Development of a Robust Framework for the Supply Chain Management in Health Care Sector

 

Bhuvana R, Arun R

Department of Management and Commerce, M S Ramaiah University of Applied Sciences, Banglore, India

 

ABSTRACT:

The study is for the development of a robust framework for Supply Chain Management in health care sector using the basic and technical aspects of health care supply chain. There has been considerable amount of research carried out on supply chain practices in health care sector using current and updated technologies. However, a standard robust framework for practising supply chain management in health care sector is conspicuous by its absence. This research has concentrated on existing health care supply chain practices. Initially, a comprehensive literature review has been carried out to understand and analyse the current scenario of operations being performed in the health care sector. Using the important factors obtained from existing literature, a questionnaire has been developed and data has been collected from 50 people working in 4 different health care organizations. This data has been analysed for prioritization of different factors based on the weightage assigned for the factors by the respondents. The Analytical Hierarchy Process (AHP) has then been used to analyse the criticality of each of the factors. Using these factors and their weightages, a framework that can be used for supply chain management in the health care sector has been proposed.

 

 

 

1. INTRODUCTION:

Health organizations encounter many challenges accompanied with new requirements, namely; customer dissatisfaction, increasing cost of the health services, competition and reducing the reimbursement for services. Supply chain management can be defined as the management of network flow of products and services from the buyer’s to its consumer’s. It also involves movements of raw materials which are involved in inventory, work in progress and final end products.

 

The main objective of supply chain management is to relate and monitor production, distribution, shipment of products and its services. All this can be accomplished by companies with good hold on internal inventories, production and distribution.

 

The effects of supply chain management on health care quality, has to do with quality from an administrative point of view, medical service quality can be measured from a professionally medical perspective, or from the recipient of such services, the patient, or from an administrative perspective, which is the focus of this study. The quality of health care services rendered from an administrative perspective primarily has to do making use of available resources and the ability to attract new ones to cover the required needs of exceptional service, which provides the right service at the right time at a reasonable cost.

 

 

Supply chain management (SCM) deals with the management processes of flows of goods, information and funds among supply chain partners in order to satisfy consumer needs in an efficient way (Chopra & Meindl 2017). Providing quality of health care service at a reasonable cost and rationalizing resources should never be at the expense of a quality performance, which requires efficiency at both the planning and executing phases, personal and professional competency and finally an internally structured philosophy to deal with external parties (Ayers. 2015). More accurately, the search for more resources requires the development of public relations with the health sector as a whole.

 

The health system, in general, is vague and complicated, requiring tremendous effort for the promotion of administrative quality. This demonstrates the great importance of supply chain management and its role in ensuring the quality of medical services. Omar et al (2010) also stated that supply chain management (SCM) includes the management of product, information, and financial flow from the source of supplies to the manufacture and assembly of the product right to the delivering of the final product to consumers. Due to cost control Supply chain management had become an important phenomenon by health care organizations in order to achieve the organization's set goals. Supply chain management (SCM) deals with different categories of flows; namely, flows of goods, flows of information and flows of funds within and among supply chain partners in order to satisfy consumer needs in the most efficient way (Chopra & Meindl 2011).

 

The supply chain literature has focused mainly on employing material flows to best match supply and demand. However, it is important for a competitive firm to manage and control information flows within the supply chain (Liu and Kumer 2013, Omar et al. 2016) The healthcare supply chain is composed of three major players at various stages, namely, producers, purchasers, and healthcare providers. Producers include pharmaceutical companies, medical surgical products companies, device manufacturers, and manufacturers of capital equipment and information systems. Purchasers include grouped purchasing organizations (GPOs), pharmaceutical wholesalers, medical surgical distributors, independent contracted distributors, and product representatives from manufacturers. Providers include hospitals, systems of hospitals, integrated delivery networks (IDNs), and alternate site facilities (Toba et al, 2012).

 

2. AIM:

To Develop a Robust Framework for the Supply Chain Network for Health Care Sector.

