Taking The Supply Chain Pulse
St. Onge’s Healthcare Hall of Famer and industry icon, Fred Crans, chats with leaders from all areas of healthcare to discuss the issues of today's- threats, challenges and emerging trends and technologies in a lighthearted and engaging manner.
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Taking The Supply Chain Pulse
The Human Touch: Why AI Can't Replace Healthcare Supply Chain Leadership
Hello again everybody. This is Fred Kranz from St Onge, with another episode of Taking the Supply Chain Pulse. Today we have a return guest. Charlie Michelli from the University of Vermont is on our show for at least a second time, and we're glad to have Charlie. I had to go down to University of Tennessee earlier this week to lecture and as I'm driving south on US 71, when you get to mile marker 201.4 on I-71 south, you look to your left and you'll see Michelli's Dairy Farm with exactly the same spelling as Charlie Michelli's last name.
Speaker 1:I can never go by there without thinking about you, charlie. So thanks for joining us. We're glad to have you on the program. Thanks, fred. So, charlie, we're entering a new year, we're entering a new political situation. I don't think I can ever recall when there has been so much anticipatory thought, so much, uh, fear and loathing, so much uh, um, what's going to happen next, going on out in the country in general? Uh, so let's talk about what you think, uh, health care and health care supply chain has got to look forward to and be aware of and deal with in the upcoming year. So give me three things that you think are going to be important and then we'll talk about them.
Speaker 2:Okay, listening to the market, not only within our own organizations, but with our peers and colleagues across the country, is number one. And colleagues don't just mean folks that work in supply chain or in the health care system, but our suppliers, because the pressure on our suppliers is probably more intense than it has been and we're at the end of the engagement and or relationship, so we should be, you know, simpatico with what, uh, they're going through, listen to them, and I think you know how, how are we always be as transparent as we can and be as fair as we can to each other? I think that's that's correct. That's what I've learned over over time and um. So that's that's important listing, um, leveraging and listing, leveraging. But don't 100% depend on AI.
Speaker 2:It's a tool and we still have to sharpen our skills and our internal staff, team member development in everything that we do, whether it's logistics, informatics, procurement, contracting and leveraging the technology that's there, as well as our ERP systems that we, you know there's different ones across the country and, at the end of the day, they're all good, it's how you take them and use them.
Speaker 2:End of the day, they're all good, it's how you take them and use them. So I said, listening and then leveraging technology, but not being totally dependent upon it. And then the last one is just making sure that we're being good stewards or leaders and mentors of our staff, that we work with our subordinate leaders, making sure that they're being developed, that we leverage the organizations that are out there, whether it's Strategic Marketplace Initiative, our group purchasing organizations with their programs, the external organizations, arm, which I'll have to say, over the last few years has really developed into a meaningful organization to me, and also the Bellwether League, where, which I think is really cool with the Bellwether League, is the future famers development, because those are the folks that we identify and nominate that are going to lead us down the road.
Speaker 1:Okay, well, those are three pretty good things, charlie, and you know listening to the market, with colleagues and suppliers. One thing I heard recently I heard this description of two types of negotiating processes. One is called distributive negotiation process, in which there has to be a winner and a loser. Is called integrative negotiating process, in which both sides strive to make the entire condition better without regard for having a clear-cut winner or loser in a situation. Sounds to me like that's what you're talking about when you're talking about working with the colleagues and our suppliers. Could you get into some of the things that you've done and why you see this is important and where it's going to come into play in the future?
Speaker 2:Yeah, I don't want to be a commercial for this, but there's a program actually at University of Tennessee that originated there, called Vested, and it's out of the College of Business down there and the person that started it, I believe, is Kate Vitasek. I probably butchered her name, but I saw Kate present oh geez, probably eight years ago at Procurement Leaders Meeting down in Boston. And it ties into the second type of negotiation or relationship management that you had when I worked at University of Chicago on the university side. We worked with the supplier community there as well as our researchers that we supported in that vein and it was our imprimatur there was accommodate.
