Logistics and supply chain management gains its importance in recent years to see through the process integration from upstream to downstream for health care institutions. Burns (2002) stated that around the 40% to 5% of the healthcare expense of healthcare systems and hospitals comes from the supply chain management. The function of supply chain emphasizes on determining the amount of supply that is to be purchased and carry in storerooms of healthcare organization. Christopher (2016) moreover depicted that healthcare organization also gain competitive advantage through logistic system through effective innovation, speed and flexibility in the system. Kwon et al. (2016) on the other hand argued that supply chain management is more complex in healthcare industry and there are many barriers of health care upstream supply chain in Asian countries especially in India and Thailand. These barriers can be inefficient process, inaccurate data information and inconsistent data management and manipulation. However, only the country India is considered for this research.
This research aims for evaluating the details on barriers of health care upstream supply chain in India. The major objectives that will be addressed in this chapter is the determination of the factors that affects the upstream supply chain management of healthcare in India and evaluation of the issue of healthcare SCM upstream in a hospital that affects both the doctors and hospital perspective. Several theories will also be discussed for addressing the objectives to evaluate challenges that put an adverse impact on upstream SCM in healthcare providers in India.
A healthcare business in India mostly deals their business with the service enterprises that includes pharmaceuticals, medical consumables, information technology, catering, waste management, laundry cleaning, home-care products, general supply and vehicle fleet management (Adebanjo et al. 2016). Parmar and Shah (2016) suggested that there are four major types of key individual in the supply chain management of health care organization- manufacturers, distributors, healthcare providers and payers.
Image 1: Key Individuals in Supply Chain Distribution of a Health Care Organization
(Source: Parmar and Shah 2016)
In this case, the primary manufactures acts as a supplier for secondary manufactures and after getting the supply materials these secondary manufactures is liable for transforming active ingredient into consumable products like capsules, tablets, syrups and other pharmaceutical solution. Razak et al. (2016) highlighted that the finished products then distributed the final developed goods to healthcare providers by distributors, wholesalers and manufacturers. In this case, some manufactures formulate their own medicine distribution cycle in order to give discount on distribution fees. This process helps in overcoming the problem of supplying substitute products of the medicines in the hospitals. Moreover, there are some cases where the cost related to inventory stock of the competing product is reduced by cutting the expense of stock control. Govindan et al. (2014) moreover highlight that healthcare industry play their role as both supplier and customer. Manufactures supply pharmaceutical items directly to the professional healthcare providers and thus the later act as a customer to the former one. The professional healthcare providers then sell the products to the end-customers but they also offer more functionality to the end-users like adding value to the material flow and providing new information flow through the supply chain.
Relationship with suppliers
Uthayakumar and Priyan (2013) stated that supply chain management is about developing effective links with network and links. These relationships are with those suppliers, who supply medicinal equipment, vaccines and medical technology to the hospitals. Acharyulu and Shekbar (2012) depict that effective relationship with suppliers allow the organization to develop effective system by aligning their company’s goals and objectives. It is also stated by Belien and Force (2012) that collaborative relationship facilitates innovation that is crucial for growth and improving resilience of the organization (Cho et al. 2012). Partnership with supply chain third party service provider also enhances the accuracy and timely delivery of the final products to the consumers.
Every nation has different procurement standard where the local government and organization’s authority set the legislations. These legislations pays a crucial role in supply chain management. The legislation is based on the chemical compositions, weight of the freight, temperature requirement of the medicines and tax payments for each shipment. Moreover, Singhal and Singhal (2012) highlight that these specifications are required during the transportation for police verification and custom verification. Thus, it is said that involvement of governing regulation also impacts the supply chain management system.
In this context, the post maintenance of the supplied products service and supply parts in the hospital. Dobrzykowski et al. (2014) stated that this after procurement service also allows the organization to make any amendments in their orders or develop a string relationship with their supplies and other stakeholders. Wisner et al. (2014) depicted that if services procurement is handled ineffectively, several consequence can occur like poor visibility of the entire procedure which leads to suppliers leading to throttled relationships. Another consequence that can arise is adhoc purchases where unauthorized suppliers can access the details and products in the warehouse and hampers the products and their quality (Cantwell and Ikeda 2003). Disintegration of manual processes and unclear visibility of suppliers are other two adversities that can be caused from improper procurement service. The former aspects results in some process are not automated and thus accomplishing those process take more time; while the former aspect refers to a situation, where suppliers don’t get completely involved in the business that furthermore lead to ineffective supplier collaboration (AbuKhousa et al. 2014). Thus, Monczka et al. (2015) suggests that centralized management of the supply chain management with different service categories that gives a top view of different categories purchased from the inventory. Moreover, supplier collaboration and automated process are two aspects that can be utilized for the enhancement of the SCM through collaborating suppliers in confirmations and invoice management and make automatic accomplishment of work respectively.