 

3. OBJECTIVE:

·       To study and analyze the existing practices of supply chain management in healthcare sectors.

·       To conduct a study to identify critical factors for robust Supply chain management.

·       To prepare questionnaire’s by prioritizing the critical factors for Robust supply chain management.

·       To develop a framework for designing a robust supply chain management for the health care sector based on the analysis.

·       To validate the developed framework by carrying out a pilot run in any one of the health care.

 

 

4. METHODS AND METHODOLOGY:

1	To study and analyze the existing practices of supply chain management in health care sectors	Literature review	Journal papers, websites, books etc.
2	To conduct a study to identify critical factors for robust Supply chain management and prepare a survey questionnaire	Development of Questionnaire based on Likert’s Scale	Journal papers
3	To prepare questionnaires by prioritizing the critical for Robust supply chain management.	Developed based on research gaps found in the journals	Journal papers
4	To develop a framework for designing a robust supply chain management for the health care sector based on the analysis	Statistical Tools and Techniques AHP and Prioritization Matrix	Excel, graphs, AHP tools
5	To validate the developed framework by carrying out a pilot run in any one of the health care	Case Study Approach	Based on the analysis derived from AHP drew a framework

 

5. PROBLEM SOLVING:

This chapter talks about the methodologies used for the study, which covers the concept development, data collection and the methods used for the analysis along with the verification and validation. It gives an insight about how the study has been designed for solving the problem definition formulated in a systematic way.

 

Analytic Hierarchy Process:

The Analytic Hierarchy Process (AHP), introduced by Thomas Saaty (1980), is an effective tool for dealing with complex decision making, and may aid the decision maker to set priorities and make the best decision. By reducing complex decisions to a series of pair wise comparisons, and then synthesizing the results, the AHP helps to capture both subjective and objective aspects of a decision. In addition, the AHP incorporates a useful technique for checking the consistency of the decision maker’s evaluations, thus reducing the bias in the decision making process.

 

How the AHP works:

The AHP considers a set of evaluation criteria, and a set of alternative options among which the best decision is to be made. It is important to note that, since some of the criteria could be contrasting, it is not true in general that the best option is the one which optimizes each single criterion, rather the one which achieves the most suitable trade-off among the different criteria. The AHP generates a weight for each evaluation criterion according to the decision maker’s pair wise comparisons of the criteria. The higher the weight, the more important the corresponding criterion. Next, for a fixed criterion, the AHP assigns a score to each option according to the decision maker’s pair wise comparisons of the options based on that criterion.

 

The higher the score, the better the performance of the option with respect to the considered criterion. Finally, the AHP combines the criteria weights and the options scores, thus determining a global score for each option, and a consequent ranking. The global score for a given option is a weighted sum of the scores it obtained with respect to all the criteria.

 

Intensity of Importance	Definition	Explanation
1	Equal importance	Two factors contribute equally to the objective.
3	Somewhat more important	Experience and judgment slightly favor one over the other.
5	Much more important	Experience and judgment strongly favor one over the other.
7	Very much more important	Experience and judgment very strongly favor one over the other
9	Absolutely more important	The evidence favoring one over the other is of the highest possible validity
2,4,6,8	Intermediate values	When compromise is needed.

 

The matrix is of a very particular form which neatly supports the calculations which then ensue. The next step is the calculation of a list of the relative weights, importance, or value, of the factors, such as cost and operability, which are relevant to the problem in question (technically, this list is called an eigenvector).

 

The final stage is to calculate a Consistency Ratio (CR) to measure how consistent the judgments have been relative to large samples of purely random judgments. If the CR is much in excess of 0.1 the judgments are untrustworthy because they are too close for comfort to randomness and the exercise is valueless or must be repeated.

