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Gartner Ranks Healthcare Supply Chain Top 25

November 16, 2020

Gartner has released its 12th annual Gartner Healthcare Supply Chain Top 25 ranking, which recognizes companies across the healthcare value chain that advance healthcare by improving patient outcomes and controlling costs.

"2020 has proved to be a challenging year for healthcare and life sciences supply chains with the COVID-19 pandemic stressing many networks to their breaking point," said Stephen Meyer, senior director analyst with the Gartner Supply Chain practice. “All supply chains had to make significant changes to the way they worked, both tactically and strategically.”

For the second year in a row, Johnson & Johnson (J&J) takes the top spot, scoring the highest overall peer and Gartner opinion. CVS Health, Cleveland, McKesson and Banner Health complete the Top 5 (see Table 1). Four new organizations joined the ranking: Baylor Scott & White Health, Johns Hopkins Health System, Indiana University and Biogen.

“J&J set itself apart in its approach to supply chain innovation,” Mr. Meyer said. “While other supply chains made notable strides in individual projects and initiatives, J&J stood out in its commitment to finding novel supply chain solutions to the challenges of modern healthcare.”

In its third year, the Healthcare Supply Chain Top 25 Masters recognized sustained supply chain leadership in healthcare. The criteria were the same as in Gartner’s Global Supply Chain Top 25 – a top 5 composite score in any seven of the last 10 years. The Masters category is not a permanent appointment. Companies must requalify every year and continue to innovate.

“As with last year, Mayo Clinic, Intermountain Health Care and Cardinal Health defended their standing as Masters – a remarkable achievement for each of them. Even in this challenging year, they continued to demonstrate supply chain excellence, agility and innovation,” Mr. Meyer said.

Dennis Mullins, senior vice president of supply chain operations, Indiana University Health added, "Opening a consolidated distribution center in 2018 to service our 16-hospital system proved to be a critical part of IU Health’s strategy to respond to the coronavirus epidemic. The new Integrated Service Center improves our procurement, logistics and distribution network at a time when supply chain capabilities are stressed. We foresee continued investments in our supply chain network, particularly using automation, as healthcare providers are pushed to perform more efficiently and improve service and pricing for our patients and other clients."

Table 1. The Healthcare Supply Chain Top 25 for 2020

2020 Ranking

Company Name

Three-Year Weighted ROA (2017 to 2019)1

One-Year, End-of-Year Inventory Turns (2019)2

Bond Rating3

Watson Health 15 Top Health Systems Study4

Peer Opinion5

 

Gartner Opinion5

 

Composite Score6A,6B

1

Johnson & Johnson

8.0%

3.0

   

960

274

7.37

2

CVS Health

2.8%

12.1

   

569

243

6.95

3

Cleveland Clinic (OH)

   

AA

3rd Quintile

584

250

6.74

4

McKesson

1.1%

13.1

   

446

144

5.54

5

Banner Health (AZ)

   

AA-

Top Quintile

253

193

5.50

6

Walgreens Boots Alliance

6.4%

11.4

   

295

150

5.20

7

Duke University Health System (NC)

   

AA

3rd Quintile

443

159

5.20

8

Ochsner Health System (LA)

   

A

Top Quintile

341

186

5.19

9

Mercy (MO)

   

AA-

Top Quintile

314

144

5.08

10

Medtronic

4.9%

2.2

   

636

183

5.04

11

Novo Nordisk

33.4%

1.1

   

276

188

4.96

12

AmerisourceBergen

2.6%

15.8

   

309

115

4.91

13

Becton Dickinson

1.9%

3.5

   

419

197

4.54

14

Owens & Minor

-3.9%

7.1

   

528

144

4.50

15

Pfizer

9.5%

1.2

   

422

171

4.36

16

Baylor Scott & White Health (TX)

   

AA-

15 Top

234

85

4.35

17

Stryker

8.3%

1.5

   

373

180

4.29

18

Johns Hopkins Health System (MD)

   

AA-

Top Quintile

416

21

3.84

19

Henry Schein

8.1%

4.8

   

127

161

3.83

20

Spectrum Health (MI)

   

AA

2nd Quintile

125

124

3.82

21

Roche

14.9%

2.9

   

291

102

3.81

22

Scripps Health (CA)

   

AA

Top Quintile

155

69

3.74

23

Boston Scientific

10.2%

2.0

   

357

105

3.61

24

Indiana University Healthy (IN)

   

AA

Top Quintile

157

52

3.58

25

Biogen

18.4%

2.4

   

240

79

3.54

Notes:
1 ROA: ((2019 net income / 2019 total assets) * 50%) + ((2018 net income / 2018 total assets) * 30%) + ((2017 net income / 2017 total assets) * 20%)
2 Inventory Turns: 2019 cost of goods sold / 2019 inventory
3 Bond Rating: All ratings were mapped to the Standard & Poor’s (S&P) rating system using an industry-standard mapping system
4 Watson Health 15 Top Health Systems Study: Based on score in IBM Watson Health’s 2020 15 Top Health Systems Study
5 Peer Opinion and Gartner Opinion: Based on each group’s forced-rank ordering of performance to Gartner’s Healthcare Supply Chain Capabilities Model
6A Composite Score, Health Systems: (Peer Opinion * 35%) + (Gartner Opinion * 35%) + (Bond Rating * 15%) + (IBM Watson Score * 15%)
6B Composite Score, non-Health Systems: (Peer Opinion * 30%) + (Gartner Opinion * 30%) + (ROA * 20%) + (Inventory Turns * 20%)
2019 data used where available. Where unavailable, latest available full-year data used.
All raw data normalized to a 10-point scale prior to composite calculation.

Source: Gartner (November 2020)

COVID-19 as a Catalyst to Supply Chain Innovation

The COVID-19 pandemic is a fundamental challenge to supply and demand on a massive scale. Extreme demand swings stressed, and in some cases broke, supply chains — bringing into sharp focus what worked and what didn’t.

Leading supply chains leaders embraced the disruption as an opportunity to drive their supply chains further. They are adding new capabilities that will benefit not only their response to the pandemic, but also make their supply chains better once the world transitions to a new normal.

“Successful supply chains don’t focus on just one strategy, but a portfolio of elements and solutions to protect their supply chains, including classic risk management, demand and supply visibility and agility,” Mr. Meyer said.

In many countries, there was a fast pivot to telemedicine and home healthcare. Virtual care requires a unique response to address new demand patterns and leverage different fulfillment networks. For pharmaceutical companies this means potentially forgoing the classic wholesale relationship and building direct-to-patient capabilities and logistics networks. Several leading supply chains managed to quickly align their networks to the new realities and get patients the care they needed.

Another leadership trait that made supply chain leaders stand out in 2020 is the alignment of the supply chain function to the overall organization’s strategy. Especially in the early days of the pandemic, ensuring that demand was fulfilled, and supply continued, took the full attention of the organization.

“Leading supply chains ensure strategy development is directly linked to their company’s process. They align the supply chain strategy to the existing corporate goals, but also ensure company leadership understands how the supply chain can innovate to deliver additional company or customer value. Additionally, they seek external guidance from their customers and peers to include their perspective,” Mr. Meyer concluded.

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