The healthcare supply chain is a significant factor in how organizations involved in the healthcare sector have access to resources to provide quality care services. However, several issues remain, which increase cost and reduce effectiveness for both budget and patients. Addressing these challenges is strategic for healthcare organizations that aim to utilize resources efficiently and minimize cost.
Let’s examine the five major supply chain challenges in healthcare and explore strategies to mitigate them effectively.
1. Bloated Medical Supplies Inventory
Some of the supply chain gaps that are evident especially in healthcare organizations is that the inventory is overstocked. When healthcare providers accumulate surplus stock, it often results in:
- Expired or unused items,
- Significant financial waste
- Storage inefficiencies.
Solution: Introduce an actual stock management system to understand existing stocks. This means that, with the help of the automated expiry tracking function, healthcare organizations can minimize the instances of valuable stock being used when it is no longer required or necessary. Reasoned inventory ensures stock is not piled up and resources are availed in places of demand.
2. High Supply Chain Waste
A proper inventory control system helps avoid up to 10% of waste in healthcare facilities, resulting in high pressure on the financial side of organizations. The impact of waste includes:
- Increased costs,
- Negative environmental impacts
- Lost opportunities for reallocation of resources.
Solution: Purchase products with longevity and apply technologies such as barcodes that enable automatic tracking of product usage to determine those that are almost out of date. Further, improve accountability via user tracing and item records and provide high visibility in the usage of inventories. Waste reduction is a key factor that has to be embraced for success in both cost reduction and environmental management.
3. Product Variance and Lack of Standardization
An organization purchasing similar products from different suppliers is not effective in the financial and operational contexts. A large variation in product range is just an extra complication that increases costs needlessly.
Solution: Make all products consistent and get as many suppliers as possible into a single supplier category. This can be achieved by:
- Reducing the variety of products purchased,
- Establishing a value analysis committee to assess options
- Involving clinicians in purchasing decisions to support alignment.
Applying healthcare data analytics to such discussions can also identify the cheapest products to buy to reduce variance, thus supporting efficiency in procurement processes.
4. High Upfront Costs in Inventory Management
Orders in conventional approaches to inventory management involve significant initial costs, which pressure the hospital’s cash flow and result in high storage expenses.
Solution: Implement the threshold to stick to consignment inventory management. This way, suppliers hold ownership of stock until it is actually in use, a stressing factor on the financial requirements of healthcare providers. This approach not only makes it possible to avoid massive costs in the initial stages but also avoids the expiry of most of the costly and less-used products.
5. Non-Optimized Vendor Contracts
It is common to observe that several healthcare organizations sign supplier contracts, which may not allow an optimal position for bargaining the best favorable price and an exceptional rate of discount.
Solution: Maximize vendor contracts through information analysis. Negotiate improved purchase prices based on user volume and rebates, which storeowners are willing to provide in exchange for larger volumes of their staples. As described above, proper inventory management and open cooperation with vendors contribute to improving contract value in the healthcare industry.
Improving Healthcare Supply Chain Management
The successful management of the above supply chain issues remains crucial to delivering value in cost, waste reduction and efficient operations, should a healthcare organization have such goals. Using value based approaches, adopting inventory technologies and managing vendor contracts health care facilities can change their supply chain practices for the betterment of their financial status and patents health.
