Managing Healthcare Supply Chain: Challenges & Solutions

Rising healthcare costs require healthcare providers to reassess their business strategies. The board of management has to deal with reducing operating costs while maintaining a high quality of care. A pivotal focus in this endeavour is directed toward healthcare supply chain management, which manages the flow of products, services, and information to meet the demands of patients and staff.

McKinsey indicates that supply chain costs contribute significantly, and account for up to 40 % of a healthcare provider’s overall expenses. This means that the enhancement of supply chain performance could be a major enabler for increasing resilience, operational efficiency, satisfaction, and reducing costs.

In this article, we will discuss the aspects of the healthcare supply chain and explore how automation technology solutions can aid in optimising supply chain management. Let’s explore!

What Is Supply Chain In Healthcare?

The healthcare supply chain is a complex operations network. This network involves managing systems, companies, and processes that contribute to manufacturing, distributing, and delivering medical supplies or equipment to related parties. In the healthcare supply chain, the users are often healthcare providers or patients.

Key Stakeholders: Several parties take part in the healthcare supply chain, and they all contribute to ensuring the efficient distribution of medical supplies and equipment. You can expect key stakeholders such as insurance companies, pharmacies, health systems, and manufacturers.

New regulations, advanced technology, and shifting patient needs - these are the pressures that cause the healthcare supply chain to constantly evolve. This evolution marks the importance of overcoming common bottlenecks of healthcare providers, such as manual operations, waste, or overstocking.

What Are The Key Areas Of Healthcare Supply Chain Management?

There are at least ten key areas in the supply chain that work together to make sure healthcare products and services are delivered efficiently. The goal of practitioners is to maintain efficiency, quality and adaptability of the supply chain.

Current Challenges Of Managing Supply Chain In Healthcare

There are several major challenges that healthcare providers need to overcome. These challenges may originate from traditional systems, time-consuming procedures, and poor inventory control methods:

• Siloed & fragmented systems: To manage supply chains, many healthcare companies use spreadsheets, disjointed tools, and systems. This results in a lack of visibility and complicates inventory management between departments.
• Spreadsheets & manual procedures: Using spreadsheets and manual processes most of the time is costly and error-prone. These traditional methods limit scalability and make it difficult for healthcare institutions to react quickly to supply demands.
• Overstocking & waste: As a result of poor inventory control, healthcare providers often order excessive amounts of supplies or redundant products. Particularly for medical supplies that must be used quickly, overstocking raises the likelihood of product expiration and massive waste.
• Lack of accurate forecast: Many healthcare organisations find it difficult to accurately predict future supply needs without effective data integration and advanced analytics. As a result, inventory control and profitability suffer from either overordering redundant products or underordering crucial ones.

Modern Solutions To Transform Healthcare Supply Chain Management

Automation stands as a transformative force in healthcare supply chain management. There is a surge in adopting automation solutions to streamline complex processes that consume significant human resources and get rid of old headaches.

Functions such as procurement, management, and distribution can now be automated to reduce costs, improve outcomes, and, more importantly, increase the efficiency of the supply chain. This also enables organisations to efficiently monitor inventory, minimise waste, facilitate quick decision-making based on data, and trim labour and operating costs.

To further elevate supply chain processes, healthcare organisations can leverage cutting-edge technological solutions such as AI or ERP systems. These advanced technologies pave the way for significant enhancements in managing healthcare supply chains.

1. Enterprise Resource Planning (ERP) Systems For Integrated Management

Enterprise resource planning (ERP) systems are the preferred choice. This software solution is used in many different industries, including the healthcare sector. Several healthcare providers digitalise their supply chain by implementing and fully exploiting the ERP systems’ functionality to deliver quality care at a lower cost. These comprehensive ERP applications are designed to seamlessly integrate the core functional areas of an organisation’s business processes. The implementation of ERP systems plays a crucial role in enhancing the efficiency of hospitals and facilitating prompt service delivery.

