Future of healthcare supply chains

Supply chains represent a considerable portion of the operations within an industry. They serve as a network of manufacturers and distributors that take a product from inception to end consumer usage.

The healthcare industry is a complex service and product driven industry that relies upon efficient individual supply chains to function at maximum capacity. Developing a robust, comprehensible management system is a key step towards optimising consumer experience, inventory and a number of key factors that play a part in the success of the industry.

Supply chain inefficiency is a major contributor to poor consumer experience and staff dissatisfaction. 

Cardinal health conducted a survey regarding management systems of hospital supply chains. The survey carried out displayed that 18% of staff have seen or heard a staff being harmed due to the lack of necessary supplies. The survey displays the importance of having a clear management system in a hospital to improve overall consumer experience.

Furthermore, the survey revealed that physicians and nurses currently spend 20% of their work week managing inventory and distribution processes. This is a considerable amount of time spent on management. Physicians noted they would spend that time with patients, on research or training new staff which would contribute more directly to improved consumer experience.

Apart from improving patient experience a robust management system is a large contributor to other aspects of a hospital’s success:

  1. Reduced operating costs – Ensures increased competitiveness in the marketplace.
  1. Improved financial position – Decreased fixed assets and increased profits

There are a number of emergent trends that are driving the market for supply chain management and aiding the efficiency of supply chains.

One such trend is the use and emergence of web based technology and market places. The Colorado healthcare system was one of the first to adopt this method. The health system used a marketplace known as H-source. The online marketplace allowed for the reselling and purchase of equipment as well as recycling unused equipment to bring down costs. The marketplace has shown crucial in yielding a number of cost reducing opportunities and advantages including reducing the hospital’s carbon footprint and waste as well as increasing the profits earned by the hospital.

Secondly, a major trend emerging in maintaining the quality and efficiency of the supply chain is the employment of big data analytics. 

Big data is a crucial tool in the prediction of disruptions as well as useful in improving the efficiency and ability of the supply chain in dealing with these large scale disruptions. Major crises such as the COVID 19 pandemic bring forth unforeseen chaos that disrupts industries, however, they bring in multitudes of data regarding supply chain disruptions as well. We have seen industries and individual companies suffering from a lack of inventory as they have developed a habit of ordering inventory to fit a specific, short time frame.

However, big data analytics has the potential to reduce the impact of a future event much like the current pandemic. We may use predictive analytics of data in order to supply additional informatics around management systems that help us prepare for future events. Furthermore, we can apply longer term insights regarding consumer behaviour and inventory to perform improvements that will uphold the operations in future cycles of disruption.

Big data shows promise in helping the healthcare system on a macroscale but what about the individual hospitals and hospital staff that need big data to improve their supply chains on a microscale?

Private hospitals are just that, they are a privately owned business. This essentially means that their main motive is profit or in other words lowering their operation costs as much as possible. Hospitals may incur costs via a number of means but one of the biggest elements is through the actions and preferences of surgeons and staff. Provider preference items make up 40-60% of hospital supply costs and catering to surgeon preferences for expensive equipment unnecessarily drives up costs.

However, the Wellstar health system found a way around this issue. Drafting reports in Excel, the management system detailed surgeon supply utilisation and costs and handed those reports back to them. They saw a 14% decline in costs of 1 procedure and a 24% decline in supply cost for another procedure.

Evidently a structured management system for an industry’s supply chain yields benefits for multiple aspects of the industry and multiple businesses. With the current accelerated pace of change due to the pandemic, many individual healthcare entities are beginning to adopt new technological initiatives to develop and strengthen their supply chains. How prepared is your industry for future disruptions? Does your business have an up to date management system?

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