Healthcare Supply Chain

Operations Management Decisions in the Healthcare Industry
Another important issue facing hospitals and health centers around this country is the concept of supply chain management. This is an often overlooked part of the hospital organization that has great effects oncosts and savings for a facility. Managing the supply chain efficiently and having good control over supplies often is the difference between a successful and productive facility and one that is losing money. Supply costs alone can make up as much as 25% of a hospitals operating budget (Stark, Mangione). Administrators that realize the importance of supply chain management make sure that the properly trained personnel are in these positions. Understanding the clinical areas of a hospital as well as the non-clinical areas can be a great help with managing inventory. Also, developing good relationships with vendors and forming quality partnerships can prove to be effective attributes of a good supply chain management. Information technology upgrades can also help improve supply chains. The Sisters of Mercy Health System recently found out the benefits that an efficient automated system can yield. Prior to overhauling their supply chain system, the Sisters of Mercy, which operates 18 hospitals, was very ineffective and costly. Each hospital was ordering its own supplies and doing so without any input from hospital staff, nurses, or physicians. After being overwhelmed with rising costs and mounting waste they decided to form the Mercy ROi (Resource Optimization innovation). After centralizing a storage and distribution center for all 18 hospitals, they decided to invest in the latest supply chain automation software. All aspects of supply chain became better organized through automation from planning, managing inventory, and different warehouse functions. All of the hospitals were linked on the same network. Mercy has realized astounding returns from this investment, with the supply chain turning...