Inclusion of Innovative Strategies in Supply Chain Management in the Healthcare Industry

Research Purpose: This research paper aims to create a conceptual framework for the inclusion of innovative strategies in supply chain management in the healthcare industry. Discovering the way the supply chain affects the healthcare sector as well as finding ways in which innovations can be inculcated to improve the quality of care, level of patient satisfaction, and keep costs low, is the stated purpose of this research.

Methodology: The research is to be conducted among professionals in the supply chain and in healthcare management, as this is the population with the greatest potential of possessing pertinent information. An empirical study is to be conducted using questionnaires administered to a pool of rigorously tested subjects.

Findings: Results from the research conducted proved the hypothesis that improved care and patient need satisfaction have a positive effect on the cost of healthcare right. It also indicated that the supply chain adversely affects the costs of inventory in a healthcare system. Finally, the hypothesis that innovativeness in the supply chains positively affects the cost of inventory was proven.

Contribution: The study adds to the wealth of knowledge of the impacts of the supply chain on the cost of inventory. Healthcare application of the findings made from this research is likely to bring about a positive outlook in terms of costs, satisfaction, and care.

Introduction

Innovation is the creation and enactment of new concepts that enable people in an institution to engage in transactions with others over time (Van de Ven 590). Innovations can either be physical in terms of new products in the market or they can represent new ways of doing things; improving a process to make it more beneficial to the users. Improvements mark new ways of doing things and are especially readily accepted, even pursued, in business due to its cost reduction and utility maximization effects. The simple and unassuming definition of innovations impacts greatly on the management of the same, while also giving a clear and focused understanding of advancement that managers can employ in their formulation of implementation strategies. According to Van de Ven, the four embody the four elementary problems facing most management staff: handling awareness in a humane manner, implementation of new ideas into business products or activities and ultimately, into money. The third is a structural difficulty in the management of the relationship between the part and the whole and the final issue lay in selecting the best form of institutional leadership.

The supply chain is a critical aspect of business operations in the current enterprising environment, being embodied in four aspects of the digital economy; business, technology, people, and process (Awad & Nassar 1). The management of the supply chain has become the new front for competition in businesses and organizations, with more effective strategies giving them a competitive edge (Kannan & Tan 153). Rather than the initial strategies that prioritized the enterprise in its directly productive functions, the supply chain ensures that a more holistic approach -requiring a business to cooperate more with partners in the supply chain and therefore empowering more sustainable growth and development, including the quality of the product, lower costs of products and shortened lead times- is implemented (Kannan & Tan 153).

Not only is the integration of the four processes done internally within the business, it is also conducted externally through inter-enterprise cooperation with other players in the chain of supply. It is the new front in business excellence that is opening up new front for the pursuance of excellence, with perfection and innovation in the supply chain becoming the greatest determinant of customer satisfaction (Lambert, Doyle, Copper, & Pagh 15). According to Kannan and Tan, one of the most impactful innovations in the supply chain was the introduction of Total Quality Management (TQM) in supply chain operations; a concept that is meant to reduce wastage, increase utility, and ultimately boosts the customer satisfaction (153). The TQM has become an excellent premise for the continued survival of businesses amidst cutthroat competition (Chang 82).

The healthcare industry, on the other hand, is one that consumes a substantive portion of global GDPs (Booz and Company 1). This is especially the case in high-need and high-cost patients who require highly personalized care from their doctors (Blumenthal, Chernof, Fulmer, Lumpkin & Selberg 909). It is therefore no surprise at all that practitioners in the industry is in constant pressure to reduce costs, increase care, and improve patient satisfaction (Matthew, John & Kumar 1). This reality call for the development of strategies through which the healthcare industry can increase the overall quality while reducing overall costs.

The study aims to create a system of healthcare management based on Total Quality Management in the supply chain, the new front of business excellence since the 1980s (Cheng 82). The supply chain and how it impacts on the healthcare industry will therefore be the focus of the research. Objectives for the study will be defining how the supply chain impacts on the fulfillment of patients needs in the healthcare facilities.

Discovering how the supply chain affects the quality of care patients receive.

Find out how meeting the needs of the patients and improving the quality of care affect the costs of healthcare provision.

Creating a model that combines increased fulfillment of customer needs, quality of care, and reduces costs by implementing quality management on the supply chain.

