Healthcare Supply Chain Management

In this, we will read about the Supply Chain Management in Healthcare
The following contents will be described briefly:-
1. What is a supply chain?
2. The process of Views of Supply Chain
3. Objectives of Supply Chain Management
4. Supply Chain Decisions
5. Benefits of Supply Chain
6. Integrated Health Supply Chains
7. New Trends In Healthcare Supply Chain
8. Potential Risks to an Organization and Supply Chain
9. Strategies to Improve Healthcare Supply Chain Management

1. Healthcare supply chain management

2. What is a supply chain? Supply chain management is a set of approaches utilized to efficiently integrate suppliers, manufacturers, warehouses, and stores, so that merchandise is produced and distributed at the right quantities, to the right locations, and at the right time, in order to minimize system-wide costs while satisfying service level requirements. A supply chain is dynamic and involves the constant flow of information, product and funds between different stages. T he objective of the supply chain management is to be efficient and cost-effective across the entire system.

3. There are a number of important factors in supply chains: • The supply chain includes all activities and processes to supply a product or service to a final customer. • Any number of companies can be linked in the supply chain. • A customer can be a supplier to another customer so the total chain can have a number of supplier/customer relationships. • Although the distribution system can be direct from supplier to customer, depending on the products and markets, it can contain a number of intermediaries (distributors) such as wholesalers, warehouses, and retailers. • Product or services usually flow from supplier to customer and design, and demand information usually flows from customer to supplier. Rarely is this not so.

4. Process of Views of Supply Chain Cycle View : The processes in the supply chain are divided into a series of cycles each performed at the interface between two successive stages of the supply chain. Push/Pull view : The processes in the supply chain are divided into two categories depending on whether they are executed in response to a customer order or in anticipation of the customer order.

5. Cycle View of Supply Chain Processes Customer Retailer Distributor Manufacturer Supplier Customer order cycle Replenishment Cycle Manufacturing Cycle Procurement Cycle

6. Push/Pull Processes 7 Prof. Raghavendran Venugopal, MBA Dept, Mijar Customer Retailer Manufacturer Customer order cycle Replenishment and Manufacturing Cycle Procurement Cycle Pull Processes Push Processes Supplier

7. OBJECTIVES To maximize the overall VALUE generated. Minimize the cost of material and material management. Minimize inventory investment. Ensure timely delivery of material at every level of the supply chain and to customers. Ensure quality of materials used in services. If needed, get product design help or other services from supplier.

8. Supply Chain Decisions We classify the decisions for supply chain management into two broad categories – strategic and operational. As the term implies, strategic decisions are made typically over a longer time horizon . On the other hand, operational decisions are short term, and focus on activities over a day-to-day basis. The effort in these type of decisions is to effectively and efficiently manage the product flow . There are four major decision areas in supply chain management: 1) location, 2) production 3) inventory 4) transportation (distribution), and there are both strategic and operational elements in each of these decision areas.

9. Location Decisions The geographic placement of production facilities, stocking points, and sourcing points is the natural first step in creating a supply chain. The location of facilities involves a commitment of resources to a long-term plan. Once the size, number, and location these se are determined, so are the possible paths by which the product flows through to the final customer. These decisions should be determined by an optimization routine that considers production costs, taxes, duties and duty drawback, tariffs, local content, distribution costs, production limitations, etc . Although location decisions are primarily strategic, they also have implications on an operational level.

10. Production Decisions The strategic decisions include what products to produce, and which plants to produce These decisions have a big impact on the revenues, costs and customer service levels of the firm. Operational decisions focus on detailed production scheduling. These decisions include the construction of the master production schedules, scheduling production on machines, and equipment maintenance. Other considerations include workload balancing, and quality control measures at a production facility.

11. Inventory Decisions These refer to means by which inventories are managed. Inventories exist at every stage of the supply chain as either raw materials, semi-finished or finished goods. They can also be in-process between locations. Their primary purpose to buffer against any uncertainty that might exist in the supply chain. Since holding of inventories can cost anywhere between 20 to 40 percent of their value, their efficient management is critical in supply chain operations.

