Chadha et al (2013) [9] explores how supply chain management (SCM) integration

can improve the quality of healthcare systems. SCM can aid in the creation of
better facilities for product design research. Moreover, SCM improves forward and
backward integration. A positive level of strategic partnership with suppliers,
coupled with an efficient ordering system and integrated inventory management
can enhance forward integration; a good level of communication and interaction
with patients greatly helps with backward integration. Having high levels of forward
and backward integration then improves the overall quality management of
hospitals.
However, improving SCM will inevitably increase costs. Detlef et al (2011) [10]
discusses a transformative hospital supply chain that balances cost with quality
healthcare. The hospital supply chain undergoes three stages of maturity. At the
foundational level, the hospital uses a segmented approach and delivers each
departments need, making sure that supplies are available. After this level, an
optimization model is adopted. A close relationship and collaboration between
different hospital departments is strived for so that costs can be reduced through
economies of scale. Also, the outsourcing of non-core SCM functions and
standardisation increases efficiency. The last stage of maturity, the transformation
model, moderates cost and the level of satisfaction among patients. To achieve
the transformation mode, collaborative governance, automated and integrated IT
systems and streamlined processes such as procurement and materials
management are necessary elements.
There are several internal inventory management policies that companies have
used to improve SCM. Gebicki et al (2013) [3] explores the medication inventory
policies in hospitals. A bullwhip effect the increase in demand variability when
moving upstream in supply chain was identified. Information sharing, channel
alignment and operational efficiency were proposed to handle the bullwhip effect.
4 policies were analysed. The first policy adopts a classical method to determine
reorder points and par levels. The second policy, similar to the first, is modified
with reorders made based on the criticality of the drug. The third policy determines
if a drug should be placed in a dispensing machine. Similar to the third policy, the
fourth policy includes the ordering of drugs for the main pharmacy as well. Claudia
et al (2014) [4] suggests the point-of-use hybrid inventory policy. This policy is a

combination of periodic stock replenishment with reactive stock replenishment

whenever the inventory level is low. Automated dispensing machines are utilised
and this increases inventory visibility, improving the dispensing and control of
hospital supplies. Amrik et al (2012) [5] cites collaborative methods that can be
harnessed to enhance hospital supply chain. Danas (2002) proposes forming a
virtual hospital pharmacy where information on different pharmaceutical stockkeeping units around the same geographical area can be accessed, allowing
supplies to be shipped out when required. A classification framework where drugs
are ranked in order of importance is also adapted for the virtual pharmacy.
Nicholas (2004) suggests the outsourcing non-critical medical supplies while
Scheller and Smeltzer (2006) suggest the outsourcing of distribution function,
which allows the hospital to allocate capital to other critical functions. Whitson
(1997) recommends that a just-in-time (JIT) system is suitable for the materials
management and pharmacy departments. Rivard-Royer (2002) tested a hybrid
stockless method in which the stockless method was merged with the traditional
way by distributing goods through a hospital central store. The central store will
then separate items into point-of-use quantities and supply to individual patient
care units. The vendor managed inventory (VMI) system where the supplier
monitors retailers inventory levels and makes periodic replenishment decisions
could accurately determine the consumption levels in the hospital. Bendavid et al
(2010) [6] proposes the use of radio frequency identification (RFID) in the
replenishment process of medical supplies. RFID is used in patient safety,
inventory management and asset tracking in the hospital setting so far. RFID can
be further harnessed into the RFID-enabled e-kanban replenishment solution, in
which a replenishment signal is detected when the item storage location is empty,
serving as a signal for the delivery of items.
Besides inventory management techniques, Nazar et al (2013) [1] discusses a
procurement strategy in supply chain management - a hybrid approach for
integrated healthcare cooperative purchasing and supply chain configuration. The
purpose of the approach is for hospitals to form Group Purchasing Organisations
(GPO) so that supplies can be ordered in bulk, and costs are reduced. However,
issues regarding cooperation and order size between hospitals in a GPO arose
from this approach. The solution proposed is to consolidate purchasing

cooperation without mandatory compliance from hospitals. Information regarding

the hospital's supply chain structure and transactional data should be obtained
and then analysed. It is recommended to adopt the best hospital structure among
the GPO that minimises total cost to enhance supply chain management.
Apart from procurement strategies and inventory management techniques, Wafi et
al (2013) [2] provides additional insight on the effects of knowledge management
on the hospital supply chain. Inept knowledge management results in a knowledge
disparity and misunderstanding between supplier and beneficiaries. This
knowledge revolves around medical procurement, management of supply chain,
relationship to the user and procurement process. A gap in professional culture
due to different backgrounds and working environment of beneficiaries and
supplier also results. Human communication and interaction are required to bridge
this gap. Lastly, being overly dependent on management science techniques,
which are insufficient, should use mixed techniques. These effects of inept
knowledge management eventually lead to project failures.
Chen et al (2013) [7] present a relational view that enhances hospital supply chain
performance. Having hospital-supplier integration is able to enhance hospital
supply chain performance as delivery speed of suppliers and responsiveness to
customers improved. Hospital-supplier integration can be achieved through high
levels of knowledge exchange, strong IT integration between hospital and
suppliers, and trust between hospitals and key suppliers. These factors eventually
improve hospital-supplier integration, and hospital supply chain performance is
enhanced.