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How to implement a collaborative arrangement in a Hospital-Distributor relationship?


How to implement a VMI arrangement for the healthcare supply chain.

I am stuck in an airport in Cali (500 kms from Bogota), a beautiful city with a high development of the healthcare value chain. It has top ranked hospitals in Latin America like Fundación Valle de Lili and Centro Médico Imbanaco. I was reflecting today about arrangements of VMI after a fruitful visit to a large hospital and came with this very good and descriptive table of contingent factors for implementing VMI (Vendor Management Inventory) in a healthcare provider.

Let me explain briefly and simple what VMI is: It is a system whereby the supplier takes responsibility for monitoring the retailer’s inventory level and makes periodic replenishment decisions regarding frequency, order quantities and timing of the replenishments. In my doctoral research I am always curious about contingent factors, barriers and enablers for implementing any project of Inventory Management in Hospitals. I hope this table developed by Bhakoo et al. in 2012 can help practitioners that are working on this fascinating topic.

From the previous table we can conclude:

  1. Products that are innovative are better managed in inventory terms with an internal control while functional products are candidates for a VMI arrangement.

  2. If the product has a strong regulatory environment can better be managed by an internal control while low regulatory environment are candidates for a VMI arrangement.

  3. The degree of goal congruence between the distributor and the hospital is important for a collaborative arrangement and therefore if both parties share goals can better implement a VMI arrangement while low goal congruence can lead to manage inventory internally.

  4. The spatial complexity (distances between warehouses of the distributor and the hospital) also plays as a contingent factor and therefore it is better to manage inventory in a collaborative arrangement if this complexity is low, opposed to manage inventory internally if the spatial complexity is high.

  5. At last, physical characteristics of the hospital (storage and IT capabilities) can determine the proper way to manage inventory. Low physical characteristics are better for managing internally the inventory while high and well developed physical characteristics of the hospitals are better candidates for a VMI arrangement.

I also think and have written about how important is TRUST for any supply chain. I found interesting that the base of the previous table was a trust between partners. I believe strongly that supply chain is not only about a core in mathematical and operations research but also and strongly relevant about Organizational behavior and social studies.


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