4 Best Practices for Hospital Supply Chain Management

By , SVP CHC Supply Trust March 2, 2020 Supply Chain

Hospital supply chain management has become a red-hot buzzword these days in the medical field, and its importance seems to be growing exponentially every few months. Most hospitals are faced with very tight budgets, and that means that in addition to being as cost-effective in every area as possible, that many hospitals are forced to take a hard look at cost-cutting measures throughout their organizations.

The supply chain has come under increasing scrutiny for this very reason, because it is ripe for generating savings in a number of areas, and thus reducing costs for many hospitals. Some of the specific areas of the supply chain which are getting a much closer look these days are the four best practices which are identified below. By implementing some of these supply chain best practices, your medical organization may realize enough savings on current expenses that you have significant relief on your monthly budget, and the margin of profit for your hospital increases.

Inventory Optimization

You need to be sure that your materials department is ordering the right volume of materials in order to sync up with the volume used by your staff, and that there is no excess material being ordered on the basis of someone’s gut instinct, and all of this should happen without jeopardizing the safety of your patients. It is also important to know that these supplies are reaching the appropriate departments on time, so they can be used to deliver needed services at the time services are actually required.

At the same time however, it’s very desirable to also maintain low levels of inventory so that you don’t carry excess from month to month, which can often result in unused medical supplies accumulating in a storage area. It’s crucial to have a good understanding of what’s happening in your materials department, and if there are any changes which need to be made, these should be implemented as quickly as possible so that efficiencies can be gained and so the materials side of the supply chain can be leaner. If you’re carrying excess inventory in your organization, that amounts to unused and dead revenue, and you need to be aware of it so that appropriate steps can be taken to reduce this waste.

Gather Data Across Departments

Gathering as much data as possible will be very beneficial to your efforts, and will help springboard you toward better supply chain management. For one thing, once you have a wealth of data collected, you’ll have a better understanding of any opportunities for improvement which might be present in your department, as well as any trends which have been in effect during recent months.

Many supply chain departments are evaluated on the basis of savings, and that motivates them to collaborate with third parties which can help provide business intelligence that will favor the accumulation of those savings. This can come in the form of consumables, purchased service engagements, or savings on capital. By tracking and publishing all of the savings your department makes on purchases, it will allow other departments, as well as upper management, to observe the kind of progress you’ve been making.

Dashboards can help to enforce level pricing, and can ensure that you’re not paying a number of different prices for similar supplies. It’s a good idea to create a centralized location for tracking all your active purchase projects, as well as any savings you’ve identified on projects which have been completed. Having the ability to gain access to data analytics is one of the most important elements toward ensuring that you meet the objectives outlined for your department.

When you put these practices into play early on, or if you re-establish these practices during your leadership role on the supply chain, it will help you build a solid foundation for the future. This foundation can then help progress your department into a greater level of supply chain optimization, while also carrying out the vision of your specific department.

Create Strategic Sourcing

Having an approach for strategic sourcing will generate immense value for your medical organization. With purchasing responsibilities increasingly coming under the umbrella of the supply chain, it will become increasingly important for you to have a definite direction on exactly what responsibilities your department must shoulder.

Historically, purchasing departments were only required to manage capital and consumables, but in recent years these responsibilities have broadened to include IT, service contracts, and purchasing services as well. It will be helpful if you can gain an understanding of the role which your group purchasing organization should have in the company, and review any local agreements which might already have been established.

Then you can figure out the level of flexibility you’ll need to have regarding group purchasing organization (GPO) compliance. This may take a little while to implement, especially with regard to any trends related to GPO compliance, and that means this is not a pressing decision you’ll have to make immediately. For any of those areas which you need additional expertise called in on, a third party might be able to provide useful insights which you can then turn into actionable items.

Examine Purchasing Controls and Patterns

The best way to examine your purchasing controls and automation is to invest some time in reviewing your current policies and procedures, for example the authorization of orders.

Most ERP systems are able to generate electronic purchase orders, and they will also require you to maintain your inventory on an electronic basis so that you will have adequate inventory management. Most vendors have no problem using electronic data interchanges, and that will help you to track your orders, deliveries, and confirmation electronically.

If you lack this type of system currently, you should begin investigating the requirements and the costs of installing an EDI system right away. Once you have captured all important data electronically, you’ll be much better prepared for other challenges of the future. Establishing and maintaining a good item master file might be one of these challenges, although that will likely require some support from upper management. Any future automation you include should take into account electronic invoicing and payments, bar-coding, and integrating your supply dispensing.

Help With Supply Chain Management

The supply chain is quickly becoming the main area of focus for all cost reduction efforts in hospitals and medical organizations, having eclipsed labor as the prime cost reduction area. This means that many of today’s medical organizations have already implemented or are in the process of implementing data-driven supply chain enhancements, for the purpose of improving patient care. The leader of a supply chain department in today’s hospitals is most likely to be a c-level manager, which is an accurate reflection of the degree of importance now associated with optimizing hospital supply chains. If your organization lacks the expertise to carry out this new emphasis on supply chain optimization, contact us at Community Hospital Corporation, and let some of our experts assist you with reorganizing your medical organization.

By , SVP CHC Supply Trust March 2, 2020 Supply Chain

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