Global healthcare spend is expected to increase to a whopping $8.7 trillion by 2020! This means that the healthcare industry needs to implement better supply chain management tools to keep up. However, supply chain for healthcare organizations is more complex. They involve multiple stakeholders such as insurance companies, group purchasing organizations (GPO), and health regulatory bodies. There is no doubt that the healthcare providers need to be well stocked and maintain inventory to provide proper services.
Currently, there are two main ways for sourcing products in the industry. Providers usually weigh the pros and cons of each option before deciding which way to go:
- Obtain them directly
- You can attain the required material by directly reaching out to the manufacturer or the distributor
- Through a GPO
- You can assign a GPO to act on your behalf
- They establish a purchasing contract with the manufacturer to buy items in bulk
This blog post will look at some common challenges faced by healthcare industry and what SCM strategies you can implement to overcome those issues.
Data in this particular industry emerges from both purchasing as well as consumption activities, which includes the cost and pricing information of the products. If you record all the data, you can easily improve the way to manage your inventory. We highly recommend using the simple technology of barcode and RFID scanning that allows:
- Streamlining the data capturing and monitoring process
- Tracking shipments in a timely manner
Want to increase efficiency even more? Gather the information to keep track of your contracts and the times to reorder products. But, don’t forget to integrate this data into an ordering and shipping management system! You can use it to consolidate orders from all the sales channels in a centralized location. If all the stakeholders have access to this data, the objective of reducing wastage will be achieved easily.
Although ordering through a GPO can take away your headache of dealing with multiple manufacturers or distributors, it does come with some risks. Since GPOs act on behalf of more than just one organization, they have to focus on the greater objective (acquiring a high volume of products at the least possible cost). If your priorities are different than your GPO’s, you may not be kept in the loop during their purchasing cycle. And, if you rely too much on GPOs, then you’re in trouble. We recommend that you mitigate this risk by installing a Vendor Managed Inventory system to:
- Solidify the relationship between the two parties
- Provide GPOs the full access to the inventory level for them to
- Synthesize the data
- Make decisions accordingly
Reduce Hidden costs
Healthcare industry typically deals with the purchasing costs, but you might have to incur additional hidden costs such as distribution and inventory holding expense. Don’t let your supplies stay in the warehouse till their expiry date without being sold! If they do, they will be thrown away and written off as an useless expense. We suggest using best practices from other industries to overcome this particular challenge:
- Lean approach to supply chain by driving out waste
- Identify value and non-value adding steps throughout the chain
- Building an organizational culture that encourages lean thinking
- Having the right amount of supplies at the right time
- Establish benchmarks in order fulfillment
- Automate the process of replenishment
In conclusion, eliminating wasteful practices in the supply chain can allow the industry to optimize its cost and resources. Thus, healthcare providers can offer better care while also generating higher profits. Interested in learning more? Take a look at how the Clear Spider can help to make your inventory management more efficient.