The healthcare supply chain today is complex and costly. Supply chain represents the second largest area of expense for hospitals, consuming approximately 40-55 percent of the average operating budget. Studies have shown that hospitals can avoid between 5-15 percent of that cost through better supply chain practices, thereby increasing operating profits by anywhere from 2-7 percent. Unlike other industries where the supply chain is viewed as a strategic asset, the healthcare supply chain has often been underleveraged – and even neglected. Most healthcare organizations are managing supplies using outdated information technology systems that cannot communicate with one another. As a result, supply chain processes are largely manual, with staff keying data into various systems as they procure products, manage inventory, capture its use and trigger replenishment needs.
For decades, experts have pointed to the inefficiencies, costs and waste in the healthcare supply chain as a significant drain on the industry’s financial resources. They have urged healthcare organizations to take a holistic, integrated approach to their supply chains where the procurement, management and movement of supplies is facilitated on an enterprise-wide level using an automated and integrated approach. Those that have heeded the experts’ advice and implemented technology to build efficient, effective and sustainable supply chains have significantly cut costs and reduced labor, while improving patient care delivery.