News & Trends Impacting the Healthcare Supply Chain

85 percent of hospital executives say that reducing supply chain waste and related costs is a top strategic priority.

—Cardinal Health

What’s the Prognosis?

As the supply chain ecosystem evolves in 2019, healthcare leaders must focus on collaboration and purpose to ensure optimization, according to Steve Dowse, senior vice president of product management for supply chain solutions provider Blume Global.

Here are his predictions for the healthcare supply chain next year:

  1. Rising tariffs. Increasing tariffs on various products will remain a concern for the healthcare industry, forcing the C-suite to rethink its current manufacturing strategies and global operations.
  2. Emergence of artificial intelligence. AI and machine learning will fill the gap between information and optimization, harnessing and analyzing data generated by connected medical devices.
  3. On-demand freight. Uber Freight and other new platforms will push more trucking companies into the gig economy. This may affect delivery speed.

  4. Competitive advantages. Supply chains that have access to data, AI, and machine learning may begin to see a competitive advantage in the market.
  5. The move to orchestration. Orchestration is the process of arranging and coordinating automated tasks to consolidate a process or workflow. With advanced technology, “organizations will become poised to move from automation to orchestration,” Dowse says.

—Alia Paavola, Becker’s Hospital Review

Each hospital could save around $11 million per year if it transformed its supply chain. That’s equivalent to the salaries of more than 100 registered nurses, or the cost of thousands of cardiac defibrillators.

—Navigant survey of 2,300 hospitals across the United States

Supply Chain Goes to Waste

The prognosis is not good: Research suggests that hospitals in the United States are expected to waste $25.4 billion across the supply chain by the end of 2018. To remedy the situation, many healthcare leaders are now looking to demonstrate healthy financial stewardship by analyzing common causes of supply chain waste and how to best mitigate them.

Healthcare industry leadership can address several main symptoms to cut down on waste. These include:

Data silos. In many cases the abundance of data available for analysis isn’t yet effectively integrated. With so many contracted vendors, it can be challenging to identify overlapping expenses or other opportunities for cost savings. Also, expensive purchase orders are often placed as the necessary supplies languish in a closet or on another floor.

Rx: Reduce the number of suppliers and contracts, rewarding those that provide the highest quality at the best rates in order to take advantage of economies of scale.

Skills shortage. A huge amount of information is available to help healthcare managers streamline and optimize supply chain processes. But the deluge of data often proves overwhelming for those who have not been trained in effectively implementing analytical tools, let alone leveraging artificial intelligence or machine learning solutions.

Rx: Automate processes where possible to reduce the potential for human error. At the same time, technology can identify anomalies in purchase orders and requisitions, and, ultimately, via predictive analytics, bring about smarter purchasing and product sourcing decisions.

Clinical variations. With a lack of integration and shortage of staff that can accurately monitor and maintain supply chain spending, there is little transparency offered for price variations or supply chain shortfalls. All too often, the goal is simply to maintain the status quo.

Rx: Standardize the type and frequency of products used to control costs while still producing clinically equivalent outcomes.


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