Supply chain management is a concept that has been in existence since the 1980s. The concept has been used by manufacturing firms to examine their own internal operations. Over time, the concept has quickly extended to healthcare where it is used to regulate the flow of medical goods and services from manufacturers to patients. For many hospitals, shifting to value-based care has become a mantra. The supply chain continues to play an integral role in the identification and management of costs while offering quality care. Spectrum healthcare is one of the healthcare organizations whose clinicians are spending time on the supply chain and inventory management to minimize supply chain inefficiencies with the aim of increasing the amount of time clinician spends on their patients. This research aims to discuss the components of the supply chain of Spectrum healthcare with close attention on future scopes together with present trends. The paper also addresses other new strategies that are emerging in the healthcare which are contributing towards efficient supply chain management (SCM).
Spectrum healthcare heavily relies on the supply chain to deliver healthcare products such as medical devices, stationery, pharmaceutical products, and other services along with healthcare I.T which can fulfill the needs of providers. The purpose of the SCM to Spectrum healthcare is to ensure complete end-to-end visibility of information from the manufacturers and distributors ( Kwon et al., 2016 ). Stakeholders that supply products to spectrum healthcare are divided into three broad groups: producers, Purchasers, and providers. In addition to these, government institutions, insurance companies, and regulatory agencies are also involved.
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Primarily, manufacturing includes the creation of active ingredients that are accepted within the medical practice. These products should be free from contamination. This calls for long downtimes in production so as to allow cleaning to take place. Secondary production includes the conversion of an active ingredient such as capsules and tablets into useable products. This expands the product line, especially after packaging, has been completed ( Langabeer & Helton, 2015) .
Distribution of finished products can be done through many channels. The dominant intermediary of medical products is wholesalers. The main reason for this is to avoid large costs associated with receiving shipments. Garg (2018) states that takes between 1,000 and 8,000 hours for pharmaceutical products to be delivered at the company. Due to the large numbers of intermediaries in the supply chain, batching is also likely to occur. This makes the supply chain to be fragmented and inefficient at times.
Current State of Spectrum Healthcare Supply Chain Management
The supply chain associated with pharmaceutical products that Spectrum healthcare receives is important. It must ensure that the hospitals receive sufficient supplies of medication for pharmacies. It is approximated that the company incurs 25-30% of operational costs for hospitals. It is imperative to manage these costs effectively to ensure that the company achieves its objectives. The company has identified a number of distribution issues that it incurs from the wholesalers to its hospitals as follows:
Lack of supply of chain education. Control of the supply of medication is not properly done by managers of Spectrum healthcare. This is due to poor awareness creation within the supply chain management. The product life cycle is another issue. The moment an active ingredient has been patented, it really takes over eight years to come up with another new product in the market. This means that alternative products enter the market after the patent has expired. New technology is reducing life cycles of medical products hence creating pressure on the distribution channel. Lastly is the aspect of profit margins. Despite the high value of pharmaceutical products, Spectrum healthcare is recording low profits.
Supply Chain Process
In Spectrum healthcare, each hospital is responsible for monitoring and managing and monitoring their inventories. The place their orders to the wholesalers when they are running out of stock. The twelve managers in every hospital make orders directly using the Purchase Order (PO) system. This is done in the first three months of each month and within the fifth week; all orders are processed and delivered. The first step of processing the order from the wholesaler involves checking the details of the order and the availability of the product ordered by managers at Spectrum healthcare. If the products are not available, the supply manager is notified ( Mathur et al., 2018 ) Delivery, in this case, is delayed until the products are availed. Sometimes, alternatives that can perform the same purpose can be provided. For instance, Spectrum managers can opt for herbal lozenges in place of range lozenges since the two only differ in terms of flavor.
The packaging of the pharmaceutical products will be based on the PO. Products for different hospitals are packed separately. The essence for this is to allow fast delivery i.e. 3 days before the delivery date. All delivered products must be indicated on the Delivery order form that has a unique number. The inventory status must be updated by the storekeeper and ensure that the wholesaler’s information is also updated too ( Mathew et al., 2013) . All deliveries are made depending on the hospital’s plan and it normally happens twice a month.
