Talk to healthcare professionals about improving the industry and their organizations and you’ll likely hear about new treatment protocols, more extensive and inclusive care regimens, application of data analysis, and computerization. What you may not hear mentioned is better supply chain management.
Nevertheless, supply chain management, which is the monitoring and control of the total movement of goods as part of an organization’s operations, is incredibly important. The definition takes in a bewildering combination of items that care givers depend on, including medicines, supplies, medical devices, maintenance and cleaning products, and other goods.
According to one estimate, $5 billion a year is lost in the implantable device supply chain “as a result of waste, inefficiency, and lack of visibility,” according to Bruce Johnson, CEO of healthcare supply management software and services company GHX. He claims that spiraling supply chain costs are only second in size behind labor.
One big reason is that providers don’t have the same control over medical device procurement as other industries have with specialized equipment and supplies, according to Inbound Logistics.
Healthcare providers, distributors, and manufacturers struggle with a large error rate related to medical devices procurement processes. While other industries have implemented product scanning, electronic ordering, order accuracy controls, and other key processes to improve supply chain efficiencies, the healthcare industry lags behind.
The sector is still burdened by manual processes and a significant amount of re-work. Such inefficiencies can result in ordering errors, lack of product on hand to treat patients, clinicians receiving incorrect product, and expired inventory.
In the past, the industry enjoyed higher margins and issues like inefficiencies were covered over because the amounts were too small to spend the time worrying over. Now, with regulation and consumer demand pressuring providers, margins are far smaller than they once were and organizations begin to see why companies in other industries spend so much time cleaning up procurement and supply chain. Not only would more control over the supply chain mean better cost control, but also better care, as you reduce the potential for needed items to be missing to treat a patient.
Healthcare managers should consider boning up on supply chain management, which can include the following:
- Advanced inventory management systems
- Demand forecasting
- Control of inventory levels to a just-in-time level when possible
- Interchange of data with vendors for better prediction of costs and arrival times
- Vendor-managed inventory to reduce inventory holding costs
- Asset tracking
- Employment of procurement professionals to better negotiate costs
There are many more techniques and strategies to improve supply chain management. Managers should pay close attention to what is done in other industries, such as high tech or retail, to learn how control can be put into place.
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