Navigating the Complex World of Healthcare Supply Chain Management

Supply chain management is a crucial aspect of healthcare. It includes tasks like organizing and handling supplies, performing quality control, and funding. The process also involves delivering medicinal supplies to healthcare facilities.

Those who pursue a career in supply chain management in healthcare put the patient first. Their work ensures that patients receive the medications, medical devices, and procedures they need.

Managers need to track pharmaceuticals, medical supplies, and medical services. It affects the ongoing well-being of health systems and patients. These procedures seek to identify departmental weaknesses and recommend solutions to strengthen them. This involves building resilience and pinpointing vulnerable regions in management.

It is also important in raising global health system resources. Cost savings and well-looked-after patients are benefits of supply chain management in healthcare. But, issues with the healthcare supply chain still persist. These include ineffective facilities and a lack of capacity for production. Poor SCM also leads to pharmaceutical shortages, and expired medical supplies.

Key terms

  • Supply Chain Management – managing operations, sourcing, delivering, and marketing within an organization.
  • Regulatory Compliance – maintaining the standards necessary for functioning within a particular sector.
  • In-Patient Department – a section of a medical facility where patients are hospitalized for more than 24 hours.
  • Out-Patient Department – a section of a medical facility for patients with health issues who don’t yet need overnight treatment.

The Challenges of Healthcare Supply Chain Management

A healthcare supply chain can face many challenges in trying to remain efficient, while also maintaining quality care and service as a priority. Some of these difficulties include:

  • Limited accessibility. Some institutions aren’t easy to access, particularly for poverty-stricken communities. In addition, healthcare is not affordable or convenient for many individuals.
  • Workforce shortages. Covid-19 is still prevalent in many areas, and the long-term effect of the pandemic is seen in a shortage of educated and experienced staff members. This can decrease the quality of healthcare.
  • Lack of health equality and security. There are many inequalities in healthcare systems, such as limited service to those without insurance, a lack of public resources available, and financial gaps in available benefits.
  • Increasing regulations. The rules governing protective gear for hospitals have gotten very strict. Budgets for healthcare might suffer financially as a result, regardless of the fact that they are necessary.

With the rise of technology, organizations tend to struggle with keeping track of medical advancements, as well. Inventory management can suffer without effective technology in place. Employing productive inventory management in a healthcare supply chain results in superior medical results.

With these challenges in mind, a healthcare supply chain still needs to maintain sustainability in patient care while maintaining regulatory compliance. This guarantees its patients the finest treatment possible. Performing routine maintenance on machinery can help providers produce high-quality care.

Key Components of Medical Supply Chain Management

Identification and selection of suppliers

The process of finding prospective suppliers is vital. They need to provide the goods, resources, or services that healthcare institutions need.

A supplier evaluation process can help create a list of dependable suppliers, which will increase efficiency at medical facilities. The following factors should be considered:

  • Price of the supplier’s inventory
  • Quality of services
  • Customer support
  • Distribution time

Adopting regular communication and accountability can help create a resilient healthcare supply chain that operates smoothly. It also allows them to maintain good supplier relations management.

Contract management

Contract management involves proposals and renewals of contracts in the healthcare industry. This includes managing conformity within specific sector rules. Healthcare institutions can enter into four different kinds of contracts:

  • Physician Employment Contracts – between a doctor and a hospital.
  • Contracts for Physician Recruitment – conditions are specified for hiring a physician. They then collect recommendations for government inpatient and outpatient care.
  • Management Services Arrangements – outsourcing management of any non-medical staff to another organization.
  • Medical Directorship Arrangements – the director handles the management of the healthcare provider.

The organization should track the performance of the supplier after the contract is signed. This ensures all are met expectations are met and the quality of the service is consistent.

Purchasing and procurement

Procurement is an important part of the supply chain. It involves getting the goods and services a healthcare institution needs in order to operate, budget effectively and provide service. It relates to acquiring medical supplies and equipment for providers. Supply chain management in healthcare is the process of converting those materials into products and distributing them to customers.