When the Spectrum hospitals receive the orders, the products are checked to ascertain whether they are the same as the one ordered. Upon completion, the products are moved as soon as possible to the storage room and refrigeration respectively. The delivery form and the DO forms are signed as an indication the products were delivered. A copy is then returned to the distributor via the driver. In case the products delivered are different from the ones indicated on the DO, the wholesaler is notified as soon as possible by mail or phone while indicating the error ( Langabeer & Helton, 2015) . In case the products are delivered to a different hospital of Spectrum healthcare, a reversed delivery will be arranged to rectify the error. The main challenge that Spectrum healthcare faces is the unavailability of stock from its wholesalers in cases where urgent orders are placed.
Ways that Spectrum Healthcare can Transform the Supply Chain Management
The following are new strategies that can help Spectrum healthcare to optimize the supply chain. The first one is virtual centralization of the supply chain. Virtually centralized SCM can allow Spectrum healthcare to control its costs and improve service delivery among its twelve hospitals. Virtual centralization involves the integration of operations from the perspective of the market. Through the use of a consolidated service center, Spectrum and other hospitals can form a single entity in order to benefit from distribution, contracting, procurement and logistical operations ( Ross, 2016) . This can help to solve some of the challenges associated with time, budget shortages and staff that Spectrum healthcare experience.
Radio Frequency Identification application is the second technology that Spectrum healthcare can use to connect to the internet. This will allow the company to trace all the products and share data of manufacturing industries. This system does not require line of sight identification and as such, it eliminates all forms of human intervention ( Chong et al., 2015 ). The program is made of tags that allow automation within the supply chain. The technology promotes efficiency in goods tracking and warehouse space optimization in order to lower costs and improve customer service. The technology is likely to offer Spectrum healthcare accurate information and compel processes and applications across the healthcare and add value to service.
The other strategy is to supply utilization management. This strategy holds that Spectrum healthcare can only realize its savings through a number of ways. This includes the elimination of waste, misuse, inefficiency and value mismatch of services, products, and technologies that are employed in its hospitals ( Mathew et al., 2013) . Supply utilization management provides a number of utilization misalignments that are common Spectrum healthcare including value mismatch, underspecification, an old technology.
Vendor managed inventory can help spectrum healthcare to improve the hospital’s service and cost performance. The strategy allows vendors to work inside the company hospitals’ while taking care of material management, order processing, and logistics. This client-eccentric approach minimizes the chances of moving supplies in and out of the hospital stores ( Christopher, 2016) . This strategy can be applied to several material categories such as pharmaceutical supplies, food, medical devices, consumables and pathology supplies.
In conclusion, Spectrum healthcare has discovered that the supply chain costs are the second largest expense it incurs. There has been a slow motion when it comes to curbing healthcare supply chain cost despite the expenditure on the same being high. Healthcare providers are now under high pressure to rising competition, rising costs, government regulation and the call for high-quality service. Unquestionably, healthcare has become even complex since it has to handle diversified locations, employees, mergers, and lots of information around the world. Spectrum healthcare needs to add value across the whole supply chain by supervising supply chain management practices. The use of latest technologies such as virtually centralized supply chain management, RFID and supply utilization management holds the key to the future in healthcare. Spectrum healthcare should adopt the supply utilization management which will enable it to dig broadly and dipper into their supply chain expenses so as to secure a better supply savings ( Christopher, 2016 ).
References
Christopher, M. (2016). Logistics & supply chain management . Pearson UK.
Chong, A. Y. L., Liu, M. J., Luo, J., & Keng-Boon, O. (2015). Predicting RFID adoption in the healthcare supply chain from the perspectives of users. International Journal of Production Economics , 159 , 66-75.
Garg, S. (2018). Efficient Inventory Management of Hospital Supply Chains Using a Sim-Heuristic Approach.
Kwon, I. W. G., Kim, S. H., & Martin, D. G. (2016). Healthcare supply chain management; strategic areas for quality and financial improvement. Technological Forecasting and Social Change , 113 , 422-428.
Langabeer, J. R., & Helton, J. (2015). Health care operations management . Jones & Bartlett Publishers.
Mathew, J., John, J., & Kumar, S. (2013, May). New trends in healthcare supply chain. In International Annual Conference, Production and Operations Management Society, Denver, Colorodo .
Mathur, B., Gupta, S., Meena, M. L., & Dangayach, G. S. (2018). Healthcare supply chain management: literature review and some issues. Journal of Advances in Management Research , 15 (3), 265-287.
Ross, D. F. (2016). Introduction to supply chain management technologies . Crc Press.
