By Mike Polaski, Executive Director, Supply Chain, OC Reilly, Inc.

(Feb. 19, 2019)—Health care supply chain continues to evolve, as technology improves and the demand to achieve peak operational and cost efficiency only increases.

The next step – one that a growing number of health care systems and networks have already adopted – mimics the e-commerce model championed by mega-providers like Amazon.

An article appearing last June in Logistics Management* magazine described this expanding trend:

“Enabled in part by the increased availability of off-the-shelf software and materials handling equipment, many hospital networks have begun centralizing their distribution operations to bypass third parties,” the story reads. “Chris Lingamfelter, president of SencorpWhite’s White Systems, notes similarities to the early 1990s trend of retailer adoption of centralized distribution models.

“’With a sophisticated DC, they can reduce stock in the hospital storerooms, manage that inventory better, and work more efficiently with suppliers,’ Lingamfelter says. ‘Space and labor outside a hospital is much less expensive than inside, which further adds to the benefits of things like more efficient pick paths.’

“The new health care supply chain model centers on direct-to-consumer capabilities, where it can benefit from lessons learned in the broader e-commerce shift from pallet and case quantities to high-throughput piece picking.”

But even as the rapid order fulfillment and reduced costs of the Amazon model carry obvious appeal to health care systems, misinterpretations, miscalculations, and mistakes always remain a possibility. It still makes sense to consult with an independent third-party supply chain expert, to make sure the numbers fit and the returns on the investment are secure.

More efficient operations, providing better service to patients and better results for health care providers, can be a wonderful thing. Take care to invest the time and engage with outside counsel to ensure any decision to move to a new way of doing business is the best one.

© 2019 OC Reilly, Inc.