Three Opportunities for Improving Hospital Supply Management

Use of appropriate technology in the pharmaceutical supply chain can help reduce costs to organizations and improve care for patients.

One challenge to effective supply chain management is the basic fluctuation in medication demand from day to day.

These fluctuations may lead to overpurchasing of certain products, which leads to a short term financial benefit from bulk discounts, but expose the hospital to financial risk when products become outdated or inventory sits on the shelf.

Hospitals must keep a large supply of medication on site to meet patient demand. As a general rule, most hospital pharmacists will accept inventory costs of pharmaceutical products averaging $100 to $200 worth of medication in storage per hospital bed. This general rule of inventory management highlights some of the inefficiencies associated with the traditional ordering processes, and some of the difficulties inherent in standardizing shipping and logistics functions in pharmacies.

Some of these challenges and inefficiencies include the following:

• Pharmacies often must order the same generic medication from multiple manufacturers due to patient preferences, resulting in complex inventory management that must be individualized.
• Many processes in shipping are poorly supported by technologies, resulting in an unnecessarily high human workload and an increased probability of error due to fatigue.
• The supply of pharmaceuticals must be dealt with differently from the supply chain of other products, and must include safeguards against counterfeiting and other criminal activities that may introduce inefficiencies.

In spite of the challenges that set apart the pharmaceutical supply chain from those of other industries, there are some areas that can be improved through widespread use of existing technologies. For example:

• Pharmacists and pharmacy technicians currently check the packages received against an invoice by manually checking the product codes on the purchase invoice with product codes on the actual products. The accuracy of this process could be improved using a barcode reader system.
• Inventory inspection requires manually inspecting the products on a shelf and comparing product inventory with perpetual inventory count records. Digital systems, such as radiofrequency identification (RFID) tags, could be used to continuously monitor inventory and identify discrepancies as soon as they occur without intensive visual inspection.
• Supply planning is often carried out manually and does not take into account historical trends or any other data that a pharmacist can use to predict demand. The underuse of technology in supply planning can lead to product overstock, product shortages, and loss of medication due to expiration.

In a survey of pharmacists, pharmaceutical scientists, and health care technology providers at 38 hospital sites, approximately three-fourths (76%) of 58 professionals surveyed were aware of the procedures involved in the provision of medication within the hospital. However, a minority of professionals (21%) were aware of the processes involved in maintaining the hospital’s overall supply chain of pharmaceuticals.

Implementing demand estimation systems, digital purchase order verification systems, and RFID-based inventory management requires a greater awareness of opportunities for improving supply chain processes.

With process improvement pervading so many areas of health care, embracing flexible digital technologies and implementing the correct technologies in the right way can reduce overhead stock costs and improve product availability for patients. Ultimately, shipping and logistics is an important part of patient care. Performing improvements to shipping and logistic processes can help health organizations use resources more efficiently and subsequently care for patients more effectively.

Reference

Romero A. Managing medicines in the hospital pharmacy: Logistics inefficiencies. Proceedings of the World Congress on Engineering and Computer Science. 2013;2:1-6.