Unlocking 5 Myths of Hospital Supply Chain Management

The supply chain is often thought of as a cost center, instead of a strategic opportunity. And so, the supply chain ends up suffering from not being optimized to its fullest. But to reach top supply chain performance, you need to weed through the facts. It’s time to bust some myths and get you up to speed.

Myth #1: It’s always about the lowest cost

Fact: Actually, it’s not. The cheapest prices doesn’t always relate to overall cost. But at the same time, sometimes paying a higher price may lead to an overall lower cost. The buy price usually does not take into account the extra costs with freight, packaging, quality, finance, etc.  But in focusing solely on costs, the supply chain can inhibit innovation and competitive advantage for growth.

Myth #2: It’s about placing orders with suppliers for the required products or services

Fact: If this were the case, then maintaining a sustainable and cost effective supply chain process would not be possible. You should be always looking for new ways to improve procurement and supply chain networks to make sure you keep up with the ever-changing commercial ecosystem. Through some spend-analytics software, you can tinker with “what-if” scenarios for decision making and see the degrees of change vary with new suppliers, pricing, routes, etc. in relation to your bottom-line.

Myth#3: Don’t treat IT as another commodity

Fact: When technology is combined with the right business processes for supply chain integration, you will find it can significantly improve performance and efficiencies. With emerging mobile and cloud technologies, hospitals can provide real-time supply chain visibility all the way down the line that allows for the reduction of costs, in terms of legacy system upgrades and maintenance. Often, valuable data is trapped in silos that make it difficult to blend for useful purposes and decisions. That’s where the cloud can extract data quickly and bring it to your hand at any point of care.

Myth #4: “We have all the visibility we need”

Fact: You may have the ‘top of the line’ ERP system with all the bells and whistles, but they’re only as good as the data that’s in them. Bad data means bad output. More data doesn’t necessarily mean clarity. And visibility into your hospital supply chain goes beyond real-time events and data only. It’s about peering into the future and seeing not only what has shipped or not, but also which shipments are out the door or will be delivered on time, even before it is shipped.

Myth #5: It’s about meeting budgets in supplier contracts

Fact: By using this strategy to meet spend objectives will most certainly be affected in other areas of the supply chain. It’s important to monitor other factors such as performance, response times, reliability and “on-time” deliveries. If your supplier is “dropping the ball” in any of these areas, you’re losing money and opportunities for saving.

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