What Does a Strategically Integrated Supply Chain Look Like?

In a June 18 webinar hosted by Becker's Hospital Review, John Cunningham, senior vice president of client operations at Alpharetta, Ga.-based MedAssets, and Steve Chyung, vice president of supply chain management and real estate at Denver-based Sisters of Charity of Leavenworth Health System, discussed the supply chain's role in hospitals' competitive margins and what a strategically integrated supply chain looks like.

The hospital supply chain is an area that historically did not receive much attention in terms of strategic planning, but that is changing in this era of healthcare reform.

"As healthcare providers continue on a journey to high functioning organizations, there's an equal need to create a high reliability methodology to the supply chain," Mr. Cunningham said.

To begin on the journey toward such strategic integration, Mr. Cunningham said hospitals and healthcare organizations need the appropriate leadership. "From a vision and strategy standpoint, we look at the supply chain from a very integrated perspective with a sense of accountable leadership. Every opportunity to advance the supply chain starts with the executive buy-in."

Supply chains with such accountable and advanced leadership sit on a high point on what Mr. Cunningham calls 'the maturity curve.' On the curve, there are four levels of supply chain organization: baseline, conventional, advanced and leading. Organizations in the top level have the greatest maturity and highest value, Mr. Cunningham said, and are characterized by executive engagement with the supply chain, market influence and risk sharing.

On its way to the top level of the supply chain maturity curve is SCL Health System The organization has been working with MedAssets to improve supply chain operations and efficiencies after a merger brought together several different hospitals.

Mr. Chyung said part of SCL Health's strategic plan was to include nontraditional spend areas under the materials management organizational structure. "What differentiates us is we're incorporating all of our spend in this organizational structure," he said.

In addition to typical supply chain operations and clinical category management, SCL includes real estate management such as lease payments, capital spending, travel payments and the accounts payable processes in the supply chain structure. "We implemented this organizational structure and it gave us a way to drive a signal of accountability of how we're managing our spend," Mr. Chyung said.

Identifying areas for savings opportunities surrounding the hospital supply chain can help reduce supply chain costs by 5 to 15 percent, said Mr. Cunningham. "As we look at some of the more advanced industry leaders, what we see different in those organizations from other organizations is that they view the supply chain as a leverage for their businesses," he said. "Progressive organizations and healthcare organizations have a similar effort to move up to that 'best in class' environment where they have a culture of supply chain. It's strategic."

View the webinar by clicking here.

View the webinar slides by clicking here.

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