Health News Digest

Supply chain management

April 23, 2018

Supply Chain Management In Healthcare

By Michael D. Shaw

According to Investopedia, a “supply chain” is a network between a company and its suppliers to produce and distribute a specific product, and the supply chain represents the steps it takes to get the product or service to the customer. Supply chain management (SCM) is the active streamlining of a business’ supply-side activities to maximize customer value and gain a competitive advantage in the marketplace.

The Council of Supply Chain Management Professionals offers this definition of SCM…

Supply chain management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third party service providers, and customers. In essence, supply chain management integrates supply and demand management within and across companies.

But, how does this apply to healthcare? Jacqueline Belliveau, lead editor for asks her readers to “Take a moment to think about what providers use every day to treat patients.” There are countless items, including syringes, prescriptions drugs, gloves, pens, papers, and computers. SCM ensures that everything providers need is in stock—when they need it.

SCM must also consider the demands of regulatory agencies and third-party payers—public and private. Is the inventoried item legit, and will reimbursement be straightforward? Do patients and providers have specific preferences that may not align with cost-cutting goals? Are providers secretly hoarding their preferred goodies?

A casual Web search indicates that there is no shortage of surveys cataloging the top challenges in healthcare supply chain management. Here is a sampling of current troubles:

  • Managing expired and recalled items
  • A lack of actionable data
  • Excessive overnight shipping costs
  • Drug shortages
  • Regulatory compliance
  • Product security
  • Cost control impacted by inefficiencies

You have probably heard of blockchain, a highly secure method of storing information. The most well-known application at the moment is with Bitcoin, a crypto-currency.

Blockchains store information across a network of personal computers, making them not just decentralized, but distributed. As such, no central company or person owns the system, yet everyone can use it and help run it. With such a structure, it is extremely difficult for any one person to take down the network or corrupt it. The people who run the system use their computer to hold bundles of records submitted by others known as “blocks” in a chronological chain.

The blockchain uses cryptography to ensure that records can’t be counterfeited or changed by anyone else. More detail is available here.

In a Deloitte white paper from August 2016, the authors note that:

​Blockchain technology has the potential to transform healthcare, placing the patient at the center of the healthcare ecosystem and increasing the security, privacy, and interoperability of health data. This technology could provide a new model for health information exchanges by making electronic medical records more efficient, disintermediated, and secure. While it is not a panacea, this new, rapidly evolving field provides fertile ground for experimentation, investment, and proof-of-concept testing.​

Reflecting Deloitte’s optimism, the journal Blockchain in Healthcare Today was founded earlier this year, and the inaugural issue makes for some fascinating reading.

One interesting new company in this space is SupplyBloc Incorporated. As one of their brochures puts it: “Currently, supply-chains face problems associated with a lack of trackability, transparency, and logistical unification. This leads to more opportunities for corruption, single points of failure, disparity between participants, and other inefficiencies during transactions, information flow, and interactions or exchanges between products and supply-chain members.”

SupplyBloc Technology registers and records all pieces and participants within a supply-chain system. Every interaction between these individual entities and elements is immutably recorded and easily audited through the SupplyBloc platform. This makes complete transparency and trackability unavoidable, fostering a new and invigorating outlook on the management of product life-cycles.

Considerable technical detail on SupplyBloc’s technology is provided at its website, and I’ll give the final word to co-founder & CEO Robert McNulty…

“Streamlining the supply chain, thanks to SupplyBloc’s blockchain technology, is one of several ways to improve healthcare and lower costs for all parties involved. Unlike traditional forms of supply chain management software, our blockchain solution is secure, transparent, and decentralized. It is as much a means to manage accounts as it is a method to ensure accountability. All supply-chain participants—like hospitals, medical devices manufacturers, and pharmaceutical companies—can track or audit the supply chain, from beginning to end. This results in enhanced efficiency, increased security, and optimized growth, which benefits everyone from doctors to manufacturers to patients.”