In order to provide supply chain capabilities, compatibility in cultural values of business partners and strategic objectives is required. Yao and Minner (2017) define that in health care supply chain management, the compatibility refers between the company that supplied medical equipment and administrator in the hospital. This compatibility also illustrates the appropriateness of medical equipment and maintaining the supplies to the specifications.
Timely delivery is one of the most important factors that affect the upstream supply chain management in healthcare in India. There are more than 2 billion of populations in India and there are thousands if disease through with these people is sufferings. Moreover, every disease has different treatment requirement (Yap and Tan 2012). Thus, all the medicines have to be present on the inventory or warehouse so that on demand, the medicines can be timely delivered to the hospitals and health care centers.
The response that hospitals give to the customer demands is known as responsiveness of a system (Chan et al. 2012). This factor can be considered as a classification of the above factor that is “timely delivery”. Chen et al. (2013) furthermore depicts that responsiveness also illustrates the speed- and- accuracy and validity- and- reliability of the quality of the services that the organization is providing. Thus, it can be said that if all the medicines are always available in a health care centre, people consider the organization as a reliable company.
Cantor et al. (2012) portrays that safety plays a crucial role in supplying the materials to one place to another. Managers should develop a risk management plan so that emergency risks can be avoided. However, Attaran (2012) argued that there are sometimes natural calamity like fire, earthquake and flood can create problem in transportation of the products from manufacturing site to the final location. Safety is required in supply chain process so that all the needed patients can get their medicines on time and people can be treated timely.
Misplacement of medical equipments
In doctor’s perspective, the issue that is related to the health care supply chain management is misplacement of medical equipments. Kwon et al. (2016) stated that this adversity delay in operation and other medical functionalities in the hospital. Burns (2002) moreover depicted that this problem mainly occur due to consolidated warehouse, where all the products from different suppliers are kept together. Thus, in such cases, while loading the materials some shipments gets misplaced by other products. This took much time to supply the actual products to the hospital and finally to the doctors. Doctors also think that this delay occur due to poor documentation during the transportation process (Bhakoo and Choi 2013).
There are several cases for the accidents and deaths in the health care due to inappropriate treatment and late operations. Mangan and Lalwani (2016) stated that one of the main factors is the late delivery of the required products. These delay can occur due to many reasons- misplacement in warehouse, late police can custom verification, tax payments at portals, road congestions, bad weather and negligence of the suppliers (Bhakoo and Choi 2013). However, the adversity affects the organization and their internal functions that’s affects their reputation and the health of the patient.
Doctors often complaints that the quality of the materials is so poor that the shipments has to be cancelled and re-ordered from the supplier end. In India, this problem is high due to corruption in business. Kumar et al. (2015) also highlight that political parties are associated with each business and that affects the usual procedure of the business. Suppliers often cut cost by reducing the quality of the material that affects the patient’s health. Bhakoo and Choi (2013) also depicts that the lack of improper maintenance of the vehicles also diminishes the quality of the medicine as the temperature of the medicine have to be marinated during the transportation. Thus, the poor technology that the supplier incorporates is the reason for the raised issue of delivery of the poor quality materials.
Govindan et al. (2014) portrays that it is essential to raise supplier awareness of climate change threats so that their supply chain management can be improved. According to the result of Carbon Disclosure Project (CDP), only 58 percent respondents out of 634 suppliers, who are surveyed across the world, considered that their supply operation gets affected by the problem of climate change (Jabbarzadeh et al. 2014). Thus, the health care organization and their respective suppliers should collaborate and develop new technology that can make their supply chain process greener. Elrod et al. (2013) also stated that due to climate change, the temperature of the world rise and thus, the lifetime of some critical medicine gets reduce. Thus, the supply chain has to increase their delivery speed with accuracy so that patients can consume the medicine prior to their expiry date and condition.
Lack of awareness regarding the supply chain management
Wisner et al. (2014) depicted that all the staffs as well as top management should know about the supply chain process. However, in India, studies related to supply chain management are not so common. On the other hand, not all staffs hired for the supply chain management are from management colleges who have studied supply chain management. Cho et al. (2012) stated that this is the main reason for poor understanding of the entire system. In addition to that, low end labors are mostly work for every organization at lower cost is another big reason. The adversity rises as there are very few initiatives taken for staff training regarding the entire supply chain management system.
