Healthcare supply chains face logistics challenges, changes in software, as well as the need to reduce costs to meet demand. Following are a few ways to better segment products and markets, lower costs, and increase partnerships and collaborations across the supply chain.
About the healthcare supply chain
“The good news is that models do exist to strengthen and improve the health-care supply chain. We believe that by learning from the experience of industries such as fast-moving consumer goods (FMCG), the health-care sector could cut production lead times and obsolescence, while manufacturers, distributors, hospitals, and pharmacies could carry significantly smaller inventories,” McKinsey.
Like any other industry, healthcare supply chain management aims to to improve overall quality and lower costs.
The concern is how to effectively go about creating an efficient supply chain that can optimize services, improve logistics, and meet demand. This isn’t easy as there may be fragments and silos that must be addressed.
Healthcare supply chains can improve in the following ways:
- Improving the segmentation of customers, products, and partnerships
- Benchmarking as a way to improve pricing
- Collaborating and partnering with other healthcare supply chains
- Aligning global standards and improving technologies
- Reducing costs, improving inventory, and monitoring contract details
Monitor each contract
For some organizations, managing contracts is problematic. They may have group purchasing organizations (GPOs) that they work with. These third-party companies may help with contract negotiations and they can save money on various types of products the organization needs.
The drawback is that in giving this aspect of contract negotiations over to someone else, the hospital or medical facility isn’t examining their contracts in depth and may be paying more than they should.
Confirm pricing and confidentiality agreements
Rates are generally set by an organization’s competition. The amounts that are paid out in a market-based system impacts how services are priced. When addressing pricing structures, it’s important to examine contracts and ensure transparency, and that the hospital or medical facility isn’t being overcharged.
Another issue is confidentiality agreements that might be included in contracts. By examining these, the healthcare supply chain can best protect itself and ensure they are being charged fair market prices. Collaborating with supply-chain partners can improve contract negotiations and transactional relationships.
Use advanced technology
Pharmaceutical manufacturer replenishment lead times are typically 75 days. For healthcare organizations, optimizing services and improving lead times are critical. New advances in technology streamlines services and automates common administrative tasks. Organizations should introduce new software to simplify services and provide more accurate forecasts. Demand planning software and demand forecasting software includes features like machine learning, AI, and other state-of-the-art tools.
With effective technologies, the supply chain has better analytics. Because healthcare supply chains receive billions of data points, machine learning and AI helps sort through all that data to help with decision-making. This can transform the supply chain into a more strategic asset with solutions the medical profession needs.
Have an efficient inventory management system
Medication errors affect 10 – 20 percent of all hospital admissions. For healthcare organizations, time and efficiency are important. If products don’t move through the supply chain, they might expire, which costs the organization money. There are also issues of lost or untimely inventory that can affect profit margins. Organizations don’t want to store excess inventory they may not need or have shortages they can’t account for.
To help meet demand, organizations should add an effective inventory management software system. This helps track all products from end-to-end in the supply chain. It improves logistics and helps the organization meet demand.
Monitor all pricing
Medical facilities and hospitals need to know the costs for all products and services. They also need to compare prices to stay competitive. By benchmarking the industry, they can better work to create value, reduce costs, and meet profit margins.
To help the organization meet their bottom line, healthcare organizations need to explore effective pricing. By addressing the incremental costs that they incur for every service, they can better maintain accounting practices and won’t over- or under-charge. Inventory management software solutions help track supplies as well as materials, labor, operations costs, and other expenses.
Improving healthcare supply chains requires strategies for production, inventory fulfillment, and transparency. By incorporating inventory management software and demand planning software that includes features like machine learning and AI, they will be better able to meet demand and reduce costs. Additionally, by monitoring contract agreements and pricing, you ensure the transparency needed to maintain a competitive lead.