The 7th International Conference on Operations and Supply Chain Management 2016, Phuket Thailand

AN EXPLORATORY STUDY OF HEALTHCARE SUPPLY CHAIN

Duangpun Kritchanchai
Faculty of Engineering, Mahidol University, Salaya Campus, Nakhonpathom, 73170,
E-mail:duangpun.skr@mahidol.ac.th

Sineenart Krichanchai
Faculty of Pharmacy, Mahidol University, Bangkok Thailand, 10400,
E-mail: Sineenart.kri@mahidol.ac.th

ABSTRACT
Efficiency is the performance that every industry wants to achieve. The concept of supply
chain management is to coordinate and collaborate among supply chain players in order to
achieve system efficiency. Supply Chain coordinations and collaborations deal with the
connection of operations throughout the chain. The material and information must smoothly
flow across these supply chain operations in achieving efficiency. Healthcare supply chain
is one of the complex systems. Many stakeholders are involved in this supply chain.
Coordinating single platform of these stakeholders is the challenge. The system efficiency
must be achieved by smooth flow of operations on this platform. The paper explores the
operations in this healthcare supply chain materials and information flows across the
players. The supply chain infrastructure enabling efficiency is investigated. The operation
management particularly in hospital is analyzed in depth as it is a point where the supplies
meet the actual demand. Multiple case studies have been conducted at 13 hospitals which
include tertiary hospitals, secondary hospitals and primary hospital. Triangulation
techniques, including interviews, site visiting and document analysis, are employed for data
collection so as to enhance reliability and validity of the study. The study found that this
healthcare supply chain efficiency could be achieved at 2 levels – supply chain level and
firm level. Essentially, it is also found that not only efficiency, but also patient safety are of
their concern.

Keywords: Healthcare supply chain, hospital, operations management

1. INTRODUCTION
Supply chain and logistics management has become increasingly important in recent years
as supply chain perspective has led the industry to see through the process integration from
upstream to downstream (Krichanchai 2015; Chen et al., 2013).
It is involved with integrating 3 key flows across the boundaries of the companies in the
supply chain – product/materials, information, and financials/cash (Stock and Lambert, 2001).
Successful integration or coordination of these 3 flows has produced improved efficiency and
effectiveness for companies. It has been defined as a system of suppliers, manufacturers,
distributors, retailers, and customers where material typically flows downstream from suppliers to
customers and information flow in both directions. Additionally, supply chain management
involves managing a connected series of activities, which is concerned with planning,
coordinating, and controlling movement of materials from supplier to customers (Chandra and
567
 The 7th International Conference on Operations and Supply Chain Management 2016, Phuket Thailand

Kachhal, 2004). The key factors that enabling successful supply chain management include
inventory cost, information, customer service, and collaboration relationships (Coyle et al., 2002).
Generally, healthcare supply chain has a similar core structure to other industries’ supply
chain as it composes of input, process and output. There are material flow and information flow
along the chain (Kritchanchai and Suwandechochai, 2010). Under the concept of supply chain
management, the healthcare merchandise medicine is produced and delivered in the right
quantities, to the right location and at the right time (Krichanchai, 2015). However, Turhan and
Vayvay (2012) state that it is a must in healthcare industry as a cost of error might be someone’s
life. They also mention that healthcare supply chain management differs from other application in
term of key elements as it tends to be misalignment, high costs for healthcare providers and heavy
dependence on third party.
Additionally, healthcare supply chain is unique and differ from other industries. It is a
complex network consisting of many different parties at various stage of the value chain (Rossetti
et al., 2012; Turhan and Vayvay, 2012, Mustaffa and Potter, 2009; Burns et al., 2002).
The stakeholders from the supply side and the demand side have different interest when
operating healthcare supplies. The supplier were driven for profit maximisation while the
healthcare provider focuses more on cost and patient safety (Bhakoo et al., 2012; Krichanchai,
2015). Therefore, it would be a challenge to implement the concept of supply chain management
within healthcare context. Also, expertise states that supply chain management practices of the
healthcare industry are 10 years behinds retail and manufacturing industry (Uthayakumar and
Priyan, 2013).
Also, Gattorna (1998) describes a healthcare business as it is provided by a variety of
product and service enterprises including medical consumables, pharmaceuticals, catering, laundry
cleaning, waste management, home-care products, information technology, vehicle fleet
management and general supply. de Vries (2011) highlights that inventory management is
influenced by these stakeholders who have different perception and interests when setting
inventory policy. Moreover, it is found that healthcare staffs at the hospital operate inventory
management problems without proper guidance and limited knowledge of inventory management
and supply chain practice leads to inefficient operation management (Chen et al., 2013;
Uthayakumar and Priyan, 2013).
Muangchoo and Kritchanchai (2015) found that healthcare supply chain is generally
dominated by manual activities and regulatory pressures, with product data maintained in
fragmented IT systems. In the entire supply chain. Consequently, healthcare organisations related
to patient safety face a number of challenges in supply chain traceability, logistics efficiency and
quality of patient care.
Likewise at the operational level, a research project: Business Architecture Design and
Integrated Performance Measurement for Hospital Supply Chain in Thailand. Kritchanchai (2012)
described that drug manufacturers deliver drugs to healthcare providers (hospital or clinic) then
the pharmacist in the healthcare providers dispenses drugs to patients without sharing medical
information among the stakeholders. Comparing to other industries, product information is visible
to target stakeholders from upstream to downstream.
However, a lack of sharing medical information does not only cause the efficiency in the
healthcare supply chain, or unable to track and trace medical products but also lead to the problem
of patient safety issue.
Moreover, it is also noticed that drug dispensing does not depend on customers or patients'
demands but is driven by clinical treatment. Drug selection is heavily based on the clinical
preference of physician. Without medical training, the patients or end customers do not fully
568
 The 7th International Conference on Operations and Supply Chain Management 2016, Phuket Thailand

