Supply Chain Paper

Challenges facing the hospital supply chain today: Opportunities to improve hospital supply chain performance

The pressures on hospital supply chains are changing. In the past, a hospital that managed its purchasing costs well could operate efficiently. Today, the cost of materials management can exceed 35% of a hospital's operating budget, with nearly 20-25% attributable to supply costs alone. What are the top issues facing hospital executives and supply chain directors today? Specific perspectives may vary, but most agree that there are tremendous opportunities to improve supply chain performance. However, strong barriers must be overcome for change to succeed. Many improvements can be readily adopted and implemented without significant investment. Hence, opportunities for supply chain improvement are numerous and the following focus areas will be examined in the supply chain vision, product management, sourcing and contracting, distribution management, and technology. Opportunities also exist in the areas of inventory management and vendor-managed inventories, financing options through suppliers, including leasing programs, may prove valuable. This is an important time to look at utilization of key supplies and assess the ability to take advantage of better pricing opportunities through increased commitment to purchasing through GPO contracts.

Achieving supply chain performance improvements will require better understanding of the best practices, processes, analytical capabilities and theories behind supply chain management.

The pressures on hospital supply chains are changing. In the past, a hospital that managed its purchasing costs well could operate efficiently. Today, the cost of materials management can exceed 35% of a hospital's operating budget, with nearly 20-25% attributable to supply costs alone.

What are the top issues facing hospital executives and supply chain directors today? Specific perspectives may vary, but most agree that there are...