Transforming Healthcare Supply Chain Management with Emerging Technologies

When it comes to building a self-sufficient healthcare ecosystem, Supply Chain Management (SCM) is integral to the healthcare industry. The most visible areas of a healthcare supply chain are procurement of raw ingredients to the final products, manufacturing and transportation.

Integration of new disruptive technologies like AI, Blockchain, data analytics and IoT into the supply chain management systems facilitate smooth operation, transparency, security and dramatic growth across the global healthcare sector. According to markets and markets, the global healthcare SCM market is anticipated to reach $3.3 billion by 2025 from $2.2 billion in 2020. The critical factors for driving this growth include the emergence of cloud-based solutions, reduced operational costs, improvement in efficiency, and overall profitability. SCM’s growing popularity in every sector, especially in the healthcare industry, proves highly beneficial for human lives.

​The article covers the following points that state what healthcare supply chain management is and how technologies are transforming it:

• What is healthcare supply chain management?
• Who are the stakeholders in the healthcare supply chain?
• What are the challenges in healthcare SCM?
• A five-step plan to strengthen the healthcare supply chain
• How can emerging technologies transform healthcare SCM?

What is the healthcare supply chain management?

The Healthcare supply chain can be defined as the procurement and distribution of products and services to serve patients. Management of relationships with suppliers and customers to offer superior customer satisfaction cost-effectively is the purpose of a supply chain. Supply chain management is a fragmented process; it includes obtaining resources, managing supplies, and delivering goods and services to patients and healthcare providers.

A supply chain usually begins with a manufacturer that produces the medical products and sends them to a distribution center. Healthcare organizations or hospitals can directly buy the products from the distributor or manufacturer. Further, the products are transferred to the organization and stocked into an inventory.

The healthcare industry involves various types of supply chains. The two most significant supply chains are:

1. Pharmacy Supply Chain
   Supply chain management has a vital role for hospitals to ensure timely availability of medicines at the lowest possible price. Supply chains involve varied supplier vendor agreements, rounds of negotiation, floating tenders and freezing on product delivery process. The stakeholders cannot predict market demands for any medicine independently; therefore, capturing the exact need to consume drugs to get its current market trend is necessary. It is a general phenomenon where demands are higher than supply or reverse, as low demand and high availability. To eliminate such a situation, market research and study of the drug flow supply chain are essential.
2. Medical Devices Supply Chain
   Medical devices and equipment are a crucial part of the healthcare industry. Devices like X-ray, MRI and mammogram machines are generally susceptible and require specialist handling. It is essential to work with the manufacturers and logistics providers who have an in-depth understanding and experience handling and delivering such sensitive products in the proper condition to their destination.

Who are the Stakeholders in the Healthcare Supply Chain Management?

Based on supply chain functionalities, stakeholders are categorized into four groups:

1. Manufacturers
2. Purchasers
3. Distributors
4. Providers

These are the four main stakeholders participating in almost every supply chain. The manufacturer’s role in the healthcare supply chain is to produce the required medical products and forward them to distributors. Anyone who buys the medical supplies (generally wholesalers or retailers) from the manufacturer and holds the responsibility to disseminate them to the people can play the purchaser /distributor’s role. Hospitals, pharmacies or clinics are the healthcare providers who intend to provide the best possible healthcare services to their patients.

Moreover, for handling operations like distribution, transportation, inventory management, warehouse management, etc., logistics are involved in the supply chain. Logistics are responsible for two main functions: first, managing resources, i.e., capacity management (ambulance, wheelchair, etc.), warehouse management (drugs, medical devices and equipment, etc.); and second, workflow management, i.e., shipping, routing, etc.

What are the challenges in the healthcare Supply Chain Management?