Speaker 2:Accommodate because you really have to find out what everybody needs not wants, but needs and that's the critical and you only get that by talking and sitting down and laying it out and being transparent as much as you can and being as fair to each other, because unless it's just a one and done type transaction which in most of the time now it's not you know it's a relationship and a dependency that we have on each other with the supplier community. So I think you know it's critical to keep finessing that and developing that type of relationship. And you know I was taught three bids in a cloud of dust. Always go to the lowest cost, don't care. You know, be ruthless. You know that works, you know a bunch of times. But at the end of the day, you know there's our community is so close and the supplier community as well as the provider community is that the relationship. You don't know what's going to happen and who to call when things are down, because that's when the value of that relationship comes and helps you out.
Speaker 1:So that's my philosophy, well, and I think that you've always been a collaborative person with suppliers, as well as trying to do the best negotiating that you could for your organization, but I think the thing that I see happening is number one. For most of my career, the only interaction I had with suppliers was with their sales side. Never got into any interactions with their operations, never, never talked about things other than can you get this for me at a better price and how much can you get here how quickly? And I see that changing on both sides now.
Speaker 2:Is that fair? Oh, yeah, yeah, I can tell you. In 2019, curtis Lancaster and I we went over to. We were at an Enterprise Ireland meeting in Dublin and on our way back we traveled over to Galway and met with the head of supply chain for Medtronic and we wanted to figure out there's a lot of high-tech manufacturing, especially in the cardiac space over in Galway. And so Curtis and I sat down and I can't remember the fellow's name, but we sat down with the team there and we were concerned about Brexit, and they were all concerned about Brexit. Now this is October, november of 2019. So they were all planning for Brexit. Now this is October, november of 2019. So they're all planning for Brexit, you know.
Speaker 2:And same thing at Procurement Leaders we were fortunate to be shortlisted for a innovation award, so we were over in London in May of 2019. And again, brexit was the big thing to talk about, where there were redundant systems, you know. And then in Ireland, how are you going to get get over to continent, all that type of stuff? And then you know. So we had that dialogue with their supply chain folks and you know, we've been fortunate, we've we've been able to do that with a lot of the manufacturers and I think Strategic Marketplace Initiative really fostered that and taught us that. You know sales and sales representation is important, but you know they have supply chain folks supporting them and their IT folks and that's where you really solve with almost like a you know, a tripartite with sales, the customer as well as the internal experts. And SMI has always been advocate. Tom Hughes taught us that, which I thought you know. The more we could do that you know, the better. And so you know we had that relationship when we met with Medtronic. And then you know the yogurt hits the fan in January of 2020. And you know we knew to talk with our sales contacts but also with the manufacturing. You know, at the sites, if we could. And then, if you flash forward to this year and a company that you know had, it's almost like I'm going to use a Notre Dame thing, fred, I know you won't like it, but it's almost like you know Newt Rockne and All-American with Ronald Reagan. You know when the chips are down, you know have the boys do one for the Gipper?
Speaker 2:Well, you know, baxter, they were dealt a really tough hand with the Hurricane Helene impact at North Cove in North Carolina and I can tell you from my experience and our experience, from our coalition that we have with Dartmouth, our state, all of our hospitals in our state, as well as our hospitals in New York, is that they showed up when the chips were down and they sat in on our meetings that we had, not only with the providers, but also ASPR from, you know, the Feds, as well as our GPO, vizient and Northeast Purchasing Coalition. So we all came together, baxter, I'd have to say, and then HERC too, health Industry, resiliency, collaborative we were on these calls all together and you know it was tough. You know there were, you know, procedures that were being delayed, there were outages that had to be rectified, you know. But, baxter, the coolest thing that I saw Baxter do besides just operatively try to take care of their customers, they took care of their staff. A Facebook page, a social media page about the North Cove employees and talking about a company that respected their staff, their members and took care of them when the chips were down. They did that.
