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Healthcare supply chains

16 March 2020

The article at a glance

Supply chain management, usually associated with manufacturing, can address inefficiencies in healthcare, argue a team from Cambridge Judge Business School. The term …

Category: Insight

Supply chain management, usually associated with manufacturing, can address inefficiencies in healthcare, argue a team from Cambridge Judge Business School.

Houyuan Jiang, Feryal Erhun and Lidia Betcheva.
Dr Houyuan Jiang, Professor Feryal Erhun and PhD candidate Lidia Betcheva

The term “supply chain management” (SCM) is often associated with physical goods – think of carmakers and their lean manufacturing environments.

It is more challenging to conceptualise this management philosophy for service sectors. Yet, by applying supply chain thinking, managers can uncover, quantify, and address inefficiencies that cripple healthcare ecosystems around the world, according to a research team from Cambridge Judge Business School.

The Cambridge Judge team – PhD candidate Lidia Betcheva, Feryal Erhun, Professor of Operations & Technology Management, and Dr Houyuan Jiang, Reader in Management Science, has worked for the past year on how tailored application of supply chain thinking to healthcare can improve care quality while reducing costs and enhancing the experience of patients, carers and providers.

A rising and ageing global population coupled with many people living with multiple health conditions creates serious clinical, operational and financial challenges in the healthcare sector. Thus, the authors conclude, how healthcare supply chains are designed, operated and managed carries importance for individuals’ and populations’ health status, life expectancy and quality of life.

Their findings are outlined in a book chapter, “Healthcare Supply Chains”, to be published in the Oxford Handbook of Supply Chain Management forthcoming from the Oxford University Press.

Historically, supply chain management in healthcare has commonly been associated with procurement and logistics of healthcare supplies and services. Yet the authors emphasise that there are actually a number of supply chains in healthcare – capturing stakeholders, processes, information, finance, products and services, and interactions ranging from care delivery and drug development to organ transplantation and workforce management.

So the research team identifies several categories of supply chains within this broad ecosystem, concluding that the efficiency of all these categories could benefit from supply chain thinking – which requires a customer focus, a holistic view of the system and its interactions, and alignment of stakeholder and system incentives.

Lidia, Feryal and Houyuan discuss two particular healthcare categories that could benefit from application of supply chain management:

Lidia Betcheva: “The health services supply chain includes medical, community and social care along with supply and equipment management. It is burdened with inefficiencies such as bed blocking, when patients who need to be admitted to the hospital occupy limited A&E beds due to bed unavailability in wards, as well as delayed transfer of care, when patients stay in the hospital for excessive periods of time due to the lack of spaces in community and social care.”

Feryal Erhun: “This reflects how health services supply chains are prone to care fragmentation, which threatens health outcomes, patient experience, and continuity of care. A more holistic view of the care ecosystem, with greater customer focus and strategic orientation, can help improve timely patient flow through supply chain thinking.”

Houyuan Jiang: “Another inefficient supply chain category captures special services such as organ transplantations. Each year, hundreds of thousands of patients around the world wait for organs such as hearts, kidneys and livers, but only a fraction are lucky enough to undergo transplantation. There are notable challenges in this supply chain: supply is significantly lower than demand due to donor shortage; organs from deceased donors are perishable and cannot be stored for long periods of time; and donated organs need to be matched to patients based on many factors such as blood type, body size, and patient availability.”

Lidia Betcheva: “Supply chain thinking could offer better solutions in this area through process innovation, which borrows from queueing theory. For example, OrganJet in the United States uses affordable jet services to bring patients to organs rather than organs to patients – which better addresses the mismatch between supply and demand across regions.”