Cooper University Health Care, like most companies, struggled with their supply chain during COVID. Cooper successfully coped with the crisis, but the high costs they had to pay for critical supplies and the late nights searching for those supplies convinced the organization that there had to be a better way. The company bought a risk solution that provides real-time alerts to potential supply disruptions. Cooper uses this solution to improve their service levels and operational efficiencies.

Cooper University Health Care is the leading academic health system in southern New Jersey. The system provides access to primary, specialty, tertiary, and urgent care. Cooper has nearly 10,000 employees, including 1,600 nurses, more than 900 physicians, and more than 500 advanced practice providers practicing in more than 75 specialties. Hospitals throughout the region send the most complex and critically ill and injured to Cooper for treatment.

Cooper includes southern New Jersey’s only Level I trauma center (Cooper University Hospital), which is the busiest trauma center in the Philadelphia region. Cooper is also home to a leading cancer center (MD Anderson Cancer Center at Cooper), the only Level II pediatric trauma center in the Delaware Valley (Children’s Regional Hospital at Cooper), three urgent care centers, and more than 100 outpatient offices from Southeastern Pennsylvania to the Jersey Shore.

Operating a smoothly running supply chain for a system with that number of sites is challenging. The volume of goods needed to serve their patients is also significant. The system has more than 2 million patient visits a year, and over 30,000 hospital admissions a year.

Cooper has one main distribution center roughly three miles from their largest hospital in Camden. This DC supplies that hospital and Cooper’s other facilities. The health care system’s primary distributors deliver supplies every morning to this DC. Cooper then uses box trucks that make runs to the hospital all throughout the day. In addition, they have 8 vans that do deliveries to the ambulatory locations. Additionally, some of the ambulatory locations get deliveries directly from their distributors. Distributors also make direct deliveries of pharmaceuticals to all Cooper locations that need drugs.

Thomas Runkle, the vice president of their supply chain, said that the supply chain organization was much more successful than other hospital chains in dealing with the pandemic. “We luckily were never in a situation where our staff had to go without personal protection equipment or had to use makeshift products.” But there was a cost to this. It required “being up all night on the phone with people around the world. I was on the phone with Australia, China, Indonesia – really everywhere – trying to negotiate directly with suppliers. And then, trying to make sure we were getting quality products.”

“Our discussion afterwards,” Dr. Runkle explained “was, ‘all right, let’s not wait for this to happen again. The world is changing. We can’t wait around.’”

In the first wave of the pandemic, the challenge was getting enough personal protection equipment. “We had to go off contract and find our own. “The markup was ridiculous,” Dr. Runkle explained. Prior to 2020, they were paying around ten cents a mask. During 2020, Cooper was paying up to a $1.50 a mask. The organization realized that everything they had saved over the last 10 years by contracting with a preferred vendor, they lost in three months when they had to go off contract and find alternative suppliers.

While getting personal protection equipment was difficult, 2021 was an even more challenging time for the supply chain team. “2020 it was just a scramble for PPE,” Dr. Runkle explained. “We knew exactly what we couldn’t get.”

But in 2021, “all of a sudden there were just completely random shortages that occurred with no warning.” Everything from contrast dye, to tubing, to medical devices with embedded semiconductor chips would suddenly become difficult to source. And the reasons spanned from a global chip shortage, to embargoes, to factory fires, to natural disasters.

And too often, Dr. Runkle, said, their distributors or suppliers would “wait until the 11th hour to tell us.” The suppliers feared that if their customers knew, they would overorder and hoard the supplies, which would make their life more difficult. So instead, Cooper would get a call, “Oh, you’re not getting anything tomorrow. Well, we can’t work like that.”

Over the past 15 years, modern risk management platforms have evolved. For at least a decade, few supply chain professionals knew about these solutions. The pandemic changed that. Buying organizations use this technology to monitor and analyze supplier risk events in real-time. These are big data platforms that monitor news sources and assorted databases from governments, financial institutions, ESG NGOs, and other sources to detect when a negative event has occurred or may be about to occur.

A customer of the risk solutions begins by listing key suppliers. Then the risk solution fills in the gaps. For example, when a UPS strike was looming last year, the Interos solution automatically highlighted Cooper’s strategic suppliers that relied on UPS for shipping.

