The Gartner Healthcare Supply Chain Top 25

Since 2009, the second week in November has taken on a special significance for those in healthcare supply chain. On Wednesday of that week, Gartner reveals the annual Healthcare Supply Chain Top 25 via a webcast. The Top 25 is a ranking of the leading supply chains across the healthcare spectrum — manufacturers, distributors/wholesalers, retail pharmacies and providers.

Through a combination of qualitative and quantitative measures, Gartner analysts focus on healthcare and life sciences to create a ranking of the leading supply chains from an eligible list of companies and organizations. The quantitative measures include inventory turns and return on assets for manufacturers, distributors and retailers, and bond rating and IBM Watson 15 Top Health System performance for providers. The qualitative measures for both groups consist of two opinion polls — one of Gartner analysts and the other of external healthcare supply chain experts.

For the second year, a Masters category was revealed alongside the top 25. Supply chains that achieve a top five composite score in at least seven of the last 10 years are recognized as Masters. Both the 2019 Top 25 and the Masters can be seen in Figure 1.

Johnson & Johnson is our new No. 1 this year, returning to the top spot for the first time since our inaugural ranking in 2009. The rest of the top five are Cleveland Clinic, Mercy, CVS Health and Duke University Health System. Six supply chains that weren’t on the list last year made it on our Top 25 list this year.

Three supply chains met the qualifications of this difficult-to-achieve Masters award: Mayo Clinic, Intermountain Healthcare and Cardinal Health. The ability of these supply chains to demonstrate sustained supply chain leadership is remarkable, requiring a commitment from the entire organization to position supply chain centrally to success.

Overall, there is a good representation of the different segments of healthcare: 13 integrated delivery networks, eight manufacturers, five distributors and two retail pharmacies. Comparing the different segments in the same ranking may strike some as odd, but we believe there’s enormous value in doing so. Each supply chain has an important role in providing patient care that’s safe, delivers positive outcomes and is cost-effective. Despite the difference in how segments build their supply chains to meet these goals, they can be effectively compared. And even if you disagree with the results, there’s value in debating the outcome!

Traits of Supply Chain Leaders

Each year, we identify leadership traits that are demonstrated by the supply chains on our ranking, and this year three areas rose to the top: agility, strategy execution and the digital supply chain.

While we have a good sense of the trends that will define healthcare in the future, no one knows the specifics. However, leading supply chains know that being agile is good preparation for an unknown future. Agility, defined by how quickly your supply chain can sense and respond, is a coveted capability, but still rare in the industry. Leaders are using continuous improvement tools to remove delays in key business cycles like procure-to-pay, order-to-cash and manufacturing lead times. Improvements to visibility across the supply chain also aid agility. Leaders are doing this by establishing internal control towers and leveraging external services that can monitor key risk areas like weather, acts of God and geopolitical events.

Another defining characteristic of leading healthcare supply chains is the ability to effectively deploy strategies. Too many supply chains focus most of their efforts on strategy development. Leaders know that strategy execution is more important than strategy development. Think of an iceberg — just like only 10% of the iceberg is visible above the water, spend only 10% of your time on strategy development. Spend the majority of your time and resources on deploying and executing your supply chain strategy. Staff your supply chain strategy group with experts in communication, education and governance. These skills make the difference in effective strategy implementation.

Finally, while digital is a tempting subject, leading supply chains know how to search for reality among the promises. Technology has huge potential to impact healthcare products, services and the supply chains that support them, but the approach to digital must be measured. Align supply chain digital initiatives with existing company efforts to improve customer and patient experience. Collaborate with the organizations that are defining future service and business models. Build digital strategies to support them. Digital supply chain requires experimentation to be successful — provide resources without the requirement that every project will generate the same return as traditional investments.

Conclusion

The Healthcare Supply Chain Top 25 is one of the few opportunities to celebrate how important the supply chain is to improving healthcare, and Gartner is proud to present this ranking each year.  Whether you agree or disagree with the final results, we hope that you learn something new and reflect on how you can improve your supply chain and help meet the challenges of modern healthcare.

The full report is available at both www.gartner.com and www.supplychaintop25.com. Please take the time to read about what makes each supply chain in the ranking worthy of admiration. Do you disagree with this year’s ranking?  Be part of the process!  Send an email to supplychaintop25@gartner.com to learn more about becoming a peer voter.

Finally, I’d like to recognize key people instrumental in delivering this year’s Healthcare Supply Chain Top 25: Eric O’Daffer, Andrew Knight, Jim Romano, Kim Ennis and Lucy Lago all played critical roles in creating and delivering the research.

Stephen Meyer,
Senior Director Analyst,
Gartner Supply Chain
stephen.meyer@gartner.com