Today’s webinar offered many of us a chance to take an outside view of healthcare supply chain and look inward. While we have spent the last decade or so working on improving the healthcare supply chain, the focus in this area really didn’t get started until the 1990s.
Starting with a 1996 study, Dr. Heather Nachtmann and Dr. Edward Pohl started researching cost inefficiencies in the healthcare supply chain and identify the opportunities for improvement. They conducted a cost-analysis from top-down and bottom-up to identify $23 Billion in process costs such as inventory management, order management and logistics. The authors also outlined a set of challenges, attempted savings initiatives, and strategic improvements broken into business type (manufacturer, GPO, distributor, provider).
The advent of e-commerce has had the greatest impact not just in healthcare but every major industry. I started working for a GPO in early 2001, and I have witnessed an amazing evolution of EDI order management. It has reduced labor and paper costs, as well as contributed indirectly to an improvement in inventory management. The results of the survey show the increase in e-commerce transactions, which is also one of the top strategic initiatives of the study.
Reviewing the rest of the survey results shows that GPOs have taken a lead on many of the other initiatives, except inventory management, which is the core business of distributors. An important element to remember is that each of the stakeholders are interconnected, and that achieving greater efficiency in each step of supply chain will be better for all.
The good news is that healthcare supply chain continues to gain merit among other parts of the industry, and we have more tools and resources available compared to 1996 that can guide us to faster cost efficiencies.
Starting with a 1996 study, Dr. Heather Nachtmann and Dr. Edward Pohl started researching cost inefficiencies in the healthcare supply chain and identify the opportunities for improvement. They conducted a cost-analysis from top-down and bottom-up to identify $23 Billion in process costs such as inventory management, order management and logistics. The authors also outlined a set of challenges, attempted savings initiatives, and strategic improvements broken into business type (manufacturer, GPO, distributor, provider).
The advent of e-commerce has had the greatest impact not just in healthcare but every major industry. I started working for a GPO in early 2001, and I have witnessed an amazing evolution of EDI order management. It has reduced labor and paper costs, as well as contributed indirectly to an improvement in inventory management. The results of the survey show the increase in e-commerce transactions, which is also one of the top strategic initiatives of the study.
Reviewing the rest of the survey results shows that GPOs have taken a lead on many of the other initiatives, except inventory management, which is the core business of distributors. An important element to remember is that each of the stakeholders are interconnected, and that achieving greater efficiency in each step of supply chain will be better for all.
The good news is that healthcare supply chain continues to gain merit among other parts of the industry, and we have more tools and resources available compared to 1996 that can guide us to faster cost efficiencies.
