Supply Chain Management: 3 Major Factors that Improve a Healthcare Supply Chain

Supply chains are usually multifaceted, fragmented and hard to put your arms around. This is especially true in the health care industry. Health care includes a multitude of dissimilar products originating from a broad scope of numerous suppliers to multiple points of use.

However, achieving an efficient, robust supply chain is, ultimately, a core requirement that should include individually distinct ways to supply single products. Efforts to make improvements in the supply chain must also consider cost as a key factor, especially if you want to reduce spending.

The design of every step, and its resulting expenditures should be formulated from explicitly stated requirements that are well managed.
Performing a Supply Chain Analysis Will:

Trigger what steps are not being routinely followed.

 Highlight the related activities needed for successfully reducing
costs that may not be evident.  

Identify specific service elements that could become
revenue-producing opportunities.

Every optimization in material handling and manufacturing defines a balance between risks and efficiency in a global supply chain strategy.

Achieving Balance Includes Defining: 

The list of products

 Their specifications


Demand profiles

Specific criteria such as delivery times, planned demand variations or response efficiency due to potential delivery catastrophes

The answer lies in using a continuous improvement methodology like Lean Six Sigma, which is a universal business management strategy, and implementing the strategy across healthcare systems. Creating a demand-pull system generates best in class operations and, in most cases, be most economical situation possible.  As well, to achieve an innovative system includes using new technologies like radio frequency identification (RFID) and integrated data systems to capture the information necessary to make the business grow.

3 Major Factors That Must Be Analyzed to Drive Healthcare's Supply Chain to the Next Level

1. Major Consumption Trends:  Major consumption variations add significant, previously unknown needs for the supply of products, caused by epidemics like influenza or SARS, terrorist attacks or radically unique major incidents as almost every country of the world comes to experience.

2. Risk Factor Analysis:  Material supply interruptions on any level from raw material to finished product caused by operational problems, strikes, or unexpected wars in nations like Georgia.

3. Variations in Delivery:  Manufacturing variations stop product from proceeding to the customer in an orderly and timely manner when plants experience operational or compliance problems.

Each of these measures may yield value-added service opportunities to improve the customer experience. Additional capacity in manufacturing and transportation, flexibility of multiple plants for multiple products, storage capacity, or preparedness for alternative transportation modes may indicate areas of improvement.

A robust product supply can be calculated as additional expenditures over the costs. Knowing the value of the expense impact of the various requirements will drive further efforts in the continuous improvement program. The outlay for the total supply effort will become less, and the benefits are well worth the assiduous activities to accomplish the end results.

The result of the detailed supply chain analysis can be offered to the customers who will have a tendency to agree on pricing models acknowledging the service levels.

Approaching new contracts with a three-step mindset will allow customer and suppliers to clearly understand the impact of the range of services and products required for total supply chain expenditures.

The 3 Steps You Must Take to Get Your Supply Chain to the Next Level

1. Develop an essential supply chain model as best in class operations implementing the demand-pull system.

2. Generate advanced contingency models with defined levels of supply robustness.

3. Create clarity of the costs of various supply requirements for customers and suppliers to define the actual supply chain requirements and minimize the costs.

About the Author: Bernhard Opitz, Vice President of Manufacturing for an innovative pharmaceutical company in Chicago, builds high-performing, rapid-response supply chain organizations by driving technology innovation and productivity improvement initiatives. Now you can invite Bernhard to keynote at your next supply chain leadership conference by visiting his social networking site at

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