A Study of Multi Criteria Inventory Classification of Drugs in Health Care Supply Chain Management

CHAPTER 1 INTRODUCTION

1.1 SUPPLY CHAIN MANAGEMENT Supply Chain Management (SCM) has become an important management paradigm. SCM is the process of efficiently integrating suppliers,

manufacturers, warehouses and stores so that the merchandise is produced and distributed in right quantities to the right locations and at the right time in order to minimize system wide costs while satisfying service-level requirements. SCM for most industries is complicated because the supply chain network includes suppliers, manufacturers, and customers.

MANUFACTURER

DISTRIBUTOR

RETAILER

CUSTOMER

SUPPLIER

LOGISTICS

Figure 1.1: A Basic Supply Chain Network

1

SCM can also be defined as the management of a network of interconnected businesses involved in the ultimate provision of product and service packages required by end customers (Harland, 1996). SCM spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point of origin to point of consumption. The term supply chain can be conveniently divided into two areas: inventory management and distribution apart from many other decisions critical to streamlining the process such as facility location, material procurement, and adapting to the changes in the system and environment. Also the most important connection of SCM from suppliers to customers is the inventories flow. How to coordinate and integrate the mechanisms of the SCM is a key factor to success (Christopher, 2000; Cooke, 1997; Lee & Ng, 1997; Stock, Greis, & Kasarda, 1998).

1.2 HEALTH CARE IN INDIA Healthcare is one of India‟s largest sectors, in terms of revenue and employment, and the sector is expanding rapidly. During the 1990s, Indian healthcare grew at a compound annual rate of 16%. Today the total value of the sector is more than $34 billion. This translates to $34 per capita, or roughly 6% of Gross Domestic Product (GDP). By 2012, India‟s healthcare sector is projected to grow to nearly $40...