Cooper Health has been using the Interos solution for about two years. For the first half year they were using the out-of-the-box solution, but after that the company started working with Interos to augment the solution and make it more applicable for their industry and company.

Cooper liked the massive amount of data that Interos could access, the user friendliness of the solution, its supply chain visualization tools, the ability to detect problems across an extended supply chain of n-tier suppliers, and the ability to use the solution to operationalize responses to events. Dr. Runkle reports that Interos has been a responsive partner and is pleased with the solution.

Interos can generate a massive number of alerts. The first goal is to separate the wheat from the chaff – getting important notifications without “being overwhelmed by hundreds of emails every day”, Dr. Runkle explained.

Cooper Health began by putting their suppliers into four categories: strategic (their primary distributors that they are the most reliant on), preferred, valued, and market (vendors they only use occasionally). For strategic partners, Cooper Health is notified for any events that affect the internal operations of their distributor but also for any Tier 2 events that could affect that distributor.

“I don’t need to know about Tier 2 events for my market suppliers. I have 1000s of them. They’re valued, yes, but not strategic. I don’t need to know exactly what’s going on every day.” Dr. Runkle averred.

There is a risk tradeoff here. Would it be good to know about other potential risks and plan for them? Of course it would! But realistically, the healthcare’s Supply Chain Department uses a risk/performance matrix to determine which critical supply streams require heightened monitoring.

Dr. Runkle gave a few examples of the varied ways in which they use the solution to improve their operations.

When Cooper began putting their vendors into the platform, they began to see that with certain product categories there was concentration risk. Many of their suppliers were using the same sub-tier manufacturers. If that Tier 2 supplier had a problem, most of their vendors for that product group would be unable to deliver the goods they needed. This analysis surfaced the need for alternative suppliers for these products.

The solution also helps Cooper Health improve their resilience and agility. “Last summer a hurricane was coming up through the Gulf and across the Panhandle of Florida.” The Interos solution “showed us we had four vendors that were in the path of the hurricane. And we reached out to them ahead of time and asked each of them, ‘are you planning on shutting down? Is the hurricane going to disrupt your ability to get us our supplies? Three of the four were OK.  One of them said, ‘yeah, we’re shutting down this afternoon.’ We were able to put in a orders for a couple days’ worth of supplies before they shut down that afternoon.”

Last year, there was also a potential railroad strike. Cooper began by contacting key West Coast suppliers and asking them how dependent they were on rail. If they were dependent, did they have East Coast distribution centers where they could preplace inventory before the strike occurred. Dr. Runkle also believed that if the strike did occur, the ability to get truck capacity would be severely constrained. So, suppliers were asked if they used carriers or their own trucks to haul freight. If the supplier used carriers, how solid was their contract and relationship with those carriers?

The strike didn’t happen, Dr. Runkle admitted, but ultimately it is important to be proactive and get ahead of an event. “Reacting just doesn’t work anymore.”

Further, the conversations were important because they also revealed information about the capabilities of suppliers. “We need to start asking these questions during the contracting process. Do you have a contingency plan for transportation emergencies? Do you have a contingency plan for natural disasters?” Suppliers that have thought ahead and prepared contingency plans should be appropriately valued.

The Interos solution detects all kinds of risks, across dozens of risk categories, including financial, operational, governance, geographic, cybersecurity, and ESG. The way a company responds to the risks depends upon the category and the severity of the risk.

One of the tools Interos provides is the i-Score. The i-Score helps procurement leaders quickly assess the overall health of their extended supply chains. But Dr. Runkle is in the process of building out and validating an institutional supply chain stability index specific to Cooper Health. This Index would combine Cooper internal data, along with the i-Score, to create a more targeted Index applicable specifically to Cooper Health. The idea is that if the Index is indicating increased instability in their supply chain, to be able to drill down and search for alternative suppliers. Conversely, if the Index is showing increased stability, that is a good time to reduce inventory levels that creeped up because of the need to carry just-in-case inventory.

Cooper Health would also like to combine the stability index with more automation. If something happens, the system “should tell me, ‘reroute and go this way because there’s something happening here,’” Dr. Runkle stated. A quick reaction is paramount. The faster Cooper Health knows about a problem, the more likely the actions they take will not lead them to experience supply problems. When it comes to supply chain agility, the race truly is won by the fastest runners.

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