Why does Supply Chain Matter?

Often business focus on client-side revenue, supplier costs, and other large monitary trends. Easily lost in the shuffle is the supply chain. So why I it important to evaluate supply chain costs and service periodically? A supply chain can provide insight into many facets of an operation as well as boost other operational divisions with data evaluation and target service structures.

Specifically, the healthcare industry benefits from a sophisticated supply chain in both cost savings and client service interaction. “The supply chain is the second fastest growing expense for healthcare providers; with only labor costing most providers more”.[1] The rising cost reinforces the need for a best in class provider, to maximize ROI.

What is a best in class provider? Surely more than just point A to point B delivery or available overflow transportation. Best practices must include data acquisition and analytics, innovation, and continual improvement practices. A best in class provider is more than a vendor, or a line item on a budget, but rather a true partner that helps maintain and forecast service needs, budget responsibility, and industry trends.

According to Bruce Johnson, CEO of GHX as told to HIT Consultant, there are 5 key areas in which a supply chain partner can improve healthcare costs:

  1. Automating Manual Processes

  2. Establishing Efficient Trading Partner Relationships

  3. Reducing Waste/Excess Product

  4. Capturing Data for Business Requirements

  5. Enabling Automation Amongst Regional Care Networks

In short, the right supply chain provider can enable targeted growth, reduce costs, and deliver better patient care.


Pennic, J. (2013, May 13). 5 Ways Supply Chain Can Reduce Rising Healthcare Costs. Retrieved from HIT Consultant: http://hitconsultant.net/2013/05/13/5-ways-supply-chain-can-reduce-rising-healthcare-costs/

[1] (Pennic, 2013)

#SupplyChain #CostReduction

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