Kumar et al. (2015) depict that the top management commitment plays a crucial role for an effective supply chain system. The numerical result obtained in the research of determining critical success factors for implementing supply chain management shows that the mean value for the top management commitment is 4.2430 (Kumar et al. 2015). A likert scale of five has been conducted in this research where 1 refers to the lowest and 5 refer to the highest. This shows that this factor is crucial for successful SCM but in India most of the manager are corrupted and overlook many important aspects in delivering the pharmaceutical products effectively as they are busy in other work like managing patient details. Moreover, Attaran (2012) portrays that top management are not only liable for performing their regular duty but they are also expected to participate during the emergency procedures. India is a country where climate is humid and thus all the medicines need to be transferred in cool temperature. Adversity cases like fire or any other natural calamity, participation of the managers for avoiding such issues also shows their support. Incorporating of technology for the betterment of the SCM process also shows their support. However, all these aspects is not followed in India especially in rural regions as a result people suffers from chronic disease and some f the patient even died without proper treatment and unavailability of proper medicine due to late delivery and lack of interest of managers.
The visibility is important in order to see the progress of the distribution process from the manufacturing site to the en-user site. The subject through which is selected is known as supply chain visibility (SCV) and working process of inventory management, functioning of parts and components and the transit process can be tracked. Attaran (2012 stated that this process allows the organization to overcome the problem of unnecessary stealing. RFID technology can be incorporated for tracking all the packages and the exact quantity and other details of the content of the package. Cegielski et al. (2012) highlighted that India is a developing country and hence incorporating technology takes greater time and budget to accomplish the entire process. Indian companies still uses the technology of barcodes that can only identify he type of the item and not each asset tagged in the supply chain. Moreover, most of the organization develops individual application for promoting their presence and also for allowing their customer to access their company’s details easily. However, there are very less companies, who develop mobile application for their supply chain management process. In India, companies do not prefer to develop mobile applications for SCM as they need extra budget and maintenance team for handling the mobile presence.
The main problem arises as the entire supply chain system is fragmented and hence proper synchronization is mandatory for a smooth supply chain management process. All the staffs in the SCM process have to plan the entire process effectively and liable for maintaining developing supply chain enterprise application, planning for asset management, formulation of procurement and product lifecycle management (Hans et al. 2012). Every department has their roles and responsibility that they have to accomplish and they have to communicate and update their working approaches with every other department. Thus, the communication system should also be enhanced as delay in one process may lead to delay in the entire logistics process. Hans et al. (2012) on the other hand describes that it is not possible for a single manger to visualize every functionality of the organization and thus, several department have managing authorities. All the department details should be properly synchronized and if needed these details are required to formulate new partnership with third party service provider or with other organization. Taken for instance, if an organization desire to give their IT working approach to some 3rd party provider, they have to give them proper details so that the provider can utilize the business goals and objectives of the former organization to develop a customized IT projects that can enhance their productivity. However, in India such collaboration is hard to find as there are very less organization which are capable to provide effective services to their clients or companies hire 3rd party from foreign countries that need extra budget allocation.
Warehouse management is one of the crucial factors in supply chain management system. Some companies use consolidates warehouse process where small shipments from a number of suppliers or from different geographical areas combined into bigger shipments loads (Hans et al. 2012). Chong et al. (2015) stated that in this process maintaining data for each shipment is a difficult job for a single person or manager. In India, where automation process is not so famous and utilized in factories, managing data for individual shipment become vulnerable. In such cases, loss of data is a common issue that every organization faces. In context of healthcare system, medical equipments and medicines with same chemical compositions from different suppliers are loaded from same warehouse and there the probability of wring shipments becomes every high. In such cases, the obtained products may have huge difference from the consumer’s demand. Acharyulu and Shekbar (2012) also highlight that in such cases, the supplied products and shipped products may not attached with the products details that the manager forward.
There are millions of people living in the earth and every person suffering from some health issues are different from each other. This results in formulation of a diverse range of medications. Moreover, the technology that is used to produce the medicines is also different like in recent times; medicines are formulated with the use of biotechnology and nanotechnology (Hu et al. 2012). Cho et al. (2012) furthermore depicts since these medicines are greater in cost, the formulation of these medicines done only there is a demand so that no medicine gets wasted. On the other hand, Mangan and Lalwani (2016) depicted that sudden demands of the medications results in delay of the medicine shipment that not only hampers the entre transportation proves but also affects the health of the patient.
