The elementary definition of supply chain management is managing a network of resources required to deliver goods and services to the end customer. Understanding of ongoing demands of the customers (quantity, quality, market trends), manufacturing capabilities, and time is taken to deliver goods and services plays a crucial role in supply chain issues in healthcare. It is one of the most important aspects of any business and accounts for an average of 8-10% of overall business costs.
What Is The Current Healthcare Supply Chain Disruption?
COVID outbreak in China in 2019, Russia’s war with Ukraine and the downfalling economies of developed and developing countries following that have affected every business aspect including manufacturing, and supply chain. China is the biggest manufacturer in the world and has a 28.7% share of the market in manufacturing. Regarding COVID, China has imposed stringent rules on global exports and imports, which has significantly increased manufacturing costs & time.
Russia holds 4.8% of the world’s oil reserves. With the ongoing war situation, it has changed its oil export policies and has massively impacted logistics and supply chains globally. The chaotic times have increased supply chain costs by 4.2% worldwide.
The healthcare sector has witnessed more strains than any other industry as the supply chain costs have evidently increased by 13% and went up to 37.3% of patient care. The supply chain management in healthcare is more complicated and fragmented as it involves more stakeholders, perishable goods & potentially life-saving tools that should be delivered faster. According to researchgate, the healthcare supply chain process can take up to a year and 40% of operational costs in hospitals and labs if not done right.
How Healthcare Supply Chain Process Is Different Than Others?
In healthcare, the supply chain is mainly related to inventories and services required in laboratories and hospitals. The process requires gaining resources, managing suppliers, and delivering goods and services to both providers and patients. This becomes more complicated and tedious as medical products, services, and information travel through various independent stakeholders, such as manufacturers, group purchasing organizations, providers, hospitals, insurance companies, and several regulatory agencies.
Every stakeholder has different interests which increases complexities. Let’s take the example of medicines. Patients will sometimes expect specific medicines because they heard or read something online. Because they have been trained with them, medical professionals and doctors have different expectations for drugs and equipment. Hence, they expect different medicines or machinery. Manufacturers will hope for bulk production of similar medicine. The finance team will look at the expenses and regulatory agencies will be concerned about quality and compliance. Thus, finding the right medicine for the supply becomes puzzling.
Medical Supply Chain Issues
Incomplete & Lack Of Data About Demand
Understanding patient behavior and patterns has been a constant challenge in healthcare. The rise of diseases like COVID, dengue, malaria, etc. makes it more difficult. The number of patients, disease types, and treatments increase dramatically in such crucial times. Tracking the data about everything becomes a tough task. This incomplete or lack of data leads to more complexities in the supply chain.
With no visibility of total inventory consumption, service utilization, and patient health data it is difficult to figure out the sporadic patterns of the volatile market. In order to allocate finances and streamline production, manufacturers lack analytical data. The unclear data about demand can further complicate the supply chain.
If we consider the example of drugs, as per the researchgate report, the average time observed from the preparation of an indent to receipt of a drug is 162 days. A manufacturing process takes about 117 days, and distribution takes about 47 days. Manufacturing takes 4 times more time than distribution. Both manufacturing and supply chains are hampered due to the lack of visibility about demand & supplies. The total period has now increased to 213 days since the medical supply chain issues in healthcare.
Manual Errors
Maintaining the data integrity of supplies throughout the supply chain is a prerequisite yet cumbersome. Around 67% of laboratories have reported more than a 3% loss of revenue due to error-prone manual data handling regarding supplies. The lack of a skilled workforce is a primary reason behind this issue.
Financial Leakages
Healthcare supply chains mostly have multiple chains of distributors. A single product can have multiple distributors and a single distributor can provide multiple products. Maintaining error-free data about suppliers and finances is complex. Employees in the supply chain typically enter data manually, and since the process is repetitive and interconnected, errors are unavoidable. In addition, many infringements remain unnoticed as it involves multiple departments and approvals.
Allocating & managing finances with such data can affect every workflow and result in unnecessary costs. This issue is primarily seen in multi-center enterprises because there isn’t much-centralized procurement that can improve operations and decrease cash leakages
Adaptable Healthcare Supply Chain Solutions To Tackle Issues
For Hospitals:
The emergence of cloud and software-based solutions has come to the rescue in these testing times. Multiple innovative healthcare supply chain solutions have en-cashed the power of data. With the deployment of these solutions, healthcare organizations can store, manage and optimize their data through a single comprehensive platform. It allows them to understand demands and streamline all operations including the supply chain. All digital advancements are 92 percent focused on hospitals. Be it HIMS (Hospital Information Management System), dedicated finance management software, or other new-age healthcare supply chain technology hospitals have received a fair share of growth.
For Medical Laboratories:
The laboratories are the areas less explored in terms of innovations. Few new-age solutions are dedicated to laboratories and are capable of reducing laboratory supply chain bottlenecks.
One of them is Crelio Inventory, a leading cloud-based solution. It is a HIPAA, GDPR, SOC II & ISO compliant software solution for the inventory management of medical laboratories.
Complete Visibility
Crelio healthcare supply chain management software for inventory provides complete visibility over inventory consumption & patterns, enabling labs to understand the increasing demands and manage supplies according to real-time data. With centralized procurement, multi-centers can order, manage and deliver stocks from parent locations. The dashboard in the system shows near-expiry and below-alert-level stocks of the inventory at regular intervals. In addition, it displays overall wastage. Streamlining demands and supply with these details is easy and hassle-free.
Read More: How to improve inventory data management to prevent leakages
Automation
The system also offers an automatic stock consumption feature. This feature can help medical laboratories in automating their stock consumption according to tests and departments. If the pathology department consumes a certain number of stocks of certain inventory in a certain period, the Crelio Inventory will store that information and utilize it in the future. Similarly, when laboratories perform certain tests and use similar inventory every time, they can make decisions for average consumption in a specific scenario for the lab. The supply purchases can be effectively managed with minimal to no wastage in the future. This will help them optimize inventory planning and its costs for the future.
Stock Analysis
Capital allocation or budgeting can be easy with its stock analysis feature. It enables lab owners to analyze their opening stock, consumption, and purchase patterns, simplifying capital allocation without hassle or inaccuracy.
The importance of supply chain management in healthcare has been displayed in tackling supply chain issues with traditional methods. The only possible way to sustain and grow in an ever-growing and challenging market is to employ revolutionary digital innovations that are secure, configurable, and easily accessible.
References:
How hospitals can manage supply shortage as demand surges
Exploring the role of supply chain management in healthcare
Average turnaround time from supplies to customers
