Supply Chain Management in hospitals

Swiss hospitals operate in a challenging market environment. The high and still rising health care costs, the increasing sensitivity of the population to the quality and costs of treatment with simultaneously limited remuneration, a lack of resources as well as increased competitive pressure place high demands on the efficiency of service provision. Medical excellence and security of care must be reconciled with economic considerations.

Our case study is about a large central hospital group in the midlands of Switzerland. The purchasing organisation has grown historically and is reaching the limits of its capabilities. The procurement processes are perceived by the users as complicated and user-unfriendly. The complexity in the procurement increases, on the one hand from the necessity and on the other hand from the life cycles of the products (fig. 1). COVID-19 has clearly shown the limits of performance. To unleash the necessary potential for future excellence, fundamental change is needed. In this context, security of supply, economic efficiency and quality must be reconciled.

The overall project goal was to increase the effectiveness and efficiency of purchasing in order to ensure the hospital’s security of supply. The customer wanted the development and introduction of lean supply chain management (fig. 2). Supply chain management comprises strategic and operational procurement as well as inbound, intrabound and outbound logistics. Processes, organisation, and systems were to be optimised and aligned with the hospital’s core processes.

To achieve these goals, the following areas of action were addressed.

1. Processes: Optimise and control

• Align processes with SCM/corporate strategy and core processes
• Design SCM as an integrated end-to-end process
• Standardise and simplify processes
• Separate strategic and operational purchasing functionally
• Ensure compliance with the principles

  (governance)

2. Employees: Strengthen competencies, improve collaboration

• Define roles and responsibilities
• Strengthen competencies through education and training
• Assign process owners as contact persons and persons responsible for compliance and further development
• Improve communication and understanding between stakeholders
• Define requirement for IT

3. Goods and supplier portfolio: Reduce complexity and expense, optimise capital commitment, secure supply

• Define merchandise category strategy
• Standardise and streamline merchandise categories; optimise merchandise portfolio
• Optimise supplier and contract management

A holistic design approach made it possible to create an end-to-end supply chain management system from existing building blocks. In the process, the target image, change story, processes as well as roles and responsibilities were aligned with each other. The involvement of all relevant functions in the development of the solution – logistics experts, procurers, strategic purchasers as well as medical and other technical and infrastructural users – resulted in a high level of acceptance of the solution. Together, the target processes were modeled and tested and optimised based on specific business cases.

Today, supply chain management has a strong foundation with powerful, efficient, and flexible processes, high supply security and quality, and attractive professional profiles, and is ready for future challenges (fig. 3):

• The supply chain processes are consistent, lean, and simple and thus clear and understandable for employees and internal customers.
• Standardisation and end-to-end consideration lead to efficiency gains across procurement and logistics activities.
• Collaboration within SCM and with demand providers has improved; frontline demand providers are relieved and can focus on patient care.
• Purchasing’s position vis-à-vis suppliers and internal stakeholders is strengthened.
• SCM governance provides the hospital with an effective tool for maintaining efficiencies, collaborating at interfaces, and advancing SCM.