Supply Management Practices in the Health Care Industry
Without a doubt, organizations and institutions belonging to the healthcare industry have all recognized the importance of supply management among themselves, McCormack and Lockamy (2004) notes. This is because of the fact that this particular industry is subject to the same pressures that other industries are experiencing: the increasing levels of global competition; demanding customers and employees; shrinking product life cycles; and decreasing acceptable response times (DiConsiglio, 2007).
However, as earlier discussed, the Health Care Industry may have less superior practices of supply management when compared to other industries. However, institutions belonging to the health care industry have still developed their own manner by which they could efficiently manage their supplies. First is the RFID or the Radio Frequency Identification (Burke, 2007). According to the Healthcare Resource and Materials Management News (2005), it is no doubt that the RFID industry continues to evolve and reveals new areas of opportunity within the health care institutions and their supply chain networks.
This is being used by Texas and Instruments and Verisign as a tool to prevent problems related to drugs and counterfeiting. In the same manner, the aforementioned organizations are also in the process of authenticating the RFID model so as to ensure item-level product security in real-time and to create authentication between any tag and any RFI reader from a product’s point of manufacture until its sale (Healthcare Resource and Management News, 2005; Fernandez, 2008; Page, 2007; TTE Reports, 2005).
Generally, the use of RFID technology promises great opportunities for the members of the healthcare industry. It is through this that the institutions of health could achieve greater accuracy and efficiency in their treatment of patients by allowing healthcare providers easy access to medical information (Healthcare Resource and Management News, 2005; Burke, 2007; Page, 2007). Moreover, Scalise (2006) provides a thorough discussion of the importance of the RFID within the healthcare industry.
For this author, this supply management tool holds much promise for the improvement of the supply chain. It contains applications that includes devices which help in the proper tracking of assets; the best management of inventories; and finally, it could help in guaranteeing the safety of the patients. The healthcare industry makes use of this tool, as influenced by the success of the Radio Frequency Identification Technology in the Department of Defense in the United States as well as Wal-Mart. However, its adoption by the healthcare industry has not been that successful due to barriers.
Scalise (2006) lists these barriers as the following: (1) high costs; (2) the need to modify business practices; and finally, (3) delayed return on investment. GS1, the owner of all global standards for all industries, including that of the healthcare is also playing a very special role in the supply management practices of health care institutions (Sargent, n. d. ). They introduced standards such as the Global Location Number or GLN, the Global Trade Identification Number or FTIN, the Global Data Synchronization Network or GDSN, and lastly, the United Nations Standard Products or UNSPSC.
The standards developed by the GS1, which are also essential aspects of the healthcare industry provide the following benefits, as enumerated by GS1 (2007): (1) an increase in the reliability of the physical tracking of the different products and materials; (2) contributes in the reduction of the disputes between the partners in the supply chain together with the proper coordination of orders; receipts and invoices; (3) allows for the elimination of duplicate inputs; (4) contributes to the time saved in product preparation, shipping and receiving; (5) an improvement in the traceability of the products, thus contributing to eliminating the risk that patients may encounter; (6) enables targeted and efficient management of those products subjected to recalls; (7) an improvement in the quality of service being provided in medical care units; and lastly, (8) enables the automatic recording of data which becomes essential in improving the quality of information and the synchronization of data. According to Sargent (n. d.
), the Global Location network is an identification number which is being used and recognized all over the world in order to identify legal entities, trading partners, and customer locations in commerce activities that are already making use of technologically advanced tools. Its primary purpose is to specify the delivery location through the use of electronic identifiers (DeJohn, 2008). Without a doubt, the Global Location Number or GLN is very important for members of the health care industry since it is an essential part of their supply management, helping in the trade, reducing costs and errors, and finally, improving the safety of the patients (Sargent, n. d. ).
On the other hand, the United Nations Standard Products and Services Code or UNSPSC is another important aspect of supply management within the health care industry as it is through this that the members are enabled to continuously classify their products and services that they are buying and selling. According to Sargent (n. d. ), this is the first product taxonomy that was introduced to the healthcare industry that is neither a proprietary or commercial product nor service. It is efficient, accurate and flexible in terms of making the spend analysis of companies visible, allows the delivery of demands on a cost-effective manner and lastly, facilitates the use of e-commerce (Sargent, n. d. ; Materials Management in Health Care; 2006). The Global Trade Identification Number is another practice that is being used by the health care industry in order to effectively manage their supply chain. According to Sargent (n. d.
), this is a system by which identification numbers are used for most trade items, products and services. This is generally the point from which members of the healthcare industry aims to adopt barcode strategies. However, Sargent (n. d. ) also notes that there are only a significant number of institutions of healthcare that make use of integrated systems of total inventory, leading to one of the challenges regarding the management of supplies within the health care industry. Finally, Sargent (n. d. ) mentions another very important tool being used by the members of the Health Care Industry in managing their supplies, the Global Data Synchronization Network.
This network, often referred to as the GDSN is usually made of different trade partners such as the suppliers and retailers; data pools or those services that possess and handle the data of members of the supply chain; and finally, the GS1 Global Registry which is used as a directory all over the world to locate their data sources and manage these in order to better relationships with trade partners (Sargent, n. d. ). According to Sargent (n. d. ), the importance of the GSDN within the healthcare industry lies on the capacity of such to aid institutions of health in developing databases that could help in managing and sharing information. Moreover, it also generally aims to bring barcodes into the healthcare industry, so that all the members of the supply chain, having a common database would be able to recognize the different codes (DeJohn, 2008).
Garvin (2006) also lists the aforementioned as the standards being used within the healthcare industry in the hopes of the latter to efficiently manager their supply chains. However, Garvin (2006) describes another tool that has not mentioned by Sargent (n. d. ) in his article, the Product Data Utility or PDU. Generally, the PDU is a supply management tool that helps organizations in providing a centralized industry for product data that are both standardized and synchronized that may be used by all the members of the supply chain (Garvin, 2006). DeJohn (2008) adds the traceability adoption and the Auto ID to the list of standards and practices that are currently being applied by the healthcare industry in order to improve the efficiency of their products.
Basically, the purpose of the former is to label the drugs so that it could be easily traced, serving customers and manufacturers in times where recalls are necessary. On the other hand, the Auto ID is basically the same as the RFID (previously discussed) that could serve as an alternative to the barcode system within the healthcare sector. These standards could greatly aid the members of the healthcare industry in improving their practice of supply management. However, the researcher recognizes the fact that the practice of such has not been efficiently incorporated into their business strategy, thus showing that there is still areas by which these could be developed in order to reap the benefits it promised.