How Logistics Can Service Healthcare

Abstract

The impact of supply chain integration has been well documented in numerous industries. Healthcare is no exception: Efficient Healthcare Consumer Response> (EHCR) in the late 90s projected US$11 billion in savings in supply chain related costs in the United States alone. However, we believe that external supply chain integration initiatives are drawing most of the attention, while the internal supply chain of hospitals remains the sore spot or weak link in supply chain integration. In view of the many pressures worldwide to reduce the cost of healthcare, as well as the difficulties of adapting healthcare systems to meet the growing needs of an aging population, new illnesses and cures and a severe shortage of nursing staff, this paper offers new management ideas based on case study research of leading international practices to better understand the role and impact of logistics in healthcare. It also presents examples of how to better integrate logistics activities through a unique combination of reengineering and activity-based costing. Indeed, the integration of the internal supply chain can not only bring together new sources of efficiencies in a logistics sense, but it can also impact the quality of care.