No industry can survive without recognizing the importance of reducing expenditures wherever it may be possible). The healthcare sector is no exception, especially today when we’re witnessing new emerging trends and a rise in price in almost all its services and products. The pace of upward movement of cost is alarmingly high, making the healthcare industry’s services beyond the reach of the masses. One of the most significant cost drivers is inefficiencies in the supply chain, which is why industry stakeholders are focusing their attention to supply chain management (SCM).
Why is healthcare SCM so important? Well, it involves the flow of various product types as well as the participation of multiple stakeholders. The primary purpose of the supply chain in the health system is to deliver products (which often can be life-saving) in a timely manner to fulfill the needs of both patients and healthcare providers.
From a practical standpoint, increased focus on improving supply chain management makes sense, as the cost of services and medical supplies is the second-largest expense in any health system (right after labor costs). Hospitals are looking for new ways to reduce costs and gain a competitive advantage, and they are realigning their supply chain management strategies, among other primary concerns. Healthcare supply chain management is there to ensure complete end-to-end visibility of information among manufacturers, suppliers, distributors, and customers.
Importance of Supply Chain Management in Healthcare
Understanding supply chain management in healthcare and investing in better-organized logistics will increase the product or service value by reducing the cost and amount of time spent on moving products from point A to point B. For healthcare organizations seeking to grow and become more resilient, having a logistics system in place is important because it can facilitate a reliable, timely, and safe delivery of products at a reasonable cost.
According to this report by MarketsAndMarkets, the healthcare supply chain management market’s total value will be more than $2.2 billion by 2021, which is an increase of more than 53% from 2016. This demonstrates the continued rise of healthcare costs, pointing out the need for better managing the healthcare supply chain.
Typical daily logistics services consist of tasks such as inventory processing, shipping, and warehousing. In addition, logistics providers are there to deliver data summaries to all supply chain partners in order to increase the cost transparency and visibility of goods as they move through the supply chain. By establishing open lines of communication to improve customer support and coordinating live tracking updates, stakeholders can achieve better transparency between them.
The stakes for delivering raw materials and finished medical products in a timely manner varies between industries. In the healthcare industry, timing is everything. Being late to deliver products such as important medical devices and medical supplies is not an option when the consumer is a patient and the product is a life-saving device.
A well-run healthcare supply chain process communicates this with all supply chain partners to ensure that all goods reach their point of use in working order and on time (without incurring additional healthcare costs). Supply chain initiatives and practices can bring significant cost savings throughout the healthcare organization.
Changes Required for Achieving Better Supply Chain Management
A dependable and sturdy supply chain is the lifeline of the healthcare industry. It ensures that the health of this essential industry stays just as fit because it ensures that medical equipment, medical supplies, and medication reach the retailer or the patient smoothly. Today, the industry is moving to a value-based care delivery model, which is why the role of healthcare SCM will have a strong impact on the healthcare industry.
The value of the healthcare supply chain market is increasing because of a number of factors, including new governmental initiatives that put pressure on hospitals and other providers to make operational efficiency more effective. An essential (and new) part of the process is moving to cloud-based supply chain management software.
The automation functionality is one of the most dramatic ways in which supply chain management software can affect the healthcare industry. It makes it possible for healthcare organizations to be smarter and leaner. The best solutions are capable of automating a wide range of important logistical procedures and processes.
- Contract management
With the right supply chain management solution, healthcare organizations will improve their ability to ensure that the terms established within their supplier contracts are satisfied. Due to changes in pricing, healthcare organizations that want to stay competitive need to continually reconcile price differences between new market realities and contractually established levels. Healthcare organizations always found this to be their weak point as they have often failed to monitor performance and compliance metrics with adequate rigor. They are often underserved or overcharged because prices change or mistakes are made when deliveries are delayed. Ultimately, this contributes to unforeseen shortages and poor inventory controls.
- Improved vendor insight
With SCM software, healthcare institutions will be able to smooth out any kinks in their supply chain. An SCM solution can confirm that suppliers/vendors are performing to expected standards by monitoring to make sure that timely and accurate delivery of quality products is maintained at all times. With SCM vendor management functionality, healthcare organizations will be able to manage daily details of hundreds of vendor accounts, making the process less complex and time-consuming.
- Proactive approach to sourcing
With high-quality supply chain management, healthcare organizations are able to take a more proactive approach to sourcing. Instead of working with just one supplier or manufacturer, organizations can cast a wider net and compare candidates based on a range of factors. This will make healthcare organizations confident that they’re making the best and most cost-effective decisions.
- Data analytics accuracy
Despite the availability of different data analytics tools, most of today’s hospital staff reports performing manual inventory management and data collection. Thanks to smart supply chain management solutions, healthcare organizations get access to a sophisticated level of analysis that can help them capture all supply chain and financial data and optimize supply chain operations. Thanks to that, they can answer some tough questions that might have been a mystery. Accurate information about inventory shelf life, spending, and strong and weak areas are at the health care decision-makers’ fingertips. Utilizing data analytics technology is slowly becoming one of the most important emerging trends in healthcare supply chain management.
Healthcare supply chain management is much different from SCM in other industries, especially because of today’s climate where patient-centered processing, data-driven technologies, and new provider supplier contracts are changing healthcare as we know it.
Regardless of your requirements. Redbird Logistics Services has the right supply chain management solution to fit the needs of your healthcare organization. We are motivated by the need to reduce costs and improve efficiency, as well as improve patient care quality by identifying opportunities for healthcare institutions to improve their supply chain and logistics processes. With our technology and experience in supply chain improvement, you will get complete visibility of your products throughout your supply chain. Feel free to reach out to us today!