Supplier relations is an important aspect of procurement. Supplier access and relationship management are essential for cost containment and performance optimization in a medical institution.

Logistics and distribution

Distribution of supplies is a lengthy process and requires coordination from all parties. This includes the various healthcare supply chain leaders, the facility’s network of partners, and other stakeholders. The supply chain should place a priority on improving patient satisfaction. This raises the value of each transaction.

The resources delivered are often expensive, fragile, and essential. As a result, they need to be handled with care. Sometimes medical supplies can be defective. In this case, an organization can do an independent recall. Effective recall management is essential for managing reverse logistics.

Inventory management

Every organization must manage its inventory to prevent surplus supplies. They also need to meet patient requirements for specific pharmaceuticals. Items stored and managed in the medical field are perishable and crucial to the well-being of patients. A well-planned and managed medical stock program can achieve the ideal balance.

AI and automated processes can improve inventory management systems in a healthcare facility. They decrease costs, as well as allow for accurate tracking of information. Managing consignment inventory is a key part of the process as well.

Managing consignment inventory involves the supplier providing merchandise to a doctor or medical institution. They then store the items there until the patient buys them. Until the sale of these various supplies takes place, it is important that they are stored safely, and have received a routine quality check.

Demand planning and forecasting

Since the health and well-being of patients are at stake, healthcare facilities must promptly replenish stock. Effective capacity management is important to ensure that the correct equipment and number of staff are available.

Demand planning and forecasting also enhance management and decision-making skills; this advances future growth and expansion plans.

The key drivers of demand in healthcare are increasing population and minimum wage. Here are four techniques to predict demand for various healthcare services and facilities:

  • Percent adjustment (adjusting percent based on new circumstances).
  • 12-month moving average (calculating moving averages to determine the trend direction of inventory).
  • Trendline (for calculating current and future trends).
  • Seasonal forecasts (calculating the flow of sales throughout the year or over seasons).

Using these different methods allows facilities to manage demand variability and inventory.

Emerging Trends in Supply Chain Management for Healthcare

The use of technology by healthcare organizations has made hospital management a lot easier. Discovering more about patterns of demand and consumption is essential for efficient supply chain management. The healthcare and supply chain data found through data collection improves patient outcomes.

For medical institutions, investing in technology and data infrastructure is becoming more and more common. This makes building and maintaining infrastructures possible using powerful tools, precise and trustworthy data, and defined supply chain teams.

Value-based healthcare is when the healthcare provider is paid according to the value of a medical service. VBH is currently on the rise, globally. This is due to increasing pressure for benefits, and increased quality of service. Sustainable procurement aims to lessen harm and improve the wellness of patients.

Another trend rising in healthcare supply chain management is emerging automation and standardization. Automation allows clinical personnel to focus on patient care by relieving them of tedious and tiresome paperwork, invoicing, and inventory activities.


SCM in the healthcare system is essential to the quality of patient outcomes. It ensures that patients receive the medication and procedures they need. SCM optimization techniques help medical organizations overcome challenges.

Medical supply chain performance management focuses on supplier relationships and inventory management. This also includes supply chains, distribution, and forecasting. All of these functions aim to enhance patient service quality and healthcare facility efficiency.

We encourage all healthcare organizations to educate their staff on effective supply chain management processes. This begins their journey to becoming supply chain leaders. Healthcare organizations and facilities should try improve their SCM practices every day, as supply chain management and procurement are essential for the best result for patients and providers.


How can technology be leveraged to improve healthcare supply chain management?

Supply chain technology allows facilities to get real-time data on customers. They can then predict demand. increasing delivery time and the quality of their products.

What is the role of data analytics in healthcare supply chain management?

Data analytics allow for environmental considerations and waste elimination in healthcare supply chains. This improves the environmental sustainability of medical centers. It also cuts costs for the supply chain in healthcare.

How does value-based healthcare impact supply chain management in healthcare?

Value-based care enables organizations and medical facilities to collect precise data. This allows them to comprehend the whole cost of providing patient care.