Designing Supply Chain Efficiency into Healthcare Systems


AHSA® - August 26, 2020 - 0 comments

Efficient supply chain management systems lead to better quality of healthcare and patient safety.

Embracing new technologies such as advanced analytics and cloud-based Enterprise Resource Planning (ERP) is known to build efficient supply chain systems, which is an important step towards achieving health security.

What we know so far about supply chain is that it is the most significant aspect of any business operations and when well-managed, it drives operational efficiencies and can reduce costs by up to 25%. Supply chain plays a crucial role in the health sector. It is the system or process that ensures essential healthcare products get to healthcare providers and patients at the most efficient and affordable price possible.

The healthcare supply chain begins with the medical product manufacturer where the products are made then sent to a distribution center or sometimes directly to hospitals depending on the type of product. Some hospitals use group purchasing organizations such as MedSource to purchase the products on their behalf. It is a cost reduction strategy used by many healthcare providers.

Other elements of the healthcare supply chain include regulatory agencies such as the African Medicines Regulatory Harmonization (AMRH) and health insurance companies. Healthcare supply chain management costs is the biggest challenge most healthcare providers are currently facing. The best approach to achieving health security will include focusing on building efficient supply chain systems to ensure constant supply of good quality and affordable healthcare products.

Our State of Vulnerability

As we are aware, healthcare institutions are not well prepared for sudden high demands of essential healthcare supplies. Pre-pandemic conditions within the healthcare system had some major flaws which were exposed as soon as virus started spreading. Many healthcare facilities experienced a sudden increase in number of patients which strained their resources.

Some of the major healthcare supply chain challenges experienced during the pandemic include;

      • Shortage of essential healthcare products due to high demand for personal protective equipment, medicines and other supplies necessary for quality healthcare services.
      • Inflated costs of essential healthcare supplies as a result of shortages.
      • Weaknesses in operating models and overall financial stability due to increased demand of essential healthcare products.
      • Lack of transparency in the procurement processes as stakeholders from different parts of the supply chain seek more financial gains from products.
      • Lack of productivity as nurses and physicians spend a lot of time on manual inventory and supply chain management. This makes them spend less time on patients, research and training.

Healthcare stakeholders are relying on the supply chain management for efficient operations and cost reductions. There is a recurring need to find alternatives to the constant interruptions to the supply of essential healthcare products. About 80% of the most commonly used drugs are supplied from India and China. When the world started experiencing the worst of COVID-19 pandemic, some Chinese factories had to cease production and India had to reduce their exports in order to focus on treating their own citizens.

The increase in demand for face masks, personal protective equipment, sanitizers, gloves and all other non-pharmaceuticals known to be necessary for emergency responses to any form of unknown or unpredictable health threat has shown the need to always be prepared.

The supply of healthcare products was greatly interrupted and there were major shortages of drugs in healthcare facilities resulting in significant increase in prices, illness and in some cases, death. This has strained the entire healthcare system and there is urgent need for innovation and alternative ways of managing the system

Building Efficient Supply Chain Systems

To manage the current pandemic and burden of existing diseases, better, cost-effective and efficient supply chain systems are needed. Embracing new technologies such as advanced analytics and cloud-based Enterprise Resource Planning (ERP) is known to build efficient supply chain systems, which is an important step towards achieving  health security.

Advanced analytics: This is a process that involves using machine learning models to convert data into actionable insights.  Forecasts, driver-analyses, segmentation and regressions are just a part of it but the insights become more useful when applied in real-life situations. For example, forecasts on disease burdens and demand for pharmaceutical products will help healthcare facilities stock their supplies in good time and avoid shortages. This is very important for demand and supply matching.

Cloud-based Enterprise Resource Planning (ERP): Management teams in healthcare facilities recognize the importance of automated and accurate inventory allocation and digitized supply chain tools for more efficient procurement processes, inventory management and overall operations of healthcare facilities. Automated technology for real-time tracking products and inventory is much more efficient than manual processes. When integrated into the healthcare IT infrastructure, ERP helps in reliable sourcing and procurement.

The Power of Efficient Supply Chain Management

Efficient supply chain management systems lead to better quality of healthcare and patient safety. Some of the major benefits of an efficient supply chain system include;

      • Reduced losses in healthcare facilities
      • Transparency which leads to efficient procurement processes and less corruption
      • Reduced prices of essential healthcare products
      • Faster distribution of essential healthcare products and equipment
      • Improved integration between clinical operations and supply chain processes
      • Faster and more centralized decision making
      • More efficient procurement processes
      • Automated processes leading to better time management and more productivity for nurses and physicians who spend a lot of time on inventory

Achieving health security will require all our healthcare systems to operate efficiently, have a constant supply of essential healthcare products to prevent more fatalities from infectious and non-infectious diseased.

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