Despite the fact that the healthcare supply chain is highly regulated for the sake of patient safety, it may have more in common with other industry supply chains than you think.
As a shift toward value-based care is increasing cost pressures in an ever-changing and unpredictable space, adapting proven best practices from other industries can allow your hospital or health system to provide more effective, affordable patient care. See below for ways that other industries boost their bottom lines and increase the accountability of their supply chains.
Agriculture:
As healthcare shifts to be more transactional, patients demand greater transparency through every step of their care. This transparency is familiar and fundamental to agricultural distribution. Food safety scares, like the recent E. coli contamination of romaine lettuce, contribute to a dark cloud of mistrust that hangs over the food supply chain.
To combat such mishaps, supply chain leaders in the industry are turning toward practices that increase accountability and allow for all produce to be tracked from the moment it’s picked to the moment it’s placed on a grocery store shelf. With clear knowledge of where produce was sourced from and every facility it passed through on the way to the consumer, potentially contaminated produce can be quickly located and removed from the market.
The technology can also be used to ensure that the freshest produce is hitting the shelves at the most appropriate time. Walmart has already begun implementing blockchain technology in order to more efficiently track mangoes- the large retailer can now trace the tropical fruit in 2.2 seconds as opposed to the previous tracing time of 7 days.1 In the push for less food waste and fresher produce, blockchain will be a key factor for improved product tracking. Blockchain is already a buzzword in the pharmaceutical supply chain for precisely this reason.
The Auto Industry:
The auto industry is highly complex and has a long, demonstrated history in supply chain. Since a typical car contains over 20,000 parts and about 1,000 key components from a multitude of different suppliers, an organized and efficient supply chain is vital to success.2 From Toyota’s early adoption of lean management practices to a focus on continuous improvement, the auto industry is often the incubator of best practices.
Lean principles have been widely adopted within the healthcare space, but the auto industry also takes a unique approach to its freight. Electrical vehicles, which have fewer parts than traditional combustion engine cars, are predicted to lead to a decrease in freight for auto manufacturers.3 Furthermore, transportation of lithium-ion batteries for electric vehicles can be costly and highly regulated due to risk of combustion. Effective freight management is vital as new freight trends emerge in this ever-evolving industry.
Within the healthcare space, freight is often an overlooked area for potential cost savings. Between inbound shipments, outbound shipments, courier deliveries, and transportation of sensitive materials, shipping costs add up quickly. Look for a distribution organization whose experience and alliances with freight companies can be leveraged to reduce waste and spend.
Retail:
Much like the auto industry, retailers have had years to hone their supply chains. In fact, Toyota only developed the Kanban method of materials management after its researchers observed inventory management practices in a Piggly Wiggly grocery store in the mid-1950s.4
Today, players in this industry are at the forefront of both supply chain automation and sustainability. Currently, RFID is a hot topic in supply chain automation. The technology allows for a multitude of items to be scanned at one time as opposed to tracking or scanning each item individually with a UPC barcode. For example, Macy’s has already implemented RFID technology to track apparel items with a 97% accuracy rate.5 In the healthcare space, implementing RFID for inventory management can allow you to track exactly what a hospital has on its shelves and exactly where the products are located.
In terms of sustainability, as corporate social responsibility becomes ever more important to consumers and businesses alike, organizations can take a page out of Walmart’s book. The retail giant began Project Gigaton, an initiative to reduce greenhouse gasses in its supply chain, in 2017.6 Walmart suppliers who reduce their emissions are recognized publicly by the company and lauded for their efforts. As health systems begin to consider the environmental impacts of their supply chains, keep distributors that can deliver both service and sustainability in mind.
Within the supply chain space, being at the forefront of new practices can allow you to effectively cut costs while maintaining the quality that patients demand. Next time you implement changes in your supply chain, consider looking to other industries for guidance.
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1Forkast.news. “Blockchain for Bananas? Why Technology Will Transform Food Traceability and Supply Chain” August 2019.
2Strategicsourceror.com. “Sourcing Automotive Parts” June 2013.
3Inboundlogistics.com. “The Automotive Supply Chain: Disruption Down the Road” July 2016.
4Sixsigmadaily.com. “Kanban, JIT, and How Piggly Wiggly Changed the World of Lean Manufacturing” September 2017.
5Supplychaindive.com. “What’s next for RFID?” December 2018.
6Walmart.com. “Project Gigaton” 2018.