takes to be a leader in a healthcare system.

Q. You were at a major retail chain before you came to Medline, right? What lessons do you think healthcare systems could learn from other industries?
A. I would say continuing to use data to drive decisions, versus maybe anecdotes or past practices. And then invest in systems and technology. There’s so much capability available in systems and technology that didn’t exist even a decade ago that are now available. I was just talking with a vendor on some very, very high-end, sophisticated technology. And the owner of the company said, “Look, three years ago, this didn’t even exist.” The pace at which things are changing is so fast that if you’re not digitally driven and looking to continually modernize your systems, you’re going to fall behind in a significant way.

Q. Hearing you say that makes me think about all the high-profile cyberattacks on health systems in the last couple years, and the need to kind of level up those systems to prevent those disruptions.
A. You know, what I’ve come to appreciate over time is that protecting your system is a lot like the supply chain as a whole. You need to be good. You need to do your best job to protect the house. But you also have to recognize, in this day and age, that there is always a chance that an attacker gets in your system regardless of how well you plan. And in that event, there’s going to be disruption. Going back to our supply chain example, it’s inevitable. And the question becomes, if and when that happens, how well are you built to handle that adversity? Can you ensure that if someone does get in, that they’re not able to get at things, and that you can identify them, and that you’re able to close things down? And so, there’s kind of two components: Do your best to keep them out, but I would suggest that any company only focused on keeping people out, without a plan for if someone gets in, are doomed to fail.

Q. So, we’ve talked about the cyberattacks, about weather events, about the crisis of complexity. Not to make a comparison, but there’s uncertainty about tariffs, right? If you were a supply chain leader at a health system, how would you be thinking about tariffs, or planning for that sort of thing?
A. Most of the healthcare system is working with a partner like us to get their products. And, the reality is, the best thing they can do is select a distributor who’s highly diversified, which Medline is. We dual-source, and sometimes more than dual-source, a large portion of our products, and from different locations, which gives us some flexibility in a period of uncertainty when tariffs may come through. It enables us to have a little bit more flexibility to manage through those pieces. So, choosing the right partner—like Medline—can mean the relative impact of tariffs becomes less. Like with everything we’ve discussed, it’s about not waiting for whatever’s coming to arrive, and being strategic and prepared for those moments.