Impact of cloud-based information sharing on hospital supply chain performance: A system dynamics framework

Abstract

The inadequacies of traditional information sharing are amplified in the healthcare sector. Poor demand and inventory visibility result in demand and supply mismatch of healthcare products in ways that may have dire economic and patient care consequences. For instance, a hospital drug shortage often requires an emergency delivery. These emergency refills increase cost and may disrupt a patient's recovery process. In recent years, innovations in information technology have been leveraged to improve supply chain collaboration and move closer to matching supply with demand. In this article, we build on that body of research by examining cloud computing as an enabler of electronic supply chain management systems (e-SCMs) that enhances collaborative information sharing in a multi-echelon hospital supply chain. We use systems theory and system dynamics to develop two conceptual, causal loop diagrams (CLDs); one representing traditional and the other cloud-based information sharing in a hospital supply chain. CLDs and their equivalent system dynamics models are used to simulate the performance of traditional and cloud-based hospital supply chains. We compare the performance metrics of both models: average inventory levels, lead time, and unfilled orders. The findings of this study show that cloud-based information sharing improves visibility in healthcare supply chains. As supply chain visibility increases, a hospital's responsiveness improves. Hospitals are now in a better position to accommodate fluctuations in patient demand and supply lead times. As a consequence, hospital supply chains will experience reductions in inventory costs, supply costs, and supply shortages.