understand medical practice and they cannot select appropriate products for themselves. (Pedroso
and Nakano, 2007). Also, there is an interrelationship between patient condition and drug
utilisation. Patient condition impacts drug demand but how patients respond to drugs is also
uncertain (Vila-Parrish et al., 2008). This has a great impaction inventory since the demand is
unpredictable.
A study by Kritchanchai and Meesamut (2015) found that only one inventory policy cannot
apply entire drug items in the hospital. The drug demand characters are various. Applying only
one single policy caused stock shortage or over stock problems. Therefore, inventory policy
should be developed according to drug demand characters (Kritchanchai and Meesamut, 2015).
Additionally, Supeekit et al. (2014) studied internal transportation within the hospital under
limited staffs and transport equipment such as elevators. Demand of the elevator usage is high and
uncertain. Patients and medical physicians struggles the heavy traffic in vertical transportation
within the hospital building especially in the rush hours. It is found that the business process in the
hospital should be re-designed and developed the related information technology.
When patients enter to the hospital, they obtain services, share and use multiple resources
at the same time.
Therefore, it is necessary for the hospital to operate operation and also the flow of patient
efficiently. Zonderland and Boucherie (2012) studied a queuing network in healthcare system. It is
suggested that queuing theory is of value to trade off between patient waiting time and healthcare
provider idle time. They introduced a basic queuing network like a Poisson process and also
presented an exponential queues for the situations that either have a single and multiple servers.
Another major concerns in healthcare is to provide services to patients at low cost and the
patient care should be provided efficiently and timely. Apart from managing patient flow and
material flow within the hospital, nurse scheduling should be well-managed in order to ensure that
nurse is available at the right place and the right time. Lim et al. (2012) studied nurse i obviously
see the actual demand that generated daily while lacking of demand visibility among the upstream
members. This affects to the drug manufacturer and distributors to manage the drug procurement
production and delivery.
From the literature above, IT can be seen that supply side and demand side have different
interest. Moreover product data is on the fragmented It system through the entire supply chain. It
is difficult to visualise product information from upstream to downstream. On the other hand, the
demand in hospital is very uncertain, one inventory policy cannot apply to entire drug items in the
hospital. Transportation is another area. The challenge at this operational level is to manage
limited staffs and transportation resources. Likewise, patient queuing and nurse scheduling are
also critical.

2. THEORITICAL FOUNDATION
A supply chain is an extended enterprise that crosses over the boundaries of individual
firms to span the logistics related activities of all the companies involved in the supply chain. At
the firms level, supply chain is the system relationship among transportation, inventory
requirement, warehousing, exterior packaging, material handling and some other activities was
recognized (Coyle et al, 2003).

Sourcing Inbound storage/ Operations Outbound Consumer

Transportation storage/Transportation distribution

569
 The 7th International Conference on Operations and Supply Chain Management 2016, Phuket Thailand

Figure1. Logistics supply chain

Form above, supply chain and logistics management can be analyzed into 2 levels: supply
chain level and operational level. The supply chain level is about material and information
management between stakeholders in the system such as drug procurement from healthcare
provider to suppliers, and drug delivery from suppliers to healthcare supply chain provider. The
operational level is logistics management within the healthcare provider such as drug inventory
management, transportation, queuing and scheduling.

