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 cost is the second largest operational expenditure of most healthcare institutions in the US, surpassed only by labour cost. 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 on a regular basis could be anywhere between 18,000 and 100,000. Compounding this problem is the fact that these items are constantly updated.
A research by AHRMM (Association for Healthcare Resource & Materials Management) shows 30 percent 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’s revealed that supply chain staff are spending 24 percent 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.
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) technology which allows it to constantly update and normalise the items’ information.
VIM’s standard catalogue has more than 2 million normalised items. The system is able to recognise the same item even if 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, the key cloud ERP offering from Infor, will provide hospitals with a more advanced and comprehensive healthcare ERP suite.