How a Steady Supply Source Could Help Prevent Backorders

By having a steady supply source, government healthcare buyers will experience an increase in communication & decrease the likelihood of long lead times.

The healthcare industry is one that is everchanging. These changes can be challenging to keep up with but are necessary when the normal routine just isn’t cutting it anymore. One thing that might be ready for a change, is the supply sources for government healthcare buyers. Currently, these buyers purchase equipment and supplies from a range of vendors, both small and large. While a small portion of these vendors are Service-Disabled Veteran-Owned Small Businesses (SDVOSBs), the rest are large-scale Original Equipment Manufacturers (OEMs) or other small vendors that don’t meet the Small Business Administration (SBA) disadvantaged classification. This classification is only met when a small business is at least 51% owned by one or more individuals who are socially or economically disadvantaged.  

The problem with these current supply sources revolves around proper customer communication. As with most large businesses, OEMs can be difficult to get a hold of. If a government buyer had a question or was trying to check on their order status, it could take quite some time just to receive a simple answer. Customers frequently complain about lengthy wait times, being transferred from department to department, or being on hold for what seems like forever. While these are just the large OEMs, the smaller businesses have communication problems of their own. For example, some small businesses don’t have the capability to provide order updates following a purchase. If an item is on backorder or an order delayed, the customer is simply left waiting in the dark without any idea as to when they will actually receive it or why it was delayed in the first place. If a customer feels as though they’ve been forgotten, they are left to take matters into their own hands and reach out to the supplier via phone or email. 

The impact of poor customer communication from a reliable supply source can have a domino effect on government healthcare buyers, their colleagues, and their patients. It directly effects the buyers because without order updates, it makes their job that much harder in determining the estimated arrival. Without knowing the approximate arrival and with low stock levels, the healthcare facility could potentially run out of a certain item and interfere with their day-to-day operations. As with any hospital, it’s never good to run out of supplies. So, if an order’s lead time is significantly delayed, the purchaser might resort to cancelling their order and filing an Emergency Procurement Request (ERP) instead. If this occurs, the healthcare facility is left with a greater expense for expediting their new order and might even incur restocking fees on top of that. Delayed lead times and backorders ultimately affect the patients. Without the right item on hand, alternative solutions are used – some of which might be less effective than the original. 

While it’s always good to support small businesses, it’s even better to support SDVOSBs. SDVOSBs are the only small business classification that is earned and not inherently given. Besides showing support for our veterans in the community, purchasing from SDVOSBs is actually a requirement for government agencies. The SBA enforces that “small businesses have the maximum practical opportunity to participate in providing goods and services to the Federal Government” (SBA, 2017). Unlike manufacturers, SDVOSBs have the swiftness to shift to their customer’s urgencies and deliver the product or service in the most time-efficient manner possible. This is because these businesses offer variety and variety promotes competition, which by nature reduces costs. By reducing costs, it allows SDVOSBs to convey these cost-savings to their customers. 

Government procurement teams can easily contact a helpful customer support team without being transferred to various departments and even have a high likelihood of contacting an executive, like a CEO or President, if needed. This is largely because SDVOSBs treat their customers more than just a number and provide dependability. With an increase in customer communication and order updates, government buyers won’t have to worry about being left in the dark again. As a result, this will drastically improve communication and decrease the likelihood of delayed lead times. Additionally, by being small in nature and owned by veterans who are not only stakeholders but patients within the government healthcare system, they have a much clearer understanding of their customers’ needs and processes. Government healthcare buyers should try and prioritize these firms as their go-to supply sources because they provide better service, have more control over lead time variability, and help contribute to an improved quality of life for our veterans. After all, we should remember that we can be advocates for our veterans 365 days out of the year, instead of just on Veteran’s Day and Memorial Day.