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  • Esteban Lizarazo

Looking Healthcare from Supply Chain Lens


Supply Chain field has emerged in the last decades and has contributed to the development of the manufacturing sector. Some factors like the development of Information Systems (IS) field with the Enterprise Resource Planning (ERP) helped to accelerate SCM adoption in the 90’s in the past century (Spekman and Sweeney, 2006). The idea of performing better as a chain of companies and to get competitive as a SC and not as single entities or companies has gained terrain (Christopher, 2000). The adoption of IS in the point of sales allowed Efficient Consumer Response (ECR) and contributes to boost performance in Inventory Management by knowing in real time demand of the medical service or ward. In the service field however, the study of SC has recently taken more importance and there is still room for academic research in the topic. One of the areas of service SC is Healthcare, a sector that is getting pressure for reducing costs all over the world, while maintaining quality-care service because of the severe consequences that may occur to the patients if the service is not provided in terms of quality and opportunity. A good source of improvement in the performance of healthcare is the development and appliance of SC concepts and tools and research in the field is getting more attention from Academia.

The US spent 18% of GDP in HC during 2010. In a similar way, the UK spent almost 14% of its GDP in HC. Some factors like ageing of population with better expectative of life, new treatments for chronical that increase the time- expectancy for most of diseases, better technology and a continuous development of new pharmaceuticals and medical devices products have pushed healthcare systems under tremendous pressure all over the world (McKone-Sweet, Hamilton and Willis, 2005). Supply Chain in the HC industry is responsible for a large amount of the expenditure and literature agrees that between 30 to 40% of the expenses in a HC deliver is explained by the SC. At the same time, HC managers see themselves as completely different in operations terms than other business because of the complexity of the system they manage (Jarrett, 1998). Variability is the basis in the HC SC and the impact of a large amount of stake holders determine the difficulty in applying practices from SC (De Vries and Huijsman, 2011)

In the SC of a HC provider the Inventory Management (IM) is important for a good performance. The Supply Chain Council proposed a five performance metrics in SC: reliability, responsiveness, flexibility, costs, and efficiency in managing assets (Lega, Marsilio and Villa, 2012) and in HC the impact of IM is extremely important for improving the performance of a hospital in any of the previous five system metrics. IM for a hospital can be defined as a balance between an excellent level of service (100% is desired) avoiding stock outs and at the same time decreasing the costs of inventory like the carry cost and the administrative cost. Stock outs in HC determine patient safety and if are not properly managed could cause even the death of a patient. Therefore, is common for IM in HC to allow over stocking avoiding the risk of unsafety delivery for patients or disruption of a treatment. In the other hand, the shaping of an Inventory System is affected by different types of variability like: preferences of physicians, new products that came out due to research and development of the medical devices and pharmaceutical companies, needs of patients that require different treatments, lack of standards for products classification that increases the number of available choices for sourcing, and special conditions for storage and handling to avoid spoilage and expiration. As a conclusion, IM in HC is more knowledge intensive and complex than other SC industries (De Vries, 2011).

Literature about IM in HC mostly takes place in a developed world context. It is important to address research for developing world where best practices are not taking place. Colombia is a country that has improved over the past 15 years in economic terms. However, Colombian HC system is still struggling and a lot of the initiatives in the HC sector are seen from medical lenses, though it is a system that wants to achieve universal coverture. In the recent four years, the system has engaged initiatives for purchasing efficiently with government regulations in price control for medical procedures and pharmaceutical products. The expenditure per capita is one of the lowest compared to the OECD list of countries with less than $850 dollars compared to an average of $3.500 dollars (OECD, 2013) and the pressure for decreasing costs is high with a deficit in the government budget of more than $1 billion dollars. IM research in this context can help not only countries like Colombia but also countries were the expenditure per capita is low. The potential impact is enormous for practitioners in HC and policy makers. On the other hand there could be a contribution to knowledge from HC IM practices from a developing context to the HC literature and also to the IM practices literature.

#productivity #timemanagement

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