3. AN EXPLORATORY STUDY
The purpose of this stage is to investigate a macro-perspective in supply chain and logistics
management in healthcare in order to how the stakeholders in this chain has considered as a
critical issue for the suppliers and the hospitals to enhance collaborative and integrative supply
chain. There is various reports of supply chain and logistics management in healthcare from
global trend and best practices. We has explored and reviewed case studies from Australia,
Canada, Japan United, Kingdom practices in order to investigate macro-perspective of healthcare
supply chain and related infrastructure in this setting.
In Canada, a system of supply chain standard has been concerned by healthcare institutions
(ISMP, 2013; Canadian Society of Hospital Pharmacists, 2009). Since 2008, that the healthcare
providers and suppliers within Canada’s healthcare gear toward patient safety, optimise supply
chain processes, enable traceability, and maximise the intellectual capital of healthcare
professionals across the country. Members of healthcare industry implemented the use of standard
product identification to connect the supply chain operations nationwide. Pharmaceutical products
are not only identified by barcode on exterior package labels but they are also identified at the
unit-of use packaging, such as ampoules, vials, and blister packs(Canadian Society of Hospital
Pharmacists, 2009). There is a national collaborative effort as the Institute for Safe Medication
Practices Canada (ISMP Canada) and Canadian Patient Safety Institute (CPSI) has worked with
pharmaceutical manufacturer to ensure that the automated identification technology help improve
patient safety in medication dispensing and administration systems as well as benefiting from
enhance efficacies along the entire supply chain (ISMP Canada, 2013; GS1 Canada, 2012).
In Australian health sector, electronic commerce is of their concern (Bhakoo and Chan,
2011, NEHTA, 2016). At the heart of an effective electronic commerce system is a global way to
identify trade items and logistic units. In order to gain unilateral support across the Australian
pharmaceutical/healthcare sector for ‘one standard’ identification system, the Monash Pharmacy
Project team needed to illustrate the benefits, such as accurate inventory management and
increased efficiency, to all industry suppliers (Bhakoo and Chan, 2011). National eHealth
Transition Authority (NEHTA) proved the benefits of application of the system of identification,
bar coding and electronic messaging in the areas of hospital pharmaceutical ordering, picking,
packing, dispatch and receipt of goods. The benefits included a reduction in stock receipt time of
25 per cent at the hospital pharmacy, improved accuracy in order fulfilment, and an embracing of
the new processes and technologies by staff (Bhakoo and Chan, 2011). It is reported (NEHTA,
2016; Bhakoo and Chan, 2011) that The system composes of:
• Identification and bar coding of trade items
• Electronic messaging and improving order fulfilment accuracy
• Data synchronisation via the National Product Catalogue (NPC)
• Future requirements for batch/expiry date tracking

570
 The 7th International Conference on Operations and Supply Chain Management 2016, Phuket Thailand

In Japan, the healthcare stakeholders struggle medical incident and error, and increasing
counterfeit of drugs and medical devices. The solution to solve the problem is implementation of
unique product identification and a single database of master data called MEDIS-DC, The Medical
Information System Development Center, which is registered by manufacturer and shared to target
healthcare providers instead of individual non-compatible Hospital Information System
(Takekuma, 2008). The implementation of global standard and the datapool in Japan provides
several benefits to healthcare stakeholders both suppliers and healthcare providers: the precise data
of actual usage of the instruments, appropriate purchase control, adequate stock management,
Leading to high motivation of the hospital staff (GS1 Japan, 2009; GS1 Japan, 2015).
In United Kingdom, since 2006 the Department of Health (DH) has announced a guideline
document called “Coding for success” which is related to an implementation of Automatic identity
and Data Capture programmed (DH, 2010). To addresses patient safety issues, National Health
System Connecting for Health (NHS CFH) enter into the agreement with GS1 UK issued the
adoption of GS1 coding standard. In addition to coding, it also encourage the manufacturer to
implement GTINs while drive the NHS is to implement effective supply chain technologies. This
objective of this project is to improve patient safety together with greater efficiency in processing
(GS1, 2010). This is also highlight in RAND Europe (2009) report that the implementation of
RFID in healthcare within UK and across Europe country focuses more on enhancing patient
safety rather than, unlikely to the US, cost reduction. Also, the e-commerce has been implemented
within NHS pharmaceutical supply chain. The empirical study presented that five key success
factors for e-commerce are considered including system quality, information quality, management
and use, world wide web-assurance and empathy and trust. However, it has called for e-commerce
performance measure to be used by managers (Cullen and Tayor, 2009).

Table 1. Practices for healthcare supply chain and Logistics in each country
Country Practices

Canada Implement the use of standard product identification to connect supply chain
ration wide.
Australia Implement one standard identification system and data synchronisation
Japan Implement the unique product identification and a single database
UK Announce a guideline called “coding for success” using GS1 standard

According to the case studies, it reveals that healthcare systems around the globe are facing
challenges that affect the entire supply chain, from manufacturers through to wholesalers,
distributors, group purchasing organizations and healthcare providers. Everyone is concerned
primarily with two main issues: increasing supply chain efficiency and, more importantly,
ensuring patient safety.
Standardised healthcare infrastructures are the important way to managing healthcare
supply chain and logistics – increasing visibility and security in the Healthcare supply chain which
are composed of 5 main area.
• Standardised Product and Location Identification (GTIN-Global Trade Identification
Number and GLN-Global Location Number respectively)
• Electronic product catalogues
• eProcurement, enabled by Electronic Data Interchange (EDI)

571
 The 7th International Conference on Operations and Supply Chain Management 2016, Phuket Thailand

• Automatic Identification & Data Capture (AIDC) systems, including barcodes and RFID
• Traceability Systems
Global supply chain standards enable products and information to move accurately,
efficiently and quickly across jurisdictions and borders. GS1 is the world’s leading supply chain
standards organisation. As such, global GS1 standards like barcodes and other automatic product
identifiers enable traceability, efficiency, cost savings and a host of key benefits in various
industries, including healthcare.
As mentioned earlier, this five main infrastructures within the healthcare supply chain are
concerned as it enhances an efficiency process and contributes to patient safety. It is not only a
particular stakeholder gains advantages from this collaboration but it also provides benefits to all
in the entire supply chain. In addition to this, it should not be regardless the operations and service
within the hospital as it is affect directly to healthcare service delivering to the patients. Therefore,
it is important to understand the operations management in hospital setting.

