Data and innovative technology drive efficiency in modern supply chain management. Where once estimations and instincts ruled the day, supply chain managers use information and connected systems to drive decision-making and improve performance.
For the healthcare industry, health informatics provides key data to make supply chains work. It leads to better-run operations in which automation handles much of the logistics work and data drives purchasing and strategic decisions.
The Role of Supply Chain in Healthcare
Medical facilities, including hospitals, outpatient treatment centers and long-term care facilities, require a large array of supplies and equipment to operate efficiently. They include items such as surgical implements, syringes, prescriptions drugs, latex gloves, computers, and a variety of medical equipment (as well as the parts needed for all of them).
Data-driven automation can monitor inventory levels for the thousands of different items used in a hospital. Once that level reaches a tipping point, the system automatically orders replacements from a warehouse. Systems also can determine how many supplies should be at the warehouse itself, informing decisions on when supplies are ordered from vendors and how many are stocked.
Advanced technology can tie in supply chain systems with electronic healthcare records. This can prove useful in a variety of ways. For example, by monitoring the use of medical devices for individual patient outcomes, supply chain systems can make the link between supply cost and patient outcomes. Data-driven systems can trace supply chain usage patterns based on medical records, analyzing how these patterns impact cost, quality of care and patient outcomes.
Cloud-based systems also can provide information not only on what is in a hospital or other medical facility, but what is available from a host of vendors. That way, if one vendor is out of a certain product, the buyer can quickly pivot to buying from another vendor so that there is no delay for the patient or the medical procedure.
The Supply Chain Cost Problem
While clearly supply chains are invaluable to the success of a healthcare operation, not all organizations have focused on making them as efficient as possible. A recent report found that hospitals wasted $25.7 billion on unneeded expenses related to supply chains. The cost per hospital reached about $12.1 million, or enough to pay the salaries of 165 nurses.
The report also found that lower spending on supply chain does not lead to worse healthcare, which is reason enough for medical operations to explore using data to improve supply chain operations.
Also, savings opportunities did not change across hospital size, regional location, or whether the hospital was rural, urban, non-profit, for-profit, part of a system or standalone. All hospitals benefitted.
How Data Can Fix Supply Chain Issues
As noted in a paper published in the Supply Chain Forum international journal, the first and most important goal of using data in supply chain management is to allow medical professionals to “concentrate on their core activities and improve patient care conditions.”
Data-driven supply chains also reduce errors in ordering and inventory management, improve the quality of supply chain processes and cut down on wait times for clinicians and patients.
For example, the University of California-San Francisco Health (UCSF) now operates a supply chain with almost 90% automation. The decision to switch to an automated system came after UCSF leaders realized the extent of waste in the previous operation.
For example, every purchase order went through six or seven touchpoints as it traveled through the system. This included requisition and ordering, receiving and invoicing. Because UCSF and its five affiliates ordered more than 78 million medical-surgical products per year, the old process resulted in enormous amounts of waste.
Using automation in the system eliminates redundant steps and makes the system far more efficient. This allowed the hospital to free up staff who could take on more important work, which included opening a new 289-bed facility for women, children and cancer patients.
Keys to Information Science in the Supply Chain
One key to the use of information science in the supply chain is that it replaces opinion with facts. According to RevCycle Intelligence, one of the issues with the supply chain is that medical providers might want to work with one brand of a product while administrators might want something cheaper. Data can help find a compromise choice that satisfies both parties.
Data systems also provide price transparency, leading to smarter choices that are both more cost-effective and do not lead to any delays in care for patients.
Information science also gets all the departments within one large organization on the same page, cutting down on issues such as one department hoarding a certain type of supply while other departments run short.