All-in-one ERP systems, such as Odoo, can empower healthcare providers to manage a diverse range of business processes, including:

• Automate inventory management, and track inventory levels in real-time;
• Provide predictive analysis to forecast demands and automate replenishment when inventory levels hit specific thresholds.;
• Automate procurement to reduce costs, negotiate better deals, and optimise the procurement process.
• Maintain accurate records of costs and profit margins.

Furthermore, ERP systems contribute to effective coordination and communication among essential partners for optimal patient care and safety. The close linkage of financial flows to the product and information flow within the supply chain is efficiently managed through the utilisation of ERP systems.

Maybe you’re interested in:

• A Strategic Approach To Selecting Leading ERP Vendors.
• ERP In Supply Chain Management.

2. Predictive Analytics For Demand Planning

Predictive analytics can be an excellent tool for inventory control and demand planning in the healthcare supply chain. It assists healthcare practitioners in predicting future requirements based on past data and patterns.

This way, businesses can maintain ideal stock levels and steer clear of under or overordering items. Additionally, this technology helps to improve patient care while cutting waste by optimising lead times, forecasting shortages, and ensuring that medical supplies are delivered efficiently.

3. Artificial Intelligence (AI) & Machine Learning (ML)

The other type, referred to as innovative solutions in healthcare supply chain management, is AI. According to a recent survey by Gartner, 92% of healthcare leaders express their intention to incorporate artificial intelligence (AI) and machine learning (ML) technologies into their operations by 2025.

For instance, AI plays a pivotal role in inventory control and overall supply chain management. This intelligent technology has proven instrumental in detecting errors, enhancing efficiency, and identifying potential risks to patients, such as the use of recalled or expired products.

The shift from paper-based to automated supply chain management has resulted in benefits for healthcare companies. The digitisation of healthcare has rendered it more accessible than ever, offering speed, safety, convenience, and cost-effectiveness for all.

Furthermore, the digital transformation of the healthcare supply chain enables hospital systems to reduce operational costs and identify growth opportunities, ultimately improving patients’ care.

4. Blockchain For Transparency And Security

In the healthcare supply chain, blockchain technology offers security, traceability, and transparency. This technology ensures that medical supplies can be securely tracked from producer to patient, lowering the threat of counterfeit treatments and assuring product authenticity. Blockchain also offers a safe and auditable record of product movements and transactions, which enhances regulatory compliance.

The Path Ahead

In summary, automation has held the promise to transform healthcare supply chain management and offer a myriad of advantages. By adopting automation solutions, healthcare organisations can significantly reduce costs, increase efficiency, and improve outcomes.

However, implementing automation solutions can pose challenges, requiring healthcare organisations to commit to staff training and education for successful adoption. It’s also essential to partner with experts like Havi Technology who are accredited partners with ERP technology solution vendors such as Odoo to implement automation solutions gradually and ensure a seamless transition.

Healthcare Supply Chain - Frequently Asked Questions

1. How can AI be used to improve demand forecasting in healthcare supply chains?

Artificial Intelligence (AI) can deliver more accurate demand based on historical data, current patterns, and other variables. This enables waste reduction, efficient inventory management, and on-time delivery of healthcare supplies.

2. How can I select the right ERP system to meet my organisation’s needs?

Take into account the requirements, industry, and size of your healthcare business. Our ERP expert teams always conduct a careful business process analysis before helping the client business choose an ERP. Evaluate ERP systems in terms of features, pricing, scalability, and user-friendliness. You can consider a system that can integrate with your existing systems and offer the features that your business needs.

3. What factors should I consider about the integration capabilities of an ERP system?

The system's API, connectors, or pre-built integrations with other software should all be taken into account. Opt for a system that can be readily integrated with the accounting, HR, or CRM software that you now use. It's important to consider the ERP's level of flexibility and customisation as well.