By use of current scholarly material on healthcare and supply chain management, as well as total quality management concepts, the study anticipates to expand the scope of knowledge available in the healthcare industry for improving the overall quality of care. The literature review, research, and discussions and recommendations to be made at the end of this research are expected to create a refreshingly new way of managing the quality of care in treatment.

The concept of quality management practices of supply chain the study introduces for the healthcare industry is anticipated to improve the efficiency in the provision of healthcare services to patients. Managers in private healthcare and policy makers in public healthcare providers stand to gain a lot by implementing the healthcare management concepts discussed in this research.

Literature review

Current strategies in business have been recorded to pit supply chain versus supply chain rather than the original situation of business versus business. This situation can be explained by the fact that the supply chain allows each partner in the supply chain to integrate, grow, and improve on their business activities, (Fish 1). Quality management is defined as the practices enacted in business that are meant to improve the quality of business processes in a continuous manner. Inculcating supply chain with quality management yields supply chain management, an innovative concept that integrates the suppliers, the manufacturers, distributors, and retailers with the unique goal of ensuring that the right quantities of goods are produced and distributed to the right location at the right time (Fish 2). The aim is for cost reduction and increased customer satisfaction (Fish 2).

Innovative supply chain management models in the healthcare sector are established on the foundation of three pertinent issues according to Booz and Company: collaborative governance, structural processes, and integrated systems (8). The three create a wholesome system of healthcare management that calls for cooperation both within the institution and externally. They are introduced into the supply chain by use of the eight principles based on Cheng (83-84) represented on the image below:

Figure 1: The conceptual model of the healthcare proposed supply chain management

The eight concepts are a complete embodiment of the comprehensive supply chain leadership model, one that outlines the most crucial elements of the process and lead directly to the attainment of business goals. To better understand supply chain innovativeness, the eight principles are addressed below:

The customer focus involves the suppliers, manufacturers, and sellers and aims to bring about the total fulfillment of customers needs with them as the measure of this satisfaction. In the healthcare industry, the patients require the best possible care, which can only be brought by innovation, efficiency, and reduced costs (Booz & Company 7).

Leadership also influences the success of the supply chain, with the type of governance influencing in a huge way its effectiveness (Formentini & Taticchi 3). The leadership is especially important in the establishment and the management of relationships with other firms in their supply chain (Hammervoll 116).

Staff involvement is important not just as a direct contributor to the process of sourcing and handling inventory, but as a support activity to this greater pursuit (Cheng 83). According to Booz & Company, the hospital administrators and clinicians ought to team up while ordering both medical and non-medical supplies (8). The cooperation has a direct impact on the patient through quality of care and satisfaction.

Continual improvement calls for sustained research and practice in seeking to improve the quality of the product or service, which ultimately reduces the costs of satisfying the customer, (Cheng 84). According to Sandybayev the supply chain can be used to create value and fulfillment for the customer (patient) by ensuring that they are given optimal accessibility and worth (7). Since value and convenience are dynamic in nature, constant innovation is required to keep the customers satisfied.

System management requires that a quality management strategy, such as the supply chain concept being proposed in this study, to be addressed as a big and holistic system, (Cheng 83). The establishment of a Total Quality Management optimized supply chain entity into the management process of a healthcare facility positively impacts on the quality of care and patient satisfaction due to reduced costs of drugs and other medical equipment and greater efficiency in clinical operations, (Booz & Company 7).

The principle of process management calls for concerted efforts aimed at purposive governance at every step of the supply chain. Purchasing, logistics, and service delivery are some of the activities that make up the supply chain, they require incorporation into the business to ensure that wastage is curbed and efficiency is maintained at a high level (Tan 44). Process management is aimed at bringing harmony in the supply chain by ensuring that conflicts experienced with objectives and agendas, (Yeng 83).

Factual approaches to the management of the supply chain is applied mostly in the decision making process, where information and knowledge are critical tools for accurate and applicable decision making, (Yeng 84). The management should also be empowered to move from fixation in making decisions for the supply chain and move towards quick and capable response and action to emergencies, (Fox, Chionglo & Barbuceanu 1).

In mutual benefit, all partners in the supply chain are supposed to reap the benefits of their cooperation in the supply chain. This cooperation increases the quality of the each and every component of the process, facilitating an overall more profitable alliance, (Cheng 84). The organization is therefore quite dependent on the supplier, producer, wholesaler, and all other m...