According to Monczka et al. (2015), communication in supply chain management system can be comprised of two aspects- effective communication between systems and effective communications & collaboration between stakeholders. In former case, the computer device, that both the supplier and customer uses should support same program for uninterrupted communication (Wisner et al. 2014). Taken for instance, if one operates on SAP ERP, while there vendor have Oracle ERP they can communicate effectively. On the other hand, in context of communications & collaboration between Stakeholders, both the suppliers and customers need continuous monitoring to ensure supply meets demand (Cegielski et al. 2012). In India, not all supplier uses the new system that can provide platform for all applications thus communication among the stakeholders creates gets interrupted.
This is the most vital problem faced by Indian supply chain management especially in pharmaceutical industries that is proper maintenance of cold chain management. Chen et al. (2013) mentioned that in such cases, all the items are ensured to be present at constant temperature between +2°C and +8°C for vaccines, serums and other medicines. Since vaccines are sensitive to heat and extreme cold, such products should be carefully handled to the hospitals and health care centers. India’s temperature is humid and thus, it is the liability of the logistician’s to manage the cold chain in their supply chain process. Lack of interest and extra financial resources are the major reason may organization utilized the tradition way of supply chain in which most of the medicine gets destroyed. There are moreover improper training for staffs where they can control the temperature of the vehicle timely and safeguard the medicines so that patients can consume proper medication.
Encouraging top management commitment
It is important to make the managing authority to realize the impact of long-term vision for survival and growth of the organization. These leaders should be aware of the core strength and devoted resources from their active participation. The organization should also organizes gathering, seminars and conferences with the business experts on enhancing SCM strategy are the main CSFs for implementation of SCM in Indian health care organizations.
This can be attained through effective communication and incorporating technological advancement in the supply chain management process. Business experts suggest that organization should facilitate collaboration and engagement of all key stakeholders both internally and externally. Another aspect through which the logistic synchronization can be attained is by establishing complete visibility of the process. Different automation technology and especially RFID tags on each parcel should be incorporate so that stealing of products can be overcome. However, the process need continuous monitoring, management and execution to ensure that the system informs everyone in real-time. This will allow the managing authority to note all the activity or disruption in the SCM.
Communication plays a crucial role in making everyone aware of the current situation of the SCM and the raised issue so that it can be dealt in the initial stage. The Indian health sectors can use effective technology successfully like- invoicing tools, web-based point of sale (POS) platforms and traceability software in order to ensure great communication. It is also recommended for Indian pharmaceutical supply chain staffs to avoid the interruption in communication so that they can get all the information of products that need to be supplied with correct amount to the correct place. All the staffs also learn to focus on accomplishing a particular task once at a time. Indian staffs have a problem of finishing their tasks once as early as possible this diminished the quality of work and raise the probability of erroneous work. Moreover, several modern communication tool like social media presence and official communication tools like e-mails, notice boards and company’s website so that all the staffs get aware of any new information regarding the supply chain process.
The problem in Indian industry is that they consider supply chain system not as a primary obligation and hence they select poorly educated labors for supply chain process. Most of the problem rises due to this negligence as they do not understand the importance of the products and problem that can be created by delaying of the supply. Thus, every organization needs to involve their human resources management to recruit efficient staffs in this sector so that they can handle the loading and unloading of the shipments. Regular training should also be provided to all the staffs and the SCM managers regarding the new technology that organization incorporates so that they can utilize the same for enhancing their productivity.
This chapter highlights that the function of supply chain emphasizes on determining the amount of supply that is to be purchased and carry in storerooms of healthcare organization. However, in India there are some barriers in the supply chain system of health care industry. The supply chain of the pharmaceutical industry includes pharmaceuticals, medical consumables, information technology, catering, waste management, laundry cleaning, home-care products, general supply and vehicle fleet management. It is also concludes from this chapter that the important factors affecting the upstream supply chain management in healthcare in India are relationship with suppliers, specifications and standards, after procurement service, effective compatibility, timely delivery, responsiveness and safety of the products that are delivered to the final location. However, in doctor’s perspective, the issues related to healthcare supply chain process are misplacement of medical equipments, late delivery of the medicinal products and poor quality of the products and lack of sustainability certification. Thus, the major issues of the upstream supply chain management that is addressed in this chapter are Lack of awareness regarding the supply chain management, Deficiency in of top management support in the supply chain management, poorly integrated information system, lack of coordinated effort, strategic alliance formation and knowledge sharing, inconsistent and inaccurate product information, inability to meet changing demand pattern, limited communication among all parties and incompetent cold chain management during transportation. The suggestion that is provided in this chapter for the improvement of the health care upstream supply chain management are to encourage top management commitment, enhance logistic synchronization, improve communication at every stage and provide training to the staffs.
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