4. AN EMPIRICAL STUDY
The objective of this stage is to explore an operational level or micro-perspective within
the hospitals as a healthcare providers. The reason that we employ this in-depth case study at the
hospital as it is a point where supplies meet demand (Krichanchai, 2015). Improving an
operational at the hospital has a huge impact on both supply chain performance and quality of care
for the patients (Ebel et al., 2013).
Also, it is noted that the multiple case studies can provide the external validity and create
more testable theory than a single case (Barratt et al., 2011). Multiple case studies were conducted
at 13 hospitals which includes tertiary hospitals, secondary hospitals, primary hospital and private
hospitals. The hospital cases were selected based on theoretical sampling in order to present
similar results or show differences and diversities among case studies (Yin, 2013). The brief
description of case studies was presented in Table 2. The cases were conducted at both public and
private hospitals. The first ten of the thirteen cases were the public hospitals which can be divided
into 3 types-primary, secondary and tertiary, based on the size of the hospital and the
characteristics of healthcare service. The least of the cases were conducted at the private hospitals.
Semi-structures interview were used as a primary data collection approach. The interview
respondents were either head of pharmacists or pharmacists with 5 years of experience who were
responsible for managing inventory at the hospital. Also, triangulation techniques, including
interviews, site visit and document analysis, are employed for data collection so as to enhance
reliability and validity of the study.
The data collection process was directed by the interview guide in order to ensure that
same questions were asked and all the related issues have been covered. The interview guide was
developed in Thai version and it was reviewed by the supply chain management expertise. The
initial contact was made via telephone and email. The meeting took place at the hospital and a part
of meeting was a site visiting if applicable. Time spent on each meeting and site-visiting around 2-
3 hours. Sometimes phone interview were required in order to get additional information.
Notetaking and recording were employed during the interview. The record was later transcribed
and the data was analyzed based on the theme of the research.

Table 2. Exploratory studies

General data
Case Name
Type of Location Patient Beds Drugs

572
 The 7th International Conference on Operations and Supply Chain Management 2016, Phuket Thailand

hospital (Province) per day (SKU)

1 Phuttamontol Primary Nakornpathom 300 30 360
2 Bangyai Primary Nonthaburi 400 30 400
3 Bangbuatong Primary Nonthaburi 500 150 450
4 Sawee Primary Chumphon 400 60 400
5 Banphaeo Secondary Samutsakhon 970 500 1,700
6 Pranangklao Secondary Nonthaburi 2200 515 1,149
7 Ramathibodi Tertiary Bangkok 3700 1,029 >2,000
8 Nakornpratom Tertiary Nakornpathom 1,500 879 >1,000
9 Chaoprayayommaraj Tertiary Suphanburi 1,600 780 2,000
King Chulalongkorn Bangkok 1,346
10 Tertiary 4,000 >2,000
Memorial Hospital
11 Nontavej Private Nonthaburi 1,000 200 1,800
12 Chaophya Private Bangkok 800 200 2,000
Kasemraj Bangkok
13 Private 1,477 237 1,732
(Prachachuen)

4.1 Case Studies in operations and services of healthcare supply chain and logistics
From the hospital perspective, we see a similar pattern of hospital operations. Generally,
the operations insides the hospital can be analyzed into 3 aspects-the structure of nodes and links,
Information management and material flow management. This is illustrated in Figure 1.
Firstly, within the hospital, there is an interconnecting among healthcare staffs within
various rooms, wards, and departments in order to sharing information, resources and materials
that necessary to provide healthcare service. The complexity of hospital operation is different
among various types of hospital that we conduct the case studies. However, we can simplify the
structure of hospital operations into 2 constitutes-Nodes and Links. Nodes can be either an origin
station, in which an information is generated or a material is delivered, or a terminated station, in
which an information or a material is received. An origin station or a terminated station can be a
ward, a storeroom, a warehouse and a department even somewhere else in the hospital. In term of
link, it is an activity that enhance the flow of information or material in which interconnecting
between two nodes. Given an example, the hospital typically has a warehouse where medicines are
kept once they are received from the supplier and the storeroom where medicines are located
before being prescribes to patients. A warehouse and a storeroom can be defined as a node. A link
is an activity including ordering process from the storeroom to the warehouse, distributing process
from the warehouse to the storeroom and information sharing between both nodes.
It is noticed that all of the case studies have very similar characteristics and locations of
these nodes and links. They put effort to manage resource in the nodes. Resource management
such as staff utilisation, inventory management are critical. On the other hand, to manage the links
in hospital, they focus on facilitating working flow processes between nodes network. Information
sharing and network flow management are targeted.

