The Compelling Case for Hospitals to Invest in Supply Chain Modernization

Supply chain management stands out as a critical area where strategic investments can yield substantial benefits in improved financials, quality, and patient care. As identified during the COVID-19 pandemic, supply chains have the unique opportunity to review, align, optimize, and accelerate best practices to support overall organization goals. In this paper, Joe Arruda and Eric Wyner explore why hospital executives should prioritize investing in supply chain operations and the potential advantages it can bring to accelerate operational and financial results.

Supply chain management, clinicians, and departmental leaders play a pivotal role in controlling costs within hospitals. By investing in supply chain modernization, hospitals can accelerate and streamline procurement processes, enhance clinician and physician engagement in product strategies, increase decision-making, promote cost-effective practices, negotiate favorable contracts, and establish robust inventory management processes. These efforts can lead to reduced supply and services costs, minimized process variation, and improved overall financial performance.

Implementing effective supply chain management processes enables hospitals to identify and eliminate unnecessary expenses and redundant processes such as overstocking or procure-to-pay inefficiencies that result in substantial cost savings and limited waste. As an example, integrating areas such as strategic sourcing and value analysis can allow an organization to address cost containment proactively while strategically targeting controllable expenses.