Supply Chain Management for Healthcare Organizations

Supply Chain Management for Healthcare Organizations
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Understanding how to improve supply chain management is essential in healthcare. It allows the organization to provide adequate service while reducing costs and increasing the quality of care. In this paper, the author would like to focus on assessing and implementing the supply chain management capabilities of the University of Pennsylvania Health System (UPHS). UPHS is an organization that is a healthcare provider that is committed to delivering high-quality care to patients while controlling costs. Supply chain management is critical in achieving this goal by ensuring we have the necessary supplies and equipment to provide care at the right time and cost. As such, this report will examine our organization's supply chain management and how it impacts our brand.
Analysis of the Economics in the Organization's Market
Economics has always been one of the most significant factors in managing an organization’s supply chain. Any change in the demand, supply, and price of commodities could affect the organization's capacity to operate and the price paid by the patient. For example, one study by Almajali et al. (2023) found that reimbursement rates significantly affect the supply chain management of healthcare organizations. In response to low reimbursement rates, organizations may seek to negotiate better prices with suppliers or find alternative sources of supplies to reduce costs.
Furthermore, labor and supply costs are critical in supply chain management. A study by Fonseca and Azevedo (2020) found that labor cost is a significant determinant of supply chain performance in the healthcare sector. Rising labor costs can lead to increased supply chain costs, as organizations may need to increase wages or hire more staff to meet demand.
In line with UPHS’ market, we have also observed the impact of economic factors on supply chain management. For instance, the organization has experienced fluctuations in reimbursement rates and patient volumes, which have led us to adopt various supply chain management strategies. To counter this, the organization has implemented just-in-time inventory management and vendor-managed inventory to reduce costs while ensuring we have enough supplies and equipment to care for our patients. This shows that economic factors are critical considerations in healthcare supply chain management. Organizations must carefully monitor these factors and implement effective supply chain management strategies to ensure they can provide high-quality care while controlling costs.
Impact of Supply Chain Management on Expenses
Aside from the market itself, changes in the supply chain could also affect the organization's expenses, which could then affect operability and costs. In Khorasani et al. (2020), effective supply chain management can reduce expenses and increase the healthcare industry's profitability. The study found that just-in-time inventory management, which our organization uses, is an effective strategy for reducing inventory holding costs and minimizing waste.
In contrast, another study found that supply chain management can impact a hospital's financial performance, with ineffective supply chain management leading to higher expenses (Moons et al., 2018). The study also found that hospitals with better supply chain management had better operational performance and financial results. Both of these considerations were taken into consideration within the UPHS ecosystem. Specifically, the UPHs has implemented several supply chain management strategies, such as vendor-managed inventory and lean manufacturing, to reduce expenses and improve efficiency. Additionally, vendor-managed inventory allows UPHS to reduce the inventory we hold, reducing our inventory holding costs. Finally, adopting lean manufacturing principles has helped us minimize waste and improve efficiency in our supply chain.
However, it is essential to note that the impact of supply chain management on expenses is not limited to cost reduction. Effective supply chain management can also improve patient care quality by ensuring the right supplies and equipment are available. This can lead to improved patient outcomes and increased patient satisfaction, benefiting the organization financially. However, since finance is only one aspect of the operational variables in a healthcare organization, the following section will then focus on operations.
Summary of Supply Chain Management and Operations
Throughout the various studies and papers written this semester, the author strongly believes that UPHS's supply chain management practices align with the best practices outlined before. For example, one study by Balkhi et al. (2022) suggests that healthcare organizations can improve their supply chain management practices by using just-in-time inventory management and implementing quality control measures. The study suggests that these practices can help reduce waste, improve efficiency, and reduce costs. In UPHS, the implementation of just-in-time inventory management has led to reduced inventory-holding costs and waste.
Furthermore, the organization's practice of working closely with suppliers to negotiate better prices is also supported by previous studies. One of the organization's central tenets is to reduce costs and...