There is no question that supply chain management is critically important. And this is especially true for the healthcare industry. Studies indicate that supply chain administration costs are the second-largest operational expenditure for most healthcare institutions in the US, surpassed only by labour costs. The healthcare supply chain is also more complex and demanding than most industries’.
Hospitals and clinical centres have enormous demands for supplies, from prescription drugs to surgical gloves. In the US, the number of items that need to be replenished regularly could range from 18,000 to 100,000. Compounding this problem is the fact that these items are constantly updated.
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Research by AHRMM (Association for Healthcare Resource & Materials Management) shows 30 per cent of healthcare institutions in the US are maintaining inaccurate ‘item masters’ – master data files of supplies.
In another research by McKesson, a leading healthcare solutions provider in the US, it was revealed that supply chain staff are spending 24 per cent of their time fixing errors. And there is a 15 percent chance that different rates are applied for the same item.
Healthcare institutions, therefore, are poised to achieve huge cost savings if they can deploy more effective supply chain management systems. The cloud-based McKesson Strategic Supply Sourcing (MSSS) solution, for instance, is reported to be able to help organisations save up to 15% of annual procurement spending.
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At the heart of MSSS is VIM (Virtual Item Master), a Software-as-a-Service offering that is much more advanced than legacy item masters. Furthermore, VIM is powered by AI (artificial intelligence), which allows it to continuously update and normalise the information for items.
VIM’s standard catalogue has more than 2 million normalised items. The system can recognise the same item even when it has different naming conventions and quickly find functionally similar items, so hospitals can readily compare products from various suppliers.
Another great benefit of moving item master to the cloud is that MSSS can integrate smoothly with other modern cloud ERP systems. On December 15, McKesson and Infor announced their strategic partnership. The integration between MSSS and Infor CloudSuite, Infor’s key cloud ERP offering, will provide hospitals with a more advanced and comprehensive healthcare ERP suite.
