Strategies for Hospitals to Navigate Supply Chain Disruptions: From Just-In-Time Inventory to Stockpiling Critical Supplies

The healthcare supply chain is complicated and easily affected by problems. A recent report from Kaufman Hall shows that 71% of hospital leaders in the U.S. have faced delays getting important supplies. This disruption impacts many parts of patient care, from emergency rooms to planned imaging tests and surgeries. For example, there was a shortage of contrast dye used in imaging, which delayed non-urgent tests earlier this year.

Many things cause this problem. Extreme weather and political conflicts have made manufacturing and delivery harder. For example, Hurricane Helene in 2024 caused Baxter International to stop making almost 60% of the U.S. intravenous (IV) fluids for almost four months. Baxter is one of only three main suppliers of IV fluids in the country, showing the risk of relying on too few suppliers.

Also, many hospitals must follow rules set by Group Purchasing Organizations (GPOs) that limit the number of suppliers they can use. Often, orders cover only 75% to 90% of what they actually need. Medical supplies can go bad or expire, making it hard to keep large amounts stored safely. This forces hospitals to balance between having enough supplies and not wasting them.

All these factors make it clear that hospitals need to change how they handle inventory and work with suppliers.

From Just-In-Time to Hybrid Inventory Models

Before the COVID-19 pandemic, the Just-In-Time (JIT) system was seen as the best way to manage supplies in healthcare. Hospitals and suppliers used JIT to keep storage costs low and reduce waste by getting supplies only as needed. Toyota first created this system by placing factories close to suppliers to speed up delivery.

However, the pandemic showed that relying only on JIT has problems. Sudden high demand, factory shutdowns, and transportation delays quickly used up critical stock. Because of this, agencies like the U.S. Food and Drug Administration (FDA) now require hospitals to keep a minimum amount of essential supplies.

New models mix JIT’s efficiency with keeping extra stock of important items. These hybrid models help reduce shortages by keeping safety stock based on predicted needs. Hospitals that used to keep very little inventory—sometimes only half a day’s supply—now prepare larger buffer stocks, even if that means higher storage costs.

Hospitals in the U.S. are rethinking their supply plans in this way. Leaders are shifting from ordering supplies after a need appears to ordering ahead to avoid shortages without spending too much or using too much storage space.

Stockpiling and Inventory Management in Healthcare Supply Chains

Keeping extra supplies creates challenges for hospitals. Many medical items like medicines and devices expire quickly, so storing large amounts is hard. But some supplies that last longer, like surgical gloves, protective gear (PPE), and certain medical tools, can be kept in stock.

Hospitals now check their stock levels often, sometimes every day or week. This helps leaders respond faster to shortages instead of waiting until care is affected.

For example, St. Luke’s Health System stopped depending on one supplier. They now work with more than 111 suppliers. This variety helps protect them if one supplier has problems and lets them react quickly during shortages.

Though storing extra supplies costs more for space and handling, leaders know the cost is balanced by having supplies ready when needed.

Supplier Diversification and Domestic Sourcing

The U.S. healthcare sector is putting more focus on using different suppliers to lower risk. Depending on just one or two suppliers makes hospitals open to trouble like production stops, shipment delays, or recalls.

Michael Gordon from Impact Advisors says that getting the lowest price is not enough: “You may have the best price negotiated or cost controlled, but if you can’t get the product, it does you no good.” Using suppliers from the U.S. or nearby countries helps avoid long overseas supply chains that often suffer from political problems or pandemic limits.

Hospitals are also checking supplier contracts to make it easier to switch suppliers and encourage competition for better prices and services.

One problem has been the small number of makers for certain products like IV fluids. Finding and approving new suppliers takes time, but more hospitals want to increase supplier options to avoid future shortages.

Data and Leadership as Keys to Resilient Supply Chains

Good supply chain management now depends a lot on real-time data and strong leadership. Having correct data on supply use, demand patterns, and supplier performance helps hospital leaders make better decisions.