Speaker 2:And you know, as you look at these huge companies that like Baxter, like BD, that are worldwide, like BD, that are worldwide, and they're all dealt a negative situation and everybody is, but it's how they show up and they showed up for this one as best as they could and were a lot of people not happy with the results? Sure, but it also pushed us to improvise leverage our data that we had, leverage Epic, leverage Power BI. We had good practice on that when there was the outage with Contrast Media a couple years ago. So, you know, we leveraged what we knew and applied it to a new situation. But I have to say that you know the transparency, the way everybody worked together and communicated.
Speaker 2:We had one of the leaders from Baxter's government relations on our call every week and continues to follow up with us on our call every week and continues to follow up with us. And then we created a website for everybody to access where they could see the chronological. It's basically a book on what happened, because we got together on September 30, initially because of the port strike and what that impact was going to be, and the same day that's when Helene did the damage to that weekend. So we kind of, and the port situation was resolved, and then it was just, you know, all hands on deck, incident command stood up, et cetera, to deal with this IV solution outage and help each other and I have to say, everybody did a great job on that and you know, there were no egos. There were feelings, for sure, and there were some disappointments, but everybody just kept going and resiliency was good.
Speaker 1:And all that. What I've gotten from what you said is that now more than ever, we have sort of more formal and informal groups that we have access to, that we can participate in, and because of that we can work together in a collaborative way to solve our problems more quickly by working with each other. Is that fair?
Speaker 2:Yeah, the Health Industry Resiliency Collaborative that's a collaborative and Baxter is a member and Baxter is a badged outfit. That's in that cadre of providers, suppliers and organizations. So you know and you know we we just had, we just briefed on tariffs with that, what that kind of cannot do. But we've had tariffs before, we had tariffs in 2020, so in 2019 we had to deal with that and that's just it's part of doing business and it's just another situation that occurs and you know how we work together through those situations and you know all the stuff we went through in the pandemic. You know it was just living in a force majeure. So your relationship and your communications were most important.
Speaker 1:So the second thing you said here was leverage, but don't depend on AI. Now, before you start addressing that, explain to me what you would define as AI, how you might be using it and how you might leverage it.
Speaker 2:Yeah, you know, every system is only as good as the data that's in it the cleanliness of the data, the integrity of the data Again, another Tom Hughes axiom. You know he used to use what was the Geico garbage in, garbage out and what we were really good at working for Tom, was finding the ground truth on the data and aligning that and helping the customers we had, because sometimes they just got hamstrung with their ERP systems and couldn't get the data. And we had enough data experts like Steve Kinsella and Bob Biagi and I'll throw myself in the ring there we're able to get data to help our customers make decisions, whether it was the Cleveland Clinic or, you know, health First or any of the clients that we worked with. But that the premier pink, ai, pinc, ai technology, ai driven resiliency tool on our ERP system and we were able to prove that there was high correlation between if the data was correct in your ERP system. There were trends that were developed that were elicited by, and predictions elicited by their tool that were developed that were elicited by and predictions elicited by their tool that were pretty tight and very close to a one-on-one core at least a 90% correlation. So and the first impact of that was in was 2021, maybe 20, oh, 2022, when there was the RSV started hitting the kids hospitals in the late fall, late quarter quarter four of 2022. And the system predicted that, hey, there's going to you're going to have a tough time with all these types of breathing pieces and you know it's. That was that was cool, was cool. So it kind of it earned its, it earned its keep and but we also knew that if our receiving data is incorrect and if our, our SKUs are incorrect, we're not going to, we're not going to get there and it won't predict well for us.
Speaker 2:If you flash forward, if you look at Copilot or I can't remember the other we use Copilot, it's pretty cool. And again, the importance of the prompt. If you know, if you're a subject matter expert or know people that are or have access to that information and you can line that data into the prompt, the AI works great because it goes out and finds all the pertinent data that you asked for and then you can be a BS detector if something comes in that doesn't make sense. I recently used one on a RACI, r-a-c-i and don't don't responsible, accountable, consultative, and I can't remember what the informed and asked for a RACI, a draft RACI breakout with details, and. But I knew what I was asking for and it came out. It was perfect.
