Cardinal Health is a $162 billion giant, supporting 75% of all US hospitals with equipment and services. Its Chief Executive Officer is Mike Kaufmann and his organization – like all companies – had to find its way through the pandemic. Given all that it manufactures in pharmaceuticals and medical products, the Covid-19 pandemic was an all-hands on deck situation. Where many of us could retreat to our homes, so many of Cardinal’s people remained on the front lines.
At the Fortune Global Forum in 2021, Kaufmann shared that Cardinal saw its share of healthcare supply chain issues. The demand increases were anywhere from 2x to 12x, but the supply of course was not able to ever catch up (and reports today confirm the lag is still real). The good news for Cardinal and its customers, Kauffman said, is that when supply got to the US, it got to customers quickly. However, the trouble was that getting supplies to the USA was tough. Despite the supply chain planning, Covid called for making hard changes to the concentration of supply distribution to address the various emerging issues. Kauffman said that Cardinal shifted from looking at groups to looking at each individual item and understanding where and how the company could get those items.
In a significant pivot, Cardinal built on-shore production themselves. This produced 150 million more masks in 2020 than were expected. Admittedly, some planning moves left Cardinal with more inventory than they would like and they are carrying those loads across their network, Kauffman is okay with that. The pivot, he says, is in being prepared. “We believe we can’t get into the situation we found ourselves in when Covid hit,” he commented. “One innovation in the crisis we generated was gathering data where the hotspots were popping up, and now we have a way to manage and review that ongoingly as things happen which is a strength that will serve Cardinal well in the future to move product where it is most needed.
In a similar fashion, Robert Ford, President & CEO of Abbott Laboratories, shared that his executive team kept asking the question “what needs to be true” to have things be at 30%. Knowing that the business wouldn’t get steady against pre-Covid plans for some time, “this shift in mindset really opened up some amazing things,” he said. Ford continued saying that Cardinal had to be courageous, and it had to learn to make decisions with more risk than was typical. This boldness helped them to move something in a week that would have taken a month, which resulted in a leap forward in getting back to normal on the production side.
Ford recognizes that the diagnostic infrastructure in the US is strong, but it needs to be more flexible to manage a pandemic. Ford mentioned that when the next one comes, Abbott, like many companies, has learned that we as a country need to bring strong testing closer to the patient, and faster. He realized that we need both of these things and that it is not a this-or-that situation. May this learning serve Abbott, and all of us, well in the future.