Hospitals are using digital tools that turn supply history, seasonal changes, and patient numbers into useful information. Predictive analytics help forecast demand more accurately and improve inventory control.

William Weinstein from McKinsey & Co. says “effective governance and inventory visibility are key elements of a more resilient supply chain.” Some hospitals have set up integrated “nerve centers” —teams from supply chain, medical, and finance departments—that work together to handle shortages and risks better.

These teams meet regularly to review supply status, upcoming needs, and market trends. This helps hospitals make plans before problems occur.

Role of AI and Workflow Automations in Supply Chain Management

Artificial intelligence (AI) and automation are changing how hospitals manage supply chains. These tools improve supply tracking, demand prediction, and ordering processes. They make sure hospitals have enough supplies while cutting waste and extra costs.

AI can analyze large amounts of data on past supply use, patient numbers, seasonal illnesses, market changes, and supplier reliability. This helps predict when demand will rise so hospitals can adjust stock before shortages happen.

Companies like Walmart and Amazon have used AI to improve their supply chains, and now hospitals are starting to use similar systems. AI can suggest the best reorder amounts and times based on current data. This lowers the need for too much extra stock and prevents running out.

Besides predictions, AI can run “what-if” simulations. These let supply teams look at possible problems, like a supplier stopping or a disaster, and plan better ordering or sourcing.

Automation tools connect AI with hospital purchase systems. They can do tasks like placing orders, updating inventory, and spotting unusual usage. This cuts mistakes, speeds responses, and reduces work for staff.

Also, automated communication tools keep supply leaders, medical teams, and hospital executives updated with alerts. This helps them work together better during critical times.

Hospitals using AI and automation improve how they manage demand and see their stock. This fits with the goal of building supply chains that balance cost control and readiness for disruptions.

Balancing Costs and Risks in Inventory Decisions

One big challenge hospital leaders face is balancing cost control with supply availability. Stockpiling important supplies costs more for storage, insurance, and loses when items expire. But running out of supplies can delay surgeries and treatments, harming patients and the hospital’s reputation.

Using data analysis and supplier networks helps reduce these risks. Knowing where supplies come from and tracking use trends lets hospitals order the right amounts at the right times.

Hospitals are also trying flexible supplier contracts that allow changes based on needs instead of fixed terms. Capacity reservation, where suppliers promise to reserve part of production for a hospital, can help guarantee supply during emergencies.

Though these strategies add complexity, they are needed to build supply chains that can handle problems like pandemics, disasters, or political conflicts.

Case in Point: Effects of Geopolitical and Natural Events on Healthcare Supplies

The Russia-Ukraine conflict and recent hurricanes show how outside events affect health systems. Raw materials from Ukraine and Russia, like chemicals, metals, and farm products, are needed for medical supplies and hospital work. Interruptions hurt production.

At the same time, climate change has caused more frequent damaging weather in the U.S. Big natural disasters now happen about every three weeks instead of every four months, as they did years ago. The destruction of places like Baxter’s IV fluid plant is one result.

Hospitals have learned that depending too much on suppliers in one area and old inventory methods increases their risk. This has encouraged many U.S. hospitals to use more suppliers and create backup plans.

The Human Factor in Supply Chain Resilience

Besides plans and technology, people are very important. Supply problems need staff to think quickly and adjust care. Nurses and providers sometimes change treatment when certain supplies are not available.

Staff preference affects supply needs too. For example, butterfly needles cost about four times more than straight needles but are easier to use. This affects what is ordered and the supply budget.

Education and clear communication with medical staff about supply levels help hospitals plan better care when supplies are limited.

Hospitals and medical practices in the U.S. need to change their supply chain approaches to become stronger. Moving from using just-in-time inventory alone to hybrid models that include stockpiling, using many suppliers, and better data is key. Adding AI and automation supports better forecasting and faster work, helping hospital leaders keep care steady during ongoing global and local challenges.