Speaker 2:And so, using that tech, fred, if you know what you're asking for, ai is good, but you can't just blindly believe it. There's another system called the bridge. That's on the medical side and very high, high marks, and again, it's what your data is and how you ask the question. So the dependency you have to, you leverage it, but you don't depend on it 100 percent.
Speaker 1:There's a, there's a phrase for that.
Speaker 2:First off, trust and verify Go to Ronald Reagan. Well, that's a phrase for that. First off, I ask Trust and verify if I go to Ronald Reagan.
Speaker 1:That's a political phrase. The phrase from the AI side is called hallucinations, nightmares. Yeah, if AI only can create output based upon the input and the input is the data and if the bad data goes in it can create really great-sounding output. That is totally irrelevant because of the bad input and that's one of the big things that Ed Hiscock from Trinity talked about when I asked him for history and things.
Speaker 2:Yeah, Ed, yeah, Well, talk about a data wizard. Ed's one of the legacy, you know? First adopters right up there.
Speaker 1:Okay, so the last thing of your three things and we've got about five minutes here to do this is making sure we are being good stewards and leaders to the people we work with. Yep.
Speaker 2:Tell us about that, yep, tell us about that allowing participation in events where you don't necessarily sit back but you give your folks a chance. I would say the work when we run our supply chain coalition. Mary Horan, who's our exec admin, she runs the status report and asks the supply chain leaders from every site red, amber, green, where are you and participates in, is trusted to give the reports out, issue the dashboard and share that information. Give people a chance and you know you're there. Everybody's going to fail or make a mistake but at the end of the day you can recover from almost every mistake. I call that tuition and, um, you know you just don't want to have too much tuition or earn it, but and give folks a chance to participate.
Speaker 2:You know I was fortunate where I was able to develop a succession plan for the fellow that took my job. He runs circles around me. I just know where I've been in the industry long enough, where I know the relationships and I share that with my person, that the person that took my position and are there for support, which is great, and the knowledge base that Bellwether does with the education, the capstone projects that are out there, as well as what Vizient's doing, premier's doing Health Trust, all the GPOs, it's more on the development of folks. That's really in St Orange too. I mean you have experts there. You do this type of work here and then even you get a little more granular stuff that where's Dr Debrinsky from he Arkansas? So you got Arkansas, you got vested out of UT, you got Michigan State. You know there's. There's a bunch of education out there where supply chain is actually you know thing that kids want to get into now and work and they it's, it's in the lexicon.
Speaker 2:So I think you know making sure our folks have access. And again with Teams, with Zoom, with all of the online SIG and I'm going to butcher the sourcing information group or logic group that Diane I can't remember her last name T runs. It's fantastic. There's a lesson every day where you can learn how they educate. Same thing with Health Connect Partners and IDN Summit, the programs that the suppliers have to sit down and work with us. We didn't have that before and it's available now. And if we're not accessing that, that's a leadership flaw. If we're not sharing information with our teams or our subordinate folks, again that's a leadership flaw that we have to get better at and make sure we may, you know, send too much information, but too much is better than too little or nothing, so that's that's important to me.
Speaker 1:Yeah, and I. I think one of the one of the things I've tried to do with this podcast is you and I both know that about 95% of the people we work with don't get to travel as much as we do, don't get to be, don't get to get to be in and around folks like us. They're not exposed to us, they don't get to learn from. You know folks out there that they love to learn from and you know, with this podcast I think we put out about 50 episodes and people can learn a lot just by listening to the expertise that you bring to it. So, charlie, thanks for joining us today. Yep.
Speaker 1:I appreciate you taking time out from your busy life up there in Vermont and I hope to see you soon. I saw some of those students this week at the University of Tennessee in Knoxville at Randy Bradley's classes, both undergraduate and graduate. I think the future is bright for healthcare supply chain and thanks again, charlie, for joining us. We appreciate having you on the show. Thanks again, everybody for listening to our podcast Taking the Supply Chain Pulse. Subscribe, follow and give us your comments for topics or improvements, and if you know some people that you think we should be interviewing, please tell us about them too. I can be reached at fcrans, c-r-a-n-s at stongecom. We'd love to hear from you. Thanks again. See you next time.