 

Consistency Index and Ratio Calculation:

Finally, a Consistency Index can be calculated from(λmax‐n)/(n‐1).That needs to be assessed against judgments made completely at random and Saaty has calculated large samples of random matrices of increasing order and the Consistency Indices of those matrices. A true Consistency Ratio is calculated by dividing the Consistency Index for the set of judgments by the Index for the corresponding random matrix. Saaty suggests that if that ratio exceeds 0.1 the set of judgments may be too inconsistent to be reliable. In practice, CRs of more than 0.1 sometimes have to be accepted. If CR equals 0 then that means that the judgments are perfectly consistent.

 

Consistency Index Table:

Table below, derived from Saatys book, in which the upper row is the order of the random matrix, and the lower is the corresponding index of consistency for random judgments

 

Table 3: Consistency Index

1	2	3	4	5	6	7	8	9	10
0.00	0.000	0.58	0.90	1.12	1.24	1.32	1.41	1.45	1.49

 

Scale Reading:

< 0.05 = 1

0.05 - 0.10 =3

0.11 - 1.15 =5

0.16 - 0.2 =7

> 0.2 = 9

 

6. RESULTS:

This chapter deals with the results obtained during data collection. The results and analysis are represented by using graphical representation, AHP analysis is used for data analysis. This chapter deals with systematic presentation of the analyzed data followed by the interpretation of the analyzed data followed by the interpretation of data.

Step wise solutions derived

 

Step 1:   Analysis on the questionnaires and graphical presentation.

Step 2:   Calculation of the average on the questions asked to analyze the critical factors.

Step 3:   Implementation of AHP analysis on the choosing the critical factors

Step 4:   After identifying the critical factors applying the AHP analysis will help us derive at the solution

Step 5:   Once a solution is derived identifying the factors that affect the most to least we prepare a framework.

 

The final framework formed is based on the important factors identified. Inventory Management is the foundation followed by critical factors affecting are demand on health commodities, lead time for receiving commodities after order has been placed, frequency of stock out situations and replenishment of commodities. Outsourcing and information system are the base under outsourcing the critical factors affecting are adaptation to the market changes, management involvement in waste elimination practices and dealing with the expired products. Under information system critical factors affecting are non-usage of advanced technology on medicine consumption, consistency on utilization of materials. The supporting pillars are senior management support and supply chain training and awareness and the top is the supply chain process.

 

7. CONCLUSION:

In healthcare system, supply chain management plays an important role to reduce cost without sacrificing the quality of healthcare. It is observed that supply chain management and consumable inventory is not considered in planning of healthcare, which plays a significant role. With this background, the current dissertation was planned to understand the existing strategies and importance of systematic supply chain management at few of the healthcare sectors in Bangalore.

 

Based on the data and current practice of Supply chain management, it was found that there is a tremendous variability in execution and managing of hospital supply chain. In recent years we have seen challenges arising from legislative and regulatory obstacles as well as spread of globalization, cuts in state funding, severe competitive pressures and increasing operating costs. These factors are forcing healthcare organizations worldwide to streamline their processes and lower their costs without compromising the level of quality demanded by the users of the healthcare services.

 

The key for their success seems largely to lie in the optimal management of their supply chains. Implementing SCM systems in order to assist in the realization of these tasks is not always easy, as there are many barriers, especially organizational and people- related. The existence of limited academic research related to these significant areas of healthcare SCM supports the necessity of future research, especially regarding performance measures and standards, risk factors and response strategies on developing a robust supply chain framework for healthcare sector.

 

8. SCOPE FOR FUTURE WORK:

·       The current production network methodologies that the wellbeing area pursue isn't prepared to deal with the for-coming difficulties, so the administration need to enhance and grow new capacities and receive better approaches for cooperation.

·       The changing patterns in the human services division, endeavors ought to be made to control the expenses without influencing patient consideration and security, by sharing data among makes and wholesalers. Clients request must be imparted to the providers.

·       A Warehouse Management System (WMS) is crucial to improve the proficiency of a human services' stockroom activity from stock control, delivering and accepting. Progressed WMS have accompanied highlights like RFID, portable PCs and remote systems.

 

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Accepted on 19.10.2019      © A&V Publications All right reserved