• Inaccurate inventory data
  Poor visibility into the hospital’s inventory is the biggest problem for managing supplies. Hospitals relying on legacy software for managing their inventory, procurement, logistics and other operations usually face the problem of doing their job efficiently. For instance, a case was reported during the peak days of Covid-19 that a reputed medical institution suffered severe performance issues due to falling short on disk storage space. The system falling short on storage space could no longer store the inventory data.
  Many hospitals didn’t know how many ventilators and other resources they had and how many they would need. The next challenge was sharing the information with the distributor or state authority. Managing and sharing updated inventory data had to be performed regularly to optimize the medical resources’ relocation across various medical institutions. Consequently, the influx of inaccurate data led to derailing the planning effort for many states.
  Solution: The use of modern technologies like the Cloud-based paradigm for managing assets, Blockchain’s security, tracking and traceability capabilities can bring a massive difference in the performance of a medical organization.
• Weak supply chain
  A close observance into a medical supply chain reveals that hospitals are overly dependent on third-party logistics. It leads to an atrophied procurement process and diminishes the actual capability to adapt to a crisis quickly. Lack of visibility and accountability are the main reasons for a weak supply chain.
  Solution: The best practice to overcome an inefficient supply chain is to follow the supply chain and make sure to eliminate unnecessary manual operations and streamline data flow all along. Using technologies like AI and Blockchain could bring transparency and visibility into the system. Medical service providers should focus on integrating the inventory and procurement solutions.
• Delayed supplies
  Supplies are generally delayed when either the products are damaged or get stuck somewhere in the supply chain. Consider the supply chain of medical devices (like MRI machines, etc.); the most significant issue these devices’ shipment faces is in-transit damage due to mishandling. Rough handling is not the only reason; exposure to high temperature and humidity are just other factors.
  For example, exposure to excessive-high temperatures could cause electronic devices to reduce battery life. High moisture or condensation can lead to short circuits and there may be many other cases of damages. These damaged products are returned to the manufacturer and hospitals may have to wait for the next round of delivery.
  Solution: Technologies like data analytics, IoT and Blockchain can resolve complex real-world problems when integrated into a system. These modern technologies provide accurate data modeling. Such projections allow making more informed decisions. IoT-enabled modern fleet management and cargo tracking capabilities enable distributors to offer real-time data on supplies relocation to various medical institutions and authorities. The in-sync data between distributors, hospitals and other stakeholders allow for accurate planning on a very granular level and prioritize delivery of critical supplies, thus acting faster and saving more lives.
• Shady ordering and bidding processes
  During the pandemic, multiple incidents related to insufficient medical supplies occurred and undercover bidding and shady ordering came into existence. Since the supply chains cannot trace back the provenance, lack of transparency and visibility led to the emergence of foul plays in the supply chain.
  Solution: To preclude such foul plays, clients can rely on Blockchain-enabled end-to-end delivery tracking systems. The entire supply chain’s visibility should be an essential requirement for every stakeholder to ensure a robust and efficient workflow.
• Lack of innovation
  The old supply chains rely heavily on out-dated systems, which lacks innovation and becomes the root cause of all the supply chain mishappenings. These systems lack storage spaces, do not provide transparency, depend on out-dated working models and technologies.
  Solution: No one can be prepared enough for every unknown crisis, but an agile and resilient system can help to bounce back after getting a blow quickly. Practicing high maintenance strategies, strong connections with other parties in the business ecosystem and most importantly, leveraging modern innovative technologies can help in challenging situations. Technologies help to reach a global level and allow building prosperity, necessary skills and expertise. Innovation is the ultimate tool for survival in crisis and peace.

A five-step plan to strengthen the healthcare supply chain

One of the researches has identified five specific capabilities that could dramatically improve the healthcare supply chain’s performance. Its bottom lines:

• better segmentation of products, customers and markets
• enhanced agility to minimize costs and greater flexibility
• alignment with global standards
• measurement and benchmarking
• collaboration across the healthcare value chain

It has become a general phenomenon today that a typical laptop manufacturer in Asia can accept an order on Monday and deliver a pallet of freshly assembled customized systems to the customer sitting in Europe within a week. In comparison, a typical pharmaceutical manufacturer would take around 75 days to perform his duty. This gap is the point of concern and must be closed soon. Of the five comprehensive transformations identified, three can be accomplished internally, while the two others- alignment and collaboration, need to be worked together with customers, suppliers and even competitors.