Hospital Supply Chain Activities
Our first task is generally to identify all activities related to supplies—physical handling, storage and tracking, purchasing, payables, and even handling at point of use locations. Because we already have a fairly complete list, most of our effort for any new facility is making sure that its unique aspects are included.
Think about the steps involved in getting an item from the point that a need is recognized to the point at which the item is received from a vendor and the vendor has been paid. Here is a typical list of hospital-side activities:
- Stock count or other recognition of need
- Requisitioning
- Generating the purchase order
- Handling purchase order questions and expediting
- Receiving the shipment at the hospital dock
- Moving the shipment to stockroom
- Detailed receiving at storage location
- Putting the items into storage locations
- Removing and disposing of packing materials
- Entering invoice data
- Matching of purchase order, receiver and invoice
- Handling billing exceptions
- Generating and sending payment
There is another set of activities involved if the item moves through a central stockroom. Conducting a periodic physical inventory adds yet another set. Handling and rotating dated items and handling product stockouts are others. In most hospitals, there are a substantial number of activities like these that must be included in a supply chain cost analysis.
Even a quick look at the main list suggests that supply chain costs are going to be large. The American College of Healthcare Executives has estimated these costs to be as high as, or higher than, the cost of the supplies themselves.
Managing Supplies Ordering
Supplies ordering is one of the primary sources of supply chain costs. Up next ... Dynamic Order Management ...
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Hidden Costs
Hospital supply chain costs are largely hidden within a wide variety of activities. Nurses and nursing assistants, for example, are part of the supply chain and spend a surprising amount of time chasing supplies. One estimate places this as high as 10% to 20% of their time.
It takes a good deal of time to find all of the activities and people who are involved in them. The good news is that this only has to be done in full detail once. For each new facility, we just need to identify and understand any differences from base model activities.