12. Transportation Decisions The mode choice aspect of these decisions are the more strategic ones. These are closely linked to the inventory decisions, since the best choice of mode is often found by trading-off the cost of using the particular mode of transport with the indirect cost of inventory associated with that mode. While air shipments may be fast, reliable, and warrant lesser safety stocks, they are expensive. Meanwhile shipping by sea or rail may be much cheaper, but they necessitate holding relatively large amounts of inventory to buffer against the inherent uncertainty associated with them. Therefore customer service levels, and geographic location play vital roles in such decisions. Since transportation is more than 30 percent of the logistics costs, operating efficiently makes good economic sense.

13. Benefits of Supply Chain Wholesaler keeps stocks of many suppliers, giving retailer a choice of goods. Wholesalers are near to retailers and have short lead time. Retailers carry less stocks as wholesalers provide reliable deliveries. Retailers can have small operations, giving responsive service near to customers. Transport is fewer with simpler, larger deliveries thus reducing costs. Organization can develop expertise in specific types of operations.

14. Integrated health supply chains Similar to supply chain management in a manufacturing setting, health supply chains can be characterized by different modes of integration: .Integration and co-ordination of processes. .Integration and co-ordination of information flows . .Integration and co-ordination of planning processes. .Integration of intra- and inter- organisational processes. .Integration of market-approach. .Integration of market-development.

15. Information technology and the deployment of e-business clearly are closely linked to the co-ordination and integration of operational processes. Many studies have advocated the important role information technology plays in supply chain practices and it will be of no surprise therefore that many studies on health care supply chains focus on the role of e-business technologies across hospital supply chains The application of electronic patient record systems is also a well-known example of integrated information-technology being implemented in health systems across the world. Health care supply chain integration not only relates to the integration and coordination of planning processes but can also be linked to joint “ market development ” and offering new “care-products ”. The ongoing transformation within the healthcare sector towards greater integration and more process-oriented health care chains requires a shift in strategy, structure and control mechanisms. As such, the supply chain orientation within the health care sector can be regarded as a complex social change process.

16. NEW TRENDS IN HEALTHCARE SUPPLY CHAIN The healthcare industry is witnessing a sharp rise in price in almost all its products and services. The alarming high pace of upward movement of cost is making the produce of the industry beyond the reach of the mass. Certain new strategies are emerging in this sector contributing towards efficient Supply Chain Management practices.

17. They are RFID, Supply Utilization Management, Virtual Centralization of the supply chain and Vendor Managed Inventory. In hospitals, the supply chain strategy should be to maximize patient care. It enables it by: Ensuring product availability Minimizing storage space Maximizing patient care space Reduce material handling time and costs for all medical staffs Minimizing non-liquid assets( inventory)

18. Healthcare industry is highly interdependent and only one part can’t attain efficiency leaving behind others. That is the reason why strategy such as Virtual Centralization is proving to be popular and successful. The specific benefits that RFID tags offer over bar codes present an entirely new way of working in the competitive business market.

19. Potential Risks to an Organization and Supply Chain Labor unavailability Natural disasters Accidents Market challenges Sabotage , terrorism, crime, war Lawsuits Political uncertainty Technological trends

20. Supplier risks: Physical and regulatory risks Management risks Production problems Upstream supply risks Financial losses and premiums Distribution Risks: Infrastructure unavailability Warehouse inadequacies Lack of capacity IT system inadequacies or failure Labor unavailability Long , multi-party supply pipelines Cargo damage or theft

21. Strategies to Improve Healthcare Supply Chain Management Manage contracts Develop effective inventory management Use technology and analytics to make operations run smoother Have an effective pricing system in place Improve order accuracy and order cycle times to lower costs

22. Conclusion Supply Chain Management (SCM) involves joint collaboration between outsourcing partners, suppliers, and customers. It comprises the transformation of goods from raw materials through to the delivery of the finished product; it also includes the management of key information flows. SCM involves the integration of these activities and aims to improve relationships between the various parties, while achieving a sustainable competitive advantage through high quality and lower cost products. SCM is closely linked with enterprise resource planning (ERP) and electronic commerce systems