Managing Healthcare Supply Chain with Automation

Table of Contents

Healthcare supply chain management

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 endeavor 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 providers'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!

Why is the healthcare supply chain management important?

The healthcare sector operates within a complex supply chain framework that includes the process of purchasing, manufacturing, and distributing goods and services from providers to patients. These consist of medical and non-medical products, such as pharmaceuticals, medical devices, food, and cleaning supplies. Unlike many industries, a smooth supply chain functioning not only significantly impacts healthcare businesses but also plays a pivotal role in the well-being and lives of individuals.

Supply Chain process

The purpose of supply chain management in the healthcare sector is to ensure the timely availability of necessary resources, ultimately contributing to delivering high-quality healthcare services.

Besides, it is also to find weak spots in different departments and come up with ways to prevent issues. This enables the board of management to pinpoint areas that need improvement for better health outcomes and to make global health investments more effective.

This is why it’s crucial that healthcare leaders who are facing inefficiencies in their supply chain explore innovative solutions to streamline the process.

Current state of managing supply chain in the healthcare sector

Recently, several healthcare organisations have come to us and shared that they are using a dozen of siloed systems, cumbersome spreadsheets, and manual processes to manage their supply chain. These pose significant challenges such as being time-consuming, prone to errors, and hindering overall operations.

A notable issue arises when providers, due to the lack of a streamlined system, end up ordering unnecessary products or excessive quantities of medications and supplies, leading to substantial financial waste. Furthermore, they struggle to conduct predictive analyses for demand forecasting and generate accurate reports on costs and profit margins.

With these challenges, healthcare organisations face the formidable task of rapidly transforming their existing supply chains. As a result, these organisations are increasingly focusing on automation, a proven and highly beneficial approach to address some of these problems effectively.

Transform healthcare supply chain management to better customer service

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 labor 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.

Enterprise resource planning (ERP) systems

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 software 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.

ERP system

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.

Artificial intelligence (AI)/machine learning

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 a paper-based to an 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.

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 Odoo Gold partners in Australia to implement automation solutions gradually and ensure a seamless transition.