573
 The 7th International Conference on Operations and Supply Chain Management 2016, Phuket Thailand

Figure 2. Structure within hospital operations

Secondly, Information management is another aspect that critical for the hospital
operations. Hospital deals with a volume of information which flows simultaneously all day all
night. The larger size hospital, which reflects by the number of patients being served and the
number of beds, is likely to handle a load of information which is greater and more complicated
than the smaller size hospital. Generally speaking, this information can be generalised into two
types which are information that necessary for providing healthcare service and information that
necessary for hospital operations. The first type of information including patient information, lab
results, X-ray films, clinical information. The purpose of this information is directly used for
providing treatment and healthcare service to patients. Another type of information is not directly
related to patients care but it helps support the operations within the hospital. This includes a
status of room, a status of patients, number of medicines in a warehouse. With regardless type of
information, it needs to enhance information sharing and visibility among those who are eligible to
access. For example, patient information is available for doctors, nurse and pharmacist who
responsible for providing treatment to patients. Although, a pharmacist at the warehouse may be
only an authorised pharmacist who can access pharmaceutical purchasing activity, the entire usage
must also be visible.
From case studies, we found that information system and system integration can be defined
into two characteristics: integrated information system and separated information system. For the
first characteristic, it used a single system to operate information within the hospital. This system
is used to operate both information that necessary for healthcare service and operations
management in the hospital. Using this integrated information system help information to flow
smoothly and information is accurate and consistency throughout the processes in the hospital.
Also, the empirical study presented a distinct characteristics between the private and public
hospitals as all private hospitals have an integrated information system while a few public
hospitals operate information via an integrated system. Therefore, this enables the hospital with an
integrated system to operate efficiently and ensure patient safety. Regarding to a separated system,
it is found that some hospitals usually implement two system to manage information: front office
and back office. The front office refers to a node or operation that deal directly with the patients
which include clinics, ward, pharmacy storeroom, emergency department and finance. So, this
system supports the function related medical service, transaction and operations management at
the pharmacy storeroom. The information being operated by the front office system includes
information related to patient care like patient status, scheduling, lab results and patient’s payment.
In addition, the back office refers to any operations that does not related to patient care but
it typically related to hospital operations. This system deal with human resource, resource, hospital
finance, warehouse management and inventory management. Sometimes, this both system are not
574
 The 7th International Conference on Operations and Supply Chain Management 2016, Phuket Thailand

integrated due to the compatibility of the system or the complicated function. Some hospitals like
a primary hospital or a small size hospital sometimes has only a single system to operate the front
office while operates the back office manually. It is found that the separated system can lead to the
problem due to inconsistence information and inaccurate information. Given an example, when the
hospital operates the information related to medicine inventory level, the actual total stock level is
invisible as it can be seen only the inventory level at the warehouse and the storeroom separately.
Interestingly, the hospital gives the patient care as a priority while it regardless any other
operations that does not dealing directly to the medical service even these operations help support
medical service provided by the healthcare staffs. It has been seen that the information related
patient care is consistency and standardised, the information support hospital has not yet been
standardised. Worse, it sometimes use different set of product code in different system as it is used
for different purpose. Lack of consistency and inaccurate data can lead to inefficient hospital
operations and this can negatively affect the patient care as a consequence.
Thirdly, material flow management is another operation that important to healthcare
service. There are various products that are delivered among departments, wards or units within
the hospital including food, clothes, sterile equipment, pharmaceutical medicine, patients and so
on. To classify type of material management and transportation, it can be also classified based on
the responsibility into three types. Firstly, a supply unit delivers material to a service unit. To
illustrate the point, a washing unit delivers clean clothes to wards and patients or central
distributing unit delivers sterile products to dental units. Secondly, a terminal service unit picks up
material at the distributing point; for example, pharmaceutical products and non-pharmaceutical
products can be picked up at the pharmacy storeroom. Thirdly, both service unit and supporting
unit share of responsibility. A service unit collaborates with a supporting unit to managing
material and transportation. For instance, an in-patient ward collects used clothes and delivers to
the collecting point. Then, a washing unit picks up the clothes from the collecting point and being
responsible for cleaning it. Also, it can be classified based on the frequency of delivering service.
For example, food is delivered three times a day while clothes are deliver two times a day.
Storeroom prescribes pharmaceutical products for out-patient and emergency case every day.
However, medical supplies are distributed less frequent as they are prescribed every week.
Common problems related to material flow management within the hospital are that high
service frequency and limited space in the unit. Firstly, it has been identified that various products
are delivered and there is high delivering frequency per day. This is inefficient process especially
when a lift is used as a transporting medium in a high building. This is because it is used for
delivering pharmaceutical, non-pharmaceutical products and patients. The number of lift is limited
and it is capable to support the delivering process during a rush out. This delays a process and
consequently leads to inefficient healthcare service. Moreover, some particular ward or unit may
require large space for holding inventories. For example, operations unit and in-patient ward
typically hold various materials including medicines, sterile products, medical supplies, clothes in
order to stock enough material for one order cycle. However, it is typically found that space in the
ward and unit is not enough to stock materials properly. It can be seen that limited resources
within the hospital affects to delivering process.
Therefore, it is important to classify the material management in the hospital into three
types-patient logistics, pharmaceutical logistics and non-pharmaceutical logistics. It is suggested
that the hospital should be centralised control the logistics activities. It requires a central transport
unit to carry out these three logistics activities. The purpose of this unit is 1) to manage people and
the medium of transportation efficiently and suitable for each task in order to deliver materials as
requesting. 2) to manage delivery lead time efficiently with regards to limited resources in
575
 The 7th International Conference on Operations and Supply Chain Management 2016, Phuket Thailand

hospital. The mission of this unit is to deliver materials to the right place, at the right time, at the
right quantity, in a good quality of material and under the right condition or cost.
Issues at operation level regarding these 3 aspects-node and link, information management
and material management can be illustrated in figure 3

