Overhaul of supply chain will save millions on health care

“There’s no more money!” declared John Warrington, deputy director, policy and research of the UK’s National Health Service (NHS). An acknowledgement that is being echoed around health services across Europe and the reason why supply chains have to tighten and become more efficient, he told delegates at the LogiMed conference held in Brussels last October.

Health care supply chains need to start adopting standardisation, LEAN ways of operating and reduce complexity if they are going to serve the growing needs of the population on declining budgets, a theme reiterated during the conference for the medical device supply chain.

Warrington said that no one in the national health service understands the concept of LEAN thinking. There is too much waste, highlighting that an estimated €950 million can be tied up in consigned stock, which along with lost and out-of-date stock, is written off each year.

Limited sharing of information

“For a world class supply chain we need to have data fed through from point of use. The problem is that there is limited sharing of information. Each link in the supply chain works with its own interests at heart so there is disconnection,” he said. He quoted the UK’s department of health: “We estimate that if health trusts amalgamated small, ad-hoc orders into larger, less frequent ones, rationalise and standardise product choices and strike committed deals across multiple trusts, they could make overall savings of €625m, around 10% of the total consumables expenditure of €5.8bn”.

Warrington said the NHS was expected to save €1.5bn on procurement and the supply chain. “Therefore CEOs and boards of hospital trusts need to adopt procurement as a strategic priority.” While recognising the need for change within the NHS, he said it also had to come from industry. “We cannot achieve the efficiencies needed without a stronger partnership with industry.”

Barcode standardisation required

Tom Pereboom, Head Central Services Amstelland Hospital, the Netherlands, confirmed the lack of standardisation in the industry and the problem this causes in the operating room. “At the moment medical devices can arrive in the surgical theatre labelled with four or five barcodes. Which one should you scan? Which one is compatible with the hospital’s replenishment system?” He said some hospitals stick their own barcode on a product when it enters the hospital just to be sure. He said the sector needs to start adapting standardisation and urged suppliers to share knowledge and the responsibility.

As a member of the GS1 focus group traceability, he described the benefits that can be achieved by using the GS1 Traceability Standard for Healthcare. These include improvements in patient safety, due to fewer errors, and efficiency by reducing inventory levels and obsolete stock as well as the ability to use electronic packing lists, billing and recall procedures.

Barcodes as part of 3PL tender

Jenny Gough, GS1 specialist supply chain development for Mölnlycke Health Care, a leading provider of single-use surgical and wound care products, told delegates that some customers were already asking for GS1 barcodes as part of the tender requirement. Also both the FDA and EU are issuing new regulations whereby all medical devices will need to carry a Unique Device Identifier (UDI).

Having carried out an extensive survey of barcodes in one of the company’s factories and finding that many failed to reach even an ISO standard, she has since implemented a revision of the barcode design and internal processes. Going further Mölnlycke is ensuring that the warehouses are using AIDC for capturing the product information, systems are being prepared for the UDID requirements and that they keep in touch with new technologies, legislation and standards as they develop.

Talk the same language

David Leedam, head of Global e-Commerce of Siemens Healthcare Diagnostics said data standardisation needs an holistic approach, “It’s a way of life, not a strategy. And sometimes you just have go with your instincts and do something, rather than always thinking about ROI.” Standardisation is needed to avoid transcript errors: “One code is needed, from suppliers to wholesalers right through to the patient. If we all talk the same language the whole system will become more efficient,” he said.