What Is the Healthcare Supply Chain?
As a healthcare administrator, it’s your job to ensure that your clinical team has the supplies, goods, and materials they need to provide safe patient care. Developing a reliable healthcare supply chain — the network of manufacturers, suppliers, and transporters that produce and distribute products to your facility — ensures these items are delivered when and where they’re needed.
Whether you’re ordering surgical equipment, medicines, or cleaning products, you’ll need a robust supply chain management strategy to ensure you have enough materials to execute clinical operations. We’ll explain what supply chains are and how they’re used, and provide tips to keep your facility’s supply chain logistics running smoothly.
What Is a Healthcare Supply Chain?
A supply chain is a network of companies that work together to ensure goods and materials are produced and delivered in an efficient and timely manner. In the healthcare industry, supply chains include:
- Manufacturers that create healthcare products.
- Vendors and retailers that sell healthcare products to facilities.
- Distributors that transport and deliver the products.
- Consumers (healthcare facilities) that buy and use the products.
- Supply chain management companies that keep operations running smoothly.
What Is Supply Chain Management in Healthcare?
Healthcare companies need to conduct research and provide oversight of their supply chain performance to ensure they get the goods they need in the most timely and cost-effective way. That’s where supply chain management companies come in. These third-party entities work to prevent interruptions in supply chain operations and reduce unnecessary costs. They do this by:
- Keeping track of a facility’s inventory.
- Sourcing the necessary goods, products, and materials.
- Coordinating and managing production and distribution efforts.
- Identifying factors that could place a supply chain at risk.
- Developing a product delivery schedule that works for all parties.
When healthcare supply chain management is executed properly, organizations can feel comfortable knowing that the goods they source will be transported and distributed in the most efficient way possible.
Why Is Supply Chain Management Important?
In healthcare, timing is everything. Without proper supply chain management, organizations wouldn’t be able to adequately deliver the goods and services that patients require.
It can be challenging for administrators to manage their facility’s supply chains because they have so many independently moving parts. Unfortunately, if one of these moving parts experiences a problem or issue, it can affect other parties further along in the chain.
The COVID-19 pandemic exposed many previously unforeseen problems with critical supply chains, causing disruptions that had disastrous effects on the delivery of care. However, it doesn’t always take a global pandemic for these sorts of issues to arise. Sometimes, complications like staff shortages or communication errors can set an entire distribution chain off course. For example:
- Raw material shortages can inhibit consistent production.
- Natural disasters can cause a disruption in transportation routes.
- Pandemics or seasonal changes can affect the demand for certain goods.
- Regulatory changes can impact which healthcare products are needed.
- Inflation can alter predicted costs to produce and distribute goods.
- Staffing shortages can disrupt any stage of the supply chain.
To understand what this can look like in practice, imagine the following scenario: A healthcare organization orders surgical gloves. The supply chain manager receives word from the manufacturer that glove production will be halted due to electrical problems in the factory. The factory that produces the brand of gloves ordered by the hospital also produces gloves for all of the other major vendors, which makes it difficult for the hospital to source a new supply.
The hospital has to decrease their hours of operation because they don’t have enough gloves to provide safe care. The hospital turns patients away from their facility and their reputation is negatively affected.
What Are Ways a Facility Can Protect Their Supply Chain?
Situations like the one mentioned above often occur unexpectedly. However, there are safeguards healthcare supply chain companies can put in place to limit the effect of these unforeseeable problems. The table below outlines five ways organizations can mitigate their supply chain risks.
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| 1. Diversify suppliers | Source goods from a variety of manufacturers and vendors to prevent dependence upon single sources. |
| 2. Develop a strong inventory management strategy | Keep an adequate stockpile of goods without overburdening storage warehouses. |
| 3. Create contingency plans | Develop flexible supply chain partnerships that allow for rapid mobilization of goods in the event of emergencies or other unforeseeable circumstances. |
| 4. Hire a vetted supply chain manager | Partner with a supply chain expert to ensure the manufacturers, transporters, and vendors you rely on are efficient and trustworthy. |
| 5. Streamline communication efforts | Create clear communication channels to ensure all parties have the most accurate and up-to-date details on the status of the production and distribution schedule. |
Discover More Ways to Deliver High-Quality Care
Healthcare supply chain management is essential to keeping your facility’s operations running smoothly. Looking for more ways to optimize your organization’s care quality? Our team of clinical and legal experts has developed hundreds of free healthcare insights, guides, and resources to keep you in the know.