Strengthening the healthcare supply chain

The importance of supply chain management (SCM) as a key enabler of any organization’s business objectives has been strongly highlighted during the peak of the Covid-19 pandemic over the past two years. More recently, its relative relevance has only grown through today’s semiconductor and logistics challenges, as current global trends push it to the forefront of business strategy. Specifically in the healthcare sector, these events have caused significant supply disruptions across the world, affecting suppliers, hospital administrators, clinicians, caregivers, patients and society as a whole. Therefore, weathering these challenging times heightens the need to strengthen the overall supply chain of public and private health infrastructure systems.

In general terms, SCM in a traditional product manufacturing industry involves the sourcing, sourcing, transportation and storage of materials at various stages (covering raw material inputs, in-process assemblies and inventory of finished products), from the point of origin to the final destination.

However, in healthcare, where we see a fusion of products and services, the scope of SCM expands to encompass not only the end-to-end distribution process covering pharmaceuticals, medical consumables, equipment investment and related services, but also the element of human life. and care, with liability until a patient has ingested a drug or accessed a health-related hospital procedure/service. These complexities are a compelling reason for advanced analytics and robust processes within the healthcare supply chain to ensure that the right quality material continues to be made available in the right quantity and at the right cost. , and at the right time. Here are some ways to achieve this.

Central planning alignments

Supply times for imported medicines, medical consumables and biomedical equipment have accelerated recently. In addition, the pandemic has also changed disease profiles, causing a significant change in material consumption habits in hospitals. These external changes require adjustments in material planning algorithms across the supply channel viz. MedTech & Pharma suppliers, distributors and hospitals, to ensure efficient material availability. The planning horizon, which is typically 2-3 months for consumables and 4-6 months for appliances and equipment, now needs to be extended to 4-6 months and 8-10 months respectively.

Tiered sourcing visibility

Behind the ongoing supply constraints lie clearly identifiable bottlenecks – shortages of semiconductors for equipment, shortages of APIs (especially from China) for medicines, geopolitical tensions associated with Ukraine – Russia and its neighboring regions, a resurgence of Covid-related lockdowns in China, to name a few. A good way to neutralize the risks associated with these is to go beyond the Tier 1 supplier, understand everything that goes into the products being purchased, and work with those Tier 1 supplier partners on alternatives that relatively less dependent on the associated risks. . This would lead to win-win-win scenarios for providers, hospitals and patients.

Internal efficiencies

Across the distribution channel, inventory standards must be adapted to have higher than usual stocks, in order to overcome supply uncertainties. While this may be unfavorable from a short-term cash flow perspective, it would act as an insurance hedge with a long-term benefit, especially in the current inflationary environment. Having longer term pricing contracts with quantity and supply commitments would also be in order. Specifically in hospitals, consumption efficiency can be improved by replacing slow/stuck inventory with usable SKUs, optimizing cross-department material transfers, maintaining form compliance, and following business sharing guidelines within competing brands. This equates to the last mile of the healthcare supply chain, to ensure the little things are also taken care of, helping to reduce miscellaneous expenses.


External events during difficult times create situations that call into question the continued fulfillment of signed clauses in legal contracts. It then becomes relevant to place these clauses in the spirit of the agreement, and the importance of inter-company relations comes into play. During these periods, it is crucial to maintain good mutual relations while protecting the commercial interests of the two sides. It becomes an easy proposition to execute when, despite an ever-changing external environment, all stakeholders are aligned on the singular goal of patient care.

With all of these measures taken, I’m sure healthcare supply chain professionals would be able to weather any storm that comes their way.



The opinions expressed above are those of the author.


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