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Direct Sourcing: Where Is It Now and Where Is It Going?

The Basics

The COVID-19 pandemic highlighted issues with the fragility of our supply chains. Many healthcare organizations found that international logistics tie-ups strained availability of personal protective equipment (PPE) and other vital medical supplies.  Today, these organizations are looking for innovative strategies to build long-term supply chain resiliency.

Enter direct sourcing — an integrated approach that provides solutions to many of the supply chain challenges experienced by healthcare organizations. Major opportunity areas in direct sourcing, and accelerated by the pandemic, are three-fold:

  1. Greater diversity of manufacturing and suppliers
  2. More dynamic and demand-driven strategies
  3. Technology enablement and automation: both for greater end-to-end visibility and within the production process

Healthcare organizations are leveraging direct sourcing to access PPE and other supplies while also ensuring these products live up to superior clinical standards.

The Future 


Direct sourcing is vital for a future-forward supply chain — to build resiliency, mitigate risk, increase efficiencies and realize millions in cost savings.

The future of direct sourcing will see greater levels of supply chain transparency, similar to those prevalent in consumer online marketplaces. For instance, e-commerce buyers know where products are made, when they are going to be delivered, and if there are any hiccups along the way. With direct sourcing, healthcare organizations can enjoy full line of sight on production and deliveries and will receive critical, heads-up updates if there are any issues. What’s more: Direct-to-manufacturer relationships can help mitigate the risks of product shortages due to external factors, such as logistics problems and government shutdowns.

These improvements will be driven by advancements in systems and automation with new and emerging technology platforms allowing end users traceability across the end-to-end supply chain. Further, investments in production automation will help our nation produce goods and compete with low-cost countries in an environment where labor is hard to come by. Automating the manufacturing process helps create a smarter supply chain, driving greater efficiency by increasing production capacity, reducing costs and allowing domestic companies to compete more effectively on a global scale. The continued growth of direct sourcing will also allow for the expansion of available product portfolios.

As healthcare systems gain greater confidence in experienced, high-quality direct sourcing organizations and capabilities, these key partnerships will help them handle sourcing, logistics, supply chain, manufacturing, regulatory compliance and innovation management, while they focus on their core competency — delivering patient care.

The most severe product shortages may have eased of late, but disruptions in healthcare supply chains are expected to persist. The U.S. healthcare industry will continue to face headwinds such as global transportation delays, labor shortages and rising inflation.

Direct sourcing is poised to provide solutions to these problems with a comprehensive strategy that focuses on greater diversity of manufacturers and suppliers, direct-to-manufacturer sourcing, technology enablement and automation, innovative designs and lower shipping costs. All these will help healthcare organizations meet future challenges that may arise, providing them with an innovative model for improved product flow, pricing, quality, efficiency and long-term supply chain resiliency.

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