ops management

Topics: Supply chain management, Health care, Supply chain Pages: 30 (5419 words) Published: October 26, 2014
MANAGING HEALTH CARE SUPPLY CHAIN: TRENDS, ISSUES, AND
SOLUTIONS FROM A LOGISTICS PERSPECTIVE
Charu Chandra
Swatantra K. Kachhal
Industrial and Manufacturing Systems Engineering Department
University of Michigan – Dearborn
4901 Evergreen Road
Dearborn, Michigan 48128-1491
Abstract
The U.S. healthcare industry is a large enterprise
accounting for over 14.1% of the national economic output
in 2001. It has been under pressure for cost containment
and providing quality health care services to consumers. Its record of investing heavily on development of
sophisticated drugs and diagnostic systems does not match
that of technologies to manage its day-to-day operations.
In order to achieve improved performance, healthcare
supply chain must be efficient and integrated. The driver
for this integration is logistics and supply chain
management. This paper describes trends, issues and some
solutions for logistics management for Health Care Supply
Chain with concepts drawn from Industrial Engineering,
and Operations Research disciplines applied to specific
domains. A healthcare supply chain template utilizing Ecommerce strategy is presented. Use of simulation, optimization, and information sharing techniques are
demonstrated to optimize purchasing and inventory
policies.
(Keywords: Health Care Supply Chain, Health Care
Logistics, e-Health Care)

1. Introduction
The US healthcare industry accounted for 14.1%
of the U.S. economic output in 2001 (URL:
(http://www.cdc.gov/nchs/data/hus/tables/2003/03hus112.
pdf). Various studies of this industry point to lack or
failure of basic quality-control procedures, and
misalignment among consumer needs, payers and provider
services, as primary causes for building waste into industry management practices.
Pressures on the industry have fostered innovation in the
design of services and organizations. Most of the
innovations have targeted cost reductions in key functions,
including logistics. The industry must find a flexible
delivery enterprise that has substantial capital and is

capable of efficient operations. This means effective
management of a broad range of processes with diverse
measures, from medical outcomes to cost of tissue paper.
Healthcare sector of US economy faces several challenges,
such as cost containment, outdated information
management systems, and mergers and/or acquisitions.
The need to cut costs and compete has led to mergers and
acquisitions in healthcare industry. Such consolidations
have created new organizations made up of very different
entities which are not as integrated as they should be. Due
to competition, it has become imperative that enterprises
seamlessly and efficiently provide and manage services
(including purchase and delivery of supplies to the final
user) across entities and continuum of care, both now and
in the future.
The principal participants in the US healthcare supply
chain include: manufacturers (drugs, medical equipment,
and hospital medical supplies), distributors, medical
service providers, medical groups, insurance companies,
government agencies (such as, Health and Human
Services), employers, government regulators, and users of
healthcare services.
This paper describes trends, issues and some solutions for
logistics management in Health Care Supply Chain with
concepts drawn from Industrial Engineering (IE), and
Operations Research (OR) disciplines applied to specific
domains. A healthcare supply chain model utilizing Ecommerce strategy is presented. Use of simulation, optimization, and information sharing techniques are
demonstrated to optimize purchasing and inventory
policies.
The rest of the paper is organized as follows. Section 2
lays the foundation of supply chain as a business strategy,
describing concepts, key issues and approaches to problem
solving in supply chain management. Section 3 makes the
case for a Health Care supply chain emphasizing the need
for it,...


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