Supply Chain Networks in Healthcare: Why Providers and Suppliers Should Move Away from Point-to-Point Connections
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James Vanstone, Key Account Manager
Monday, 22 July 2024
James Vanstone, Key Account Manager
Somehow connected, yet not truly integrated – unfortunately, this is still often the case when looking at supply chains in the healthcare industry. Although providers and suppliers work together, individual contracts and processes are highly inefficient. The solution for achieving greater control and transparency in the supply chain, reducing costs and being better prepared for crises is remarkably simple: connecting to a supply chain network.
Those who know me will be aware that I like to use analogies to explain complex concepts in simple terms. When a friend’s son recently asked me what I do for a living, I used the analogy of a party. A party to which many people are invited, but none of the guests speak the same language – or so it seems. Because at GHX, we don’t just bring people together; we’ve also developed a way for them to talk to one another. Everyone with everyone. Anytime, anywhere. If they want to talk to each other, I added with a wink. And this caused my friend’s son to look at me in utter amazement: “Why wouldn’t everyone want to talk to everyone else?”
I found myself smiling briefly but didn’t have a good answer on hand. For although the associated benefits would be immense, we are still a long way from the ideal scenario of standardised communication within the healthcare industry. Many providers, suppliers and manufacturers of medical products have entered individual contracts with one another and established manual processes or disparate point-to-point connections to conduct their business. Instead of opening to other market participants, they limit themselves to working with just a few trading partners. And that cannot and does not always work out well, as negative examples from the past show.
The COVID-19 pandemic has clearly demonstrated just how important it is to build a strong network within the healthcare sector. If ventilators become scarce among regular suppliers, a provider should simply be able to order medical equipment and products from other suppliers. The key word here is resilience – the ability to withstand unforeseen events that can destabilise supply chains overnight.
The solution is a crisis-proof supply chain network. Best of all, every participant in the network can continue to use their own language, meaning they can work according to their individual process and system specifications. The information is collected on a single interface, translated if necessary, and displayed to trading partners. Anyone looking to do business with one another can do so very easily. Transaction documents such as orders, delivery notes or invoices always find their way into the trading partner’s system – naturally, always in the required language.
This not only makes the supply chain more resilient to crises but also gives market participants far greater insights across the entire supply chain. By connecting to a supply chain network, both sides therefore gain greater transparency. Providers can check the status of their orders using tracking documents, whilst manufacturers and suppliers optimise their cash flow because invoices are received and paid more quickly. A network where everyone wins – now that’s a party worth celebrating.
| Benefits of supply chain networks in the healthcare industry |
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Connecting to a supply chain network not only helps providers refine their sourcing strategies but also enables them to manage their suppliers more effectively. When key business partners are connected to the network, up-to-date product and pricing information, as well as availability and delivery times, can be accessed via a central portal. This saves time and enables decision-makers to make important decisions quickly and easily based on real-time data.
The automation associated with the digital transformation of processes fundamentally enhances responsiveness, which is essential – particularly in times of crisis – to ensure the continuity of care. Where providers manage their communication – both within the organisation and with their suppliers – via in-app tools, they benefit from faster and more efficient order management.
With the right solutions, communication and processes can, incidentally, be optimised to such an extent that manual procedures are reduced. The best example is barcode scanners, which are used in some hospitals for inventory management. When an item is removed, the relevant data is transmitted to the supplier via the supply chain network platform. The supplier receives a notification, replaces the used goods and issues an invoice, which ideally arrives at the hospital in digital form.
The automated processes enabled by connection to supply chain networks streamline workflows, improve communication and reduce the risk of supply bottlenecks. The welcome result: optimised patient care at lower costs.
Let’s return to the question I couldn’t answer to my friend’s son: if a supply chain network has nothing but advantages, why don’t all providers and suppliers join forces? I have raised this question in discussions with both sides over the past few weeks and have been given two reasons by both healthcare organisations and the industry that prevent them from joining a network: time and money.
However, the prevailing view that adapting processes is time-consuming and expensive is a misconception. Most networks and technologies – including GHX solutions – are cloud-based and can therefore be integrated into existing ERP systems with minimal effort. And for manufacturers and suppliers who do not yet conduct their business electronically, there are web-based solutions that are quick and easy to set up. All you need is internet access to benefit from the advantages of an automated supply chain.
As you can see, there is no reason not to join a supply chain network – in fact, there are plenty of reasons to do so. At GHX, we have spent more than 25 years building the largest network in the healthcare industry, which ensures that providers and suppliers speak the same language and, through optimised collaboration, provide patient care even in times of crisis.
Now there's just one question left, which my friend's son would probably ask you right now: What are you waiting for?
James Vanstone, Key Account Manager at GHX Europe, is a proven expert in the strategic optimisation of supply chain processes in the healthcare industry. Drawing on his extensive expertise, gained from over 15 years’ experience in the SaaS sector and advising stakeholders within the healthcare ecosystem, James Vanstone supports healthcare providers, suppliers and manufacturers in the healthcare industry in increasing their operational efficiency and improving patient care.