HEALTH CARE OPERATIONS AND SUPPLY CHAIN MANAGEMENT
The operations and supply function in hospitals has historically been viewed as having a limited scope, many times falling under the term materials management. However, over the past decade progressive hospitals have adopted and adapted the concepts of the broader topic of supply chain management (SCM). The combination of operations with supply chain management presents a more expansive and robust view than the subarea of materials.
Definitions of Supply Chain Management
Experts in the field often define supply chain management as the sum total of parties involved, directly or indirectly, in fulfilling a customer request.
Two of the most prominent professional supply chain management organizations in the world define supply chain management as follows:
The Institute for Supply Management defines supply management as “the identification, acquisition, access, positioning, management of resources and related capabilities the organization needs or potentially needs in the attainment of its strategic objectives.”
The Council for Supply Chain Management Professionals defines supply chain management as the function that “encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third party service providers and customers.”
These definitions are very broad and contain customer-centric concepts, as they also consider new product identification and development, marketing, operations, distribution (channels), finance, and customer service as part of supply chain management.
These definitions can be applied to health care operations and/or systems to include the flow of products and associated services to meet the needs of the health care provider and system and the patients served.
Operations and Supply Chain Management Applied to Health Care
In turn, the nature of this book is quite different from the traditional operations text that may focus more on products and manufacturing from a perspective such as the automaker Ford, or a high-technology firm such as Hewlett-Packard, or a continuous processing company such as Alcoa.
This text addresses the broader picture of operations and supply chain management tasks: not only the sourcing of materials, but also forecasting demand, developing and employing simulation models, discussing quality management tools and techniques, and the management of projects within health care. All of these topics will be applied to the health sector. Knowledge of these tasks will assist the health care professional and act as a building block for operations and supply management excellence.
Given the unique nature of the health care profession, the hospital operations and supply chain manager most often has relationships with a wide variety of organizations that connect suppliers to the health care organization. These relationships extend to group purchasing organizations, distributors, third-party service providers, information managers, and transportation support staff.
Health Care Operations and Supply Chain Management in Action
It is said that when times are good, expansion plans, future investments, and revenue growth are the focus points in most industries. However, during down times, all organizations scrutinize spending. Economic crises hit all industries, including the health care sector. Adjustments are made, such as private practices being closed, hospital operating margins being squeezed, and many nonclinical jobs getting cut.
So what do hard times mean for health care industry supply chain managers? It appears that in an attempt to usher in supply chain efficiencies and shape a healthier bottom line, clinicians, executives, and others are now more ready than ever before to listen to their supply chain managers.
It has been shown that supply chain managers’ importance has been heightened as a result of recent estimates showing that average hospital profit margins are down. It is very possible that health care supply chain executives at large health care organizations are responsible for hundreds of millions of dollars in spending per year. The best supply chain managers seek input for all levels in the health care organization, from physicians to nurses to pharmacists. Many times those employees demand products and services without any notion of potential costs or impacts to the operating atmosphere.
Of late, it appears that health care supply chain managers are beginning to look at other industries for assistance. Many health care organizations are looking to inject talent from those who have not been in the health care industry and can be tapped for...
