The interns exceeded expectations in learning about the business and problems that our supply chain faces. It is a challenging organization to learn in a short period of time and they excelled at grasping the concepts quickly. -- Jared Fetherstone, Operations Manager, Mayo Clinic

Ann Arbor, MI - In order to support their 2030 Bold Forward vision to Cure, Connect and Transform, Mayo Clinic collaborated with the Tauber Institute for Global Operations to develop an action plan and supply chain optimization strategy. To quantifiably benefit the Digital Supply Chain Strategy’s Operations Management Platform in the US, the Tauber team conducted a current situation and gap analysis to create an improvement roadmap that focused on standardizing and optimizing the operation’s processes, systems, and personnel. The student team of Joseph Kearney (Master of Business Administration ‘24), Jared Pavlick (EGL BSE Biomedical/MSE Industrial and Operations Engineering ‘24), and Jay Tatikonda (EGL BSE Biomedical/MSE Industrial Operations Engineering ’23) were selected for the 14-week team project.

In the past three years, medical and surgical supplier disruptions have increased dramatically. For Mayo Clinic, backorders have increased by 300% affecting patients directly as well as leading to waste in the supply chain. The team’s goal was to deploy new solutions to improve the reliability of current supply chain systems and reduce the quantity of backorders.

The Tauber team studied the causes of the increase in backorders, the financial costs incurred by backorders, and potential solutions to decrease backorders. The research discovered an annual estimated cost of $ 12M-$15M spent resolving backorders with substitutes. As a deliverable, the team developed a framework to provide leverage to improve existing supplier service levels and two-way commitments.

“This team project was based on the idea that since COVID-19, healthcare supply chains have taken a huge hit,” explained Pavlick. “There was a 300% increase in back orders since COVID alone. So, our team went to Mayo Clinic with the goal to try and reduce those back orders so we can provide the best care for patients.”

“We did that through two different ways,” added Tatikonda. “We proposed a method to create long-term sustainable relationships with suppliers while looking for ways to recoup the investments we made into mitigating those back orders.”

The Tauber team took a strategic approach to the problem and built a comprehensive understanding of Mayo Clinic’s current state, focusing on the Supply Chain operation’s processes, systems, and personnel. With a focus on backorders and failures to fulfill, the team was able to hold dialogue with the top six critical Tier 1 suppliers of Mayo Clinic by quantity and cost. These transparent discussions allowed team members to interact with strategic collaborators of Mayo Clinic and work with external stakeholders to develop a robust solution that can improve the entire healthcare supply chain industry rather than just Mayo Clinic. It also provided insight into the myriad of different perspectives and capabilities in the industry, with some suppliers being more impactful, willing, or able to collaborate with Mayo Clinic.

“I think the surprising thing was how many stakeholders are involved in the supply chain for Mayo Clinic,” said Kearney. “It’s a pretty large team, but everyone works together. They’re all remote, but somehow, the machine still runs continuing that impact and, ultimately, continuing patient care. We had quite a big exposure talking to about five or six major suppliers in the healthcare space, so the project really wasn’t focused on Mayo Clinic solely.”

“One thing that stood out to me was the fact that despite all these increases in backorders and all the difficulties in the supply chain, Mayo Clinic has been able to still operate without delaying or canceling any surgeries,” said Tatikonda. “That is just a testament to all the effort and money they put in to solve those issues.”

“The most fun part about the project was [the fact] they gave us an open slate,” said Pavlick. “We could come up with any solutions we wanted, talked to anyone we wanted, really whatever work we wanted to try for this project, and that was a really nice way to approach it.”

The biggest challenge during the 14-week project was centered around the data management at Mayo Clinic. The hospital system recently transitioned ERP systems, exposing issues and uncertainties regarding data inputs, accuracy, and location. In addition to the new ERP, the Tauber team began their work less than 2 months after go-live where IT systems stabilization created many resource constraints. To navigate this, the team worked patiently with different stakeholders to gather the data that could be found and document what future data should be recorded and implemented into the recommendations.

“Our strengths worked well with each other and complimented each other,” said Tatikonda. “Joe’s a very good relationship manager, whereas Jared and I are very good on the data and other things that went along with the project.”

“This team was the perfect build for getting this project done,” added Pavlick. “Joe was great at managing everything, and Jay and I were able to do more of the engineering and data analysis which was great as well.”

Pavlick has continued with the project into the semester to help guide project implementation. Thus far, he has been able to continue the implementation and start some smaller-scaled CPFR pilots with critical suppliers including forecast planning improvement. These steps follow the implementation guidelines established by the Tauber team for the CPFR portion of the project. Regarding product rebates, Pavlick is finalizing a tool to be used internally to track the cost of backorders to gain rebates from suppliers. All data mapping for this tool has recently been finalized and the tool is in the process of being validated for further use.

“I think all the [Tauber] projects are amazing experiences,” said Tatikonda. “These projects are intensive, really diving deep into the operations of a company, it’s very exciting.”

“Embrace the change, and focus on where you can make an impact,” said Kearney. “Even the slightest impact is better than nothing.”

“Ask questions whenever you can,” said Pavlick. “Early on I was hesitant to fully understand the problem, but by the end of it I asked as many questions as possible.”