Hospital operation
management

Structure Node & Links Information management Material flow

management

Nodes : origin or Integrated system :

destination a single system which Supply units deliver
which material operate both material to service
and information healthcare service and units
Characteristics Service units pick up
are delivered or operations management
received information in the material from supply
Links : activities hospital units
interconnected Separated system : two Both units share of
between two separated system-front responsibility
nodes office and back office-
which front
Intervention office deals with
Nodes : Resource Set up a centralized
Practices patient service and
management control of logistics
back office deals ith activities
for optimize operations
utilization 1) to manage people
management and the medium of
Links : Smooth
workflow transportation
processes, Standardized, consistent efficiently and suitable
Network and accurate data for inter for each task in order to
optimization, connecting through the deliver materials as
Information systems requesting.
sharing 2) to manage delivery
lead time efficiently
with regards to limited
resources in hospital.

Figure 3. Hospital operation management

5. ANALYSIS AND DISCUSSION

When conducting an investigation of the statement of knowledge in a field, two approaches
have been used. One approach is an exploratory review is employed in which the literatures
related to supply chain and logistics management in healthcare are studied in order to explore the
global trend and best practices. Another approach is to conduct the exploratory case study within
one focal player – hospital, is analyzed in depth. This emphasizes on the operations and services
within the hospital context. This study provides contributions to literature on the subject of
healthcare supply chain. Firstly, the number of literatures regarding healthcare supply chain is still
576
 The 7th International Conference on Operations and Supply Chain Management 2016, Phuket Thailand

limited (Bhakoo et al., 2012; Turhan and Vayvay, 2012; Mustaffa and Potter, 2009). Additionally,
most of previous literatures related to supply chain in healthcare or pharmaceutical product focus
only on a focal point either macro-perspective or micro-perspective. For example some studies
raised a concern on the implementation of a particular application or system at the macro-level
such as e-commerce (Bhakoo and Chan, 2011), RFID (RAND Europe, 2009) and electronic health
record (NEHTA,2016). On the other hand, some emphasis only on the micro-perspective as a
dyadic relationship between the supplier and the hospital (Bhakoo et al., 2012; Mustaffa and
Potter, 2009). However, this study presents both macro-perspective and micros-perspective view
to enhance an integrated healthcare supply chain.
In term of macro-perspective, the explorative reviews present a global best practice and a
major concerning issues which are 5 infrastructures. These include standardised Product and
Location Identification (GTIN-Global Trade Identification Number and GLN-Global Location
Number respectively), Electronic product catalogues, eProcurement, enabled by Electronic Data
Interchange (EDI), Automatic Identification & Data Capture (AIDC) systems, including barcodes
and RFID and Traceability Systems.
At the macro-level, it shows the need for all stakeholders to get an accurate and consistent
information. That is the reason why it is opted for the standardised product code and electronic
product catalogue. This information helps a stakeholder from supply side and demand side to
communicate efficiently. Therefore, this kind of information needs to support both clinical
activities and logistics activities. Also, national standard code may not be sufficient to help
communicate with the stakeholder in the industry. Generally speaking, the stakeholders involve in
the industry are not only a domestic organisation and a local pharmaceutical company but it also
includes multinational pharmaceutical company and international distributor that they are dealing
with. The global standard code are evidenced to be implemented as a medium to communicate
among the stakeholders in the industry (NETAH, 2016; ISMP Canada, 2013).
Moreover, e-procurement is suggested to facilitate the order and demand information
among the stakeholder in the chain. To enhance e-procurement, it is suggested that the supplier
and the customer need to have an integrative system, by using EDI system, which as a
consequence it will be more collaborative than it used to operate the procurement under the
traditional approach. When decide to employ e-procurement process, it means that the customer or
the hospital has to simplify its previous procurement process and shorten administration lead time.
Therefore, procurement process can be operated efficiently and enhance collaborative among
trading partners.
Additionally, when dealing with a volume of information and simultaneously flow of
demand in the healthcare, it will be difficult to operate it manually as doing under a conventional
system. Automatic Identification & Data Capture like barcoding are now suggested in order to
help capturing and collecting information. Typically, this automatic identification is used at the
exterior package. It is used to support the logistics activities since the pharmaceutical
manufacturer, the distributor and through the hospital. However, it has been less concerned and
regardless to implement the barcode at the interior level. Once the medicines are unpacked from
the box or from the pallet, it is difficult to be tracked or trace. So, it is now concerned that the
automated identification system should be employed to operate product at the unit of use so as to
better medication administration.
Regarding to micro-perspective, it should focus on an operation within the hospital. This is
because the hospital is a linkage between the supplier and the actual customer and the healthcare
service or an operation occurs within hospital context. Therefore, if there is anything affect the
operation within the hospital, it would negatively affect the healthcare service and patient safety.
577
 The 7th International Conference on Operations and Supply Chain Management 2016, Phuket Thailand

