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Supply Chain 2.0 - How the healthcare industry needs to rethink their procedures

  • By Sascha Winter

I remember a time when I was a consultant in the healthcare industry, optimizing workflow chains and processes. I was always astonished by the way hospitals were conducting their procurement. Doctors telling nurses to fill out a ‘Purchase Request Form’ (PRF) which needed to be signed by the doctor before it went to the procurement department.

The purchase officer worked on one PRF after another, sending our RFQs (Request for Quotations) to a pool of suppliers (usually the usual ones) so that the process can get started. Unthinkable for a purchase officer to look for new suppliers while PRFs were stacking up on his desk. That stood out for me as an issue, that might cause some abuse from suppliers. Seeing that they will permanently receive those RFQs (and eventually permanently receive Purchase Orders) where was the incentive of the supplier? Was the hospital really paying the best price for the best product in the market?

I have spoken to so many companies that were trying to get a foot in the door of potential clients, but it was always a challenge. Hospitals don’t see the need for challenging the status quo when everything seems to be in order (never change a winning team, right?) However, sometimes you need to take a step back and re-evaluate. Is this process really efficient? Are we really doing our best to cut the period for those processes? Of course, no one wants to cut the branch they are sitting on and arguing that “this is how we always did it” is an argument my grandfather used to say – no! No longer is that valid. Times have changed and so must every stakeholder working in a hospital.

I do understand that hospitals are large enterprises, often with hundreds of employees, but even companies such as McDonalds, Amazon or GE were able to implement processes that helped them getting efficient and effective.

One solution is an electronic B2B portal tailormade for the healthcare industry. Where suppliers are able to upload their entire portfolio, entirely being exposed to a much larger market without investing heavily into conducting market analysis, staffing an office in those markets (or even a warehouse) or alternatively contracting a distributor. It will give suppliers a fair chance to bid against the competition on equal terms, no ‘gifts’ for procurement directors, no deployment of sales staff, no huge overheads by setting up sales representative offices etc. Just pure and simple Sales and Marketing.

For hospitals, they will have access to a much larger pool of suppliers, where they can compare price and products within minutes. No need to wait for a quotation, fair comparison of products and more importantly absolute transparency. Something that is very important to a CEO/CFO.

There was one talk I have had with a CEO of a large hospital group which I will never forget. I have asked him, if he knew that his staff may be receiving ‘commission’ from suppliers and distributors to award them with those contracts and to my surprise he has said “Oh, I am well aware, but the effort, time and costs to investigate stands in no relation to the outcome” He said shrugging his shoulders, but I could see that this was indeed annoying him. He added “but now that you have mentioned it again, perhaps we really need to look into it again” … and this is where change is happening.


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