A Kraljic and competitive rivalry perspective on hospital procurement during a pandemic (COVID-19): a Dutch case study

Abstract

Purpose Procurement professionals widely use purchasing portfolio models to tailor purchasing strategies to different product groups’ needs. However, the application of these approaches in hospitals and the impact of a pandemic shock remain largely unknown. This paper aims to assess hospital purchasers’ procurement strategies during the COVID-19 pandemic, the effects of factor-market rivalry (FMR) on strategies and the effectiveness of purchasing portfolio categorizations in this situation. Design/methodology/approach This qualitative study of hospital purchasing in the Netherlands is supported by secondary data from official government publications. Semi-structured interviews were conducted with 13 hospital purchasers at large hospitals. An interpretative approach is used to analyze the interviews and present the results. Findings The findings reveal that product scarcity forces purchasers to treat them as (temporary) bottleneck items at the hospital level. The strategies adopted largely aligned with expected behavior based on Kraljic’s commodity management model. Adding the FMR perspective to the model helped to further cluster crisis strategies into meaningful categories. Besides inventory management, increasing supply, reducing demand and increasing resource coordination were the other common strategies. An important finding is that purchasers and governments serve as gatekeepers in channeling FMR, thereby reducing potential harmful competition between and within hospitals. Social implications The devastating experience of the COVID-19 pandemic is unveiling critical weaknesses of public health-care provision in times of crisis. This study assesses the strategies hospital purchasers apply to counteract shortages in the supply chain. The findings of this study emphasize the importance of gatekeepers in times of crisis and present strategies purchasers can take to assure the supply of resources. Originality/value No research has been conducted on purchasing portfolio models and FMR implications for hospitals during pandemics. Therefore, the authors offer several insights: increasing the supply risk creates temporary bottleneck strategies, letting purchasers adopt a short-term perspective and emphasizing the high mobility of commodities in the Kraljic commodity matrix. Additionally, despite more collaboration uncovered in other studies regarding COVID-19, strong rivalry arose at the beginning of the pandemic, leading to increased competition and less collaboration. Given such increased FMR, procurement managers and governments become important gatekeepers to balance resource allocation during pandemics both within and between hospitals.

Mediating scarcity in pandemic times: an ethnographic study on the prevention and control of SARS-CoV-2 infections during the emergence of the corona crisis in the Netherlands

“…isolation of patients, protection of healthcare workers, and material infrastructures. Still, no country has been prepared for the magnitude of the flow of patients in the wake of the spread of coronavirus, which has led to shortages in almost all respects, often aggravated by lockdown policies of nation-states, which have caused delays in production and transport as well as international competition for scarce resources [ 1 ]. For hospitals, this meant they had to find ways to cope with the effects of scarcity in relation to quality and safety of care.…”

“…Questions like ‘who is to wear which types of masks?’, and ‘can we safely reuse PPEs?’ were at the top of the agenda and needed answers quickly, despite many uncertainties surrounding those questions. Academic literature written about scarcity during the COVID-19 crisis covers the ethical considerations that should be taken into account when materials are scarce; who should have priority [ 2 , 3 ], how we should divide PPE worldwide, and what strategies hospitals might pursue in procuring PPE [ 1 ]. Those are important questions, but they are somewhat detached from practice and politics at the sharp end of care delivery during an acute crisis such as an emerging pandemic.…”

Organizing for supply chain resilience: a high reliability network perspective

“…Duong and Chong (2020) focus on collaboration in relation to the pandemic, Handfield et al (2020) focus on stockpiling, and Phillips et al (2021) address information asymmetry in decision making in relation to the COVID-19 crisis. Sanchez-Graells (2020) concentrates on public procurement regulation, whereas Tip et al (2021) take a competitive rivalry perspective to the procurement strategies utilized during the crisis. These various themes are in fact interrelated and interdependentrivalry impacts collaboration and vice versa.…”

“…(2021) address information asymmetry in decision making in relation to the COVID-19 crisis. Sanchez-Graells (2020) concentrates on public procurement regulation, whereas Tip et al. (2021) take a competitive rivalry perspective to the procurement strategies utilized during the crisis.…”

Social equity in federal contracting during emergencies: A portfolio management perspective

“…The procurement portfolio management theory (Kraljic, 1983) states that goods and services characterized by different strategic features require implementing different contracting strategies. While primarily used for the definition of procurement strategies in public organizations (Luzzini et al, 2012), this theoretical lens is less utilized for the definition of government procurement and contracting strategies; it primarily focuses on efficiency and market competition while disregarding social equity consideration (Tip et al, 2022).…”