Within the hospital, it is where the operations occurs and where the healthcare service is
generated to the patients. At the hospital setting, it typically consists of the structure of nodes and
links, information management and material management. Among various type and size of
hospitals, it shows a difference in term of the number of node and links within the hospital and the
complicated process either information management or material management. The larger size of
hospital contributes to a number of nodes or operations within the hospital, the number of
materials and the high volumes of information. It is necessary that the hospital should to enhance
information visibility and an integrative information system within the hospital. Information
visibility not only enables the clinical staffs to make a right decision and provide a right treatments
to the patients, it enables the healthcare staffs that operating supporting activities include queuing
and scheduling system perform an operation efficiency. Regarding the material flow management,
it should be integrated and centralised department should be authorised the logistics activities. Due
to limited resource and a number of materials in the hospital, it should plan and manage the flow
of material properly. This present that even in the operations level at the hospital the concept of
supply chain management should not be regardless. The conceptual framework for macro and
micro perspectives can be summarised in figure 4.

Healthcare Supply Chain

Macro perspective Micro perspective

Data Standard and Logistics efficiency

Data syncrhonisation

Standard product and Node & Links

Location
Synchronisation

Electronic Product Information

Catalogue management

Eprocurement-EDI Material flow

management
Automatic
Identification and Data
capture
Traceability

Figure 4. Macro and Micro Perspective in Healthcare Supply Chain

578
 The 7th International Conference on Operations and Supply Chain Management 2016, Phuket Thailand

6. CONCLUSION
Supply chain and logistics management has become increasingly important in recent years. It has
taken in consideration that a collaboration among stakeholder and an integrative supply chain are
not only provide benefits in term of supply chain performance, it also help improve the healthcare
service providing to patient. As a result, it leads to an efficient process and greater patient safety.
An explorative review of supply chain and logistics management in healthcare provides a clear
picture of the best practices from five countries. It is suggested that five main standardised
infrastructure are of concerns which includes Standardised Product and Location Identification,
Electronic product catalogues, eProcurement, enabled by Electronic Data Interchange (EDI),
Automatic Identification & Data Capture (AIDC) systems, including barcodes and RFID and
Traceability Systems. Apart from this, an explorative studies present an in-depth analysis within a
focal point at the hospital. Within the hospital context, it consist of the structure of nodes and
links, information management and material management. At the micro-perspective, the current
situation in the hospital operation is still fragmented and disintegrated. It is suggested that the
concept of supply chain management should be taken into account. Therefore, it will leads to a
collaborative among nodes and operation within the hospital. It can enhance an integrative
information system and centralised material management. As a consequence, it contributes an
efficient process and patient safety.

7. REFERENCES

Barratt, M., Choi, T.Y. and Li, M. (2011) Qualitative case studies in operations management-
trends, research outcomes and future implications. Journal of Operations
Management 29(4): pp.329-42.
Bhakoo, V. and Chan, C. (2011) Collaborative implementation of e-business process within
the healthcare supply chain: The Monash Pharmacy Project. Supply Chain Management:
An International Journal 16(3): pp.184-193.
Bhakoo, V., Singh, P. and Sohal, A. (2012) Collaborative management of inventory in
Australian hospital supply chains: practices and issues, Supply Chain Management: An
International Journal 17(2): pp.217-230.
Burns, L.R. (2002) The Health Care Value Chain: Producers, Purchasers and Providers,
New York: John Wiley&Sons.
Canadian Society Of Hospital Pharmacists. (2009) Pharmaceutical barcoding: moving
forward in Canada. The Canadian Journal of Hospital Pharmacy 62(4): pp.328-330.
Chandra, C. and Kachhal, S.K. (2004) Managing Health Care Supply Chain: Trends, Issues
and Solutions from a Logistics Perspective. In: Proceeding of the Sixteenth Annual
Society of Health Systems Management Engineering Forum, 20-21 February 2004, United
States.
Chen, D.Q., Preston, D.S. and Xia, W. (2013) Enhancing hospital supply chain performance: A
relational view and empirical test. Journal of Operations Management 31: pp. 391-
408.
Coyle, J., Bardi, E. and Langley, C. (2003). Management of Business Logistics: A Supply Chain ,
7th Edition, South-Western/Thomson Learning, Ohio.
Cullen, A.J. and Taylor, M. (2009). Critical success factors for B2B e-commerce use within
the UK NHS pharmaceutical supply chain. International Journal of Operations &
Production Management. 29(11). Pp.1156-1185.
579
 The 7th International Conference on Operations and Supply Chain Management 2016, Phuket Thailand

de Vries, J. (2011) The shape of inventory systems in health services: A stakeholder

analysis. International Journal of Production Economics 133: pp.60-69.
DH (2010) Reviewing of coding for success implementation. Retrieved from
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/215990/dh_
120722.pdf
Ebel, T., George, K., Larsen, E., Shah, K. and Ungerman, D. (2013). Insights into
pharmaceuticals and medical products: Building new strength in the healthcare supply
chain. New York, NY: McKinsey & company. Retrieved from
http://www.mckinsey.com/industries/healthcare-systems-and-services/our-
insights/strengthening-health-cares-supply-chain-a-five-step-plan.
Gattorna, J. (1998) Strategic supply chain alignment: Best practice in supply chain
management, Gower Publishing Company.
GS1 (2010) GS1 Healthcare Reference book 2010/2016 Retrieve from
http://www.gs1.org/docs/healthcare/GS1_Healthcare_Reference_Book_2010-2011.pdf
GS1 Canada. (2012) Canadian Pharmaceutical Bar Coding Project: Joint Technical
Statement (VersionII) on Pharmaceutical Automated Identification and Product Database
Requirements. Retrieved from https://www.ismp-
canada.org/barcoding/download/JTSv2/JTSv2.pdf
GS1 Japan. (2009) GS1 Healthcare Japan: For the further involvement of Japanese HC
industry. Retrieved from http://www.gs1jp.org/pdf/005.pdf
GS1 Japan. (2015). GS1 Japan Handbook 2015-2016. Retrieved from
http://www.gs1jp.org/2015/pdf/GS1-Handbook_2015-2016.pdf
ISMP Canada. (2013) Canadian Pharmaceutical Barcoding project: Medication Bar Code
System Implementation Planning: a resource guide. Retrieved from https://www.ismp-
canada.org/barcoding/download/ResourceGuide/BarCodingResourceGuideFINAL.pdf
Krichanchai, S. (2015) Investigating the feasibility of vendor managed inventory approaches
in hospital pharmaceutical supply chains. Doctoral Thesis, Nottingham University
Business Schoo, University of Nottingham, Nottingham.
Kritchanchai, D. (2012). A Framework in Healthcare Supply Chain Improvement in Thailand.
Operations and Supply Chain Management: an International Journal, 5(2), pp.103 - 113.
Kritchanchai, D. and Meesamut, W. (2015) Developing Inventory Management in Hospital.
International Journal of Supply Chain Management, 4(2): pp. 11-19.
Kritchanchai, D. and Suwandechochai, R. (2010) Supply chain management in health sector
in Thailand: a case study. International Journal Services, Economics and Management,
2(2): pp.211–224.
Lim et al. (2012). Chapter 3: Nurse Scheduling. In: Randolph, H. (Ed.), Handbook of
Healthcare System Schedulling, pp.30-64. New York: Springer.
RAND Europe (2009). Policy options for radio frequency identification (RFID) application in
healthcare; a prospective view: Final report. Retrieved
from http://ec.europa.eu/information_society/newsroom/cf/dae/document.cfm?doc_id=21
46.
Muangchoo, S. and Kritchanchai, D. (2015). National Drug Information Sharing in the
Thailand. Health Care Supply Chain. Therapeutic Innovation & Regulatory Science, 49(6),
920-928.
Mustaffa, N.H. and Potter, A. (2009) Healthcare Supply chain management in Malaysia: a
case study. Supply chain management: An International Journal 14(3): pp. 234-43.
NEHTA (2016). Evolution of eHealth in Australia: Achievements, Lessons, and
580
 The 7th International Conference on Operations and Supply Chain Management 2016, Phuket Thailand

Opportunities. Retrieved from https://www.digitalhealth.gov.au/about-the-

agency/publications/reports/benefit-and-evaluation-reports/1089-evolution-of-ehealth-in-
australia-achievements-lessons-and-opportunities
Rossetti, M.D., Buyurgan, N. and Pohl, E. (2012) Chapter3: Medical Supply Logistics. In:
Randolph, H. (Ed.), Handbook of Healthcare System Schedulling, pp.245-281. New
York: Springer.
Stock, J.R. and Lambert, D.M. (2001). Strategic Logistics Management, 4th ed., McGraw-
Hill Irwin, New York.
Supeekit, T., Somboonwiwat, T., and Kritcharnchai, D. (2014) Causal relationship of supply
chain efficiency and patient safety in measuring internal hospital supply chain
performance applying DEMATEL. In: Proceedings of the 4 th International Conference on
Computers & Industrial Engineering, Istanbul Turkey, 14 – 16 October
Pedroso, M.C., and Nakano, D. (2009) Knowledge and information flows in supply
chains: A study on pharmaceutical companies. International Journal of Production
Economics 122: pp.367-384
Takekuma, R. (2008) Database of prescription drugs and medical devices in Japan. Retrieve
from http://www.gs1.org/sites/default/files/docs/healthcare/events/281008/14_MEDIS-
DC_Takekuma_281008.pdf
Turhan, S.N. and Vayvay, O. (2012) A non traditional vendor managed inventory: a
service oriented based supply chain modeling in health service. In: Proceeding of
the 2012 International Conference on Industrial Engineering and Operation
Management, 3-6 July, 2012, Turkey
Uthayakumar, R. and Priyan, S. (2013) Pharmaceutical supply chain and inventory
management strategies: Optimization for a pharmaceutical company and a hospital.
Operations Research for Health Care. 2: pp.52-64
Vila-Parrish, A.R., Ivy, J.S. and King, R.E. (2008) A simulation-based approach for
inventory modeling for perishable pharmaceutical. In WSM. Proceedings of the 2008
Winter Simulation Conference. 7-10 December 2008, Miami, USA.
Zonderland, M.E. and Boucherie, R. J. (2012) Chapter 9: Queuing Networks in Healthcare
Systems. In: Randolph, H. (Ed.), Handbook of Healthcare System Schedulling,
pp.201-243. New York: Springer.

581