Gareth McFarlane, head of pre-sales, Virtualstock, analyses how the healthcare supply chains work in similar ways to online shopping, and what can be learnt.
Supply chain requirements across healthcare and retail have become ever more similar during the pandemic. Yet, despite healthcare being so important, we are still demanding more from our home shopping experience than our healthcare experience.
Take availability or stock levels. When purchasing products online, if a retailer cannot tell us if it is available, or even confirm when to expect it, we won’t buy it. And yet healthcare procurement professionals routinely operate without this information, sanguinely accepting the risk, even though the impact of that risk is far greater.
It doesn’t need to be this way and there is much that healthcare procurement can learn from recent advancements in retail.
With a product range in the millions, online marketplaces have created a sole destination that consumers can visit for not only a wide choice of product and prices, but also the ability to buy it all in a single purchase. These retailers also present potential add-ons at the point where products are added to the cart, helping the consumer find what they need as efficiently as possible. In fact, many retailers have adapted their business models to meet the demands of heightened competition. To do so, many use a method called drop shipping.
Drop shipping is a way in which sellers can increase product ranges without needing greater storage, more capital to buy the stock, staffing to manage it, and a logistics network to replenish it and deliver to the consumer. Instead, the orders are passed to a wholesaler, a manufacturer, another retailer, or a fulfilment house, and the third-party ships directly to the customer.
Everyone wins. The customer gets everything they need from one location and make one payment, the manufacturer is saved the time and expense of advertising or marketing, whilst the retailer makes a profit on the difference between an item’s wholesale and retail price, just as in a traditional store. And what’s more, there is a blueprint here that the healthcare sector can learn from.
Healthcare is not far behind retail at all in terms of the technology available. The company I work for, Virtualstock, provides The Edge – the e-procurement system used by many leading retailers including Argos, John Lewis and Aldi, all of which successfully scaled up their online presence almost instantly the pandemic hit.
The healthcare version of the platform, The Edge4Health uses the same technology, giving requisitioners a range of features and enabling suppliers to make product information available. It can also offer drop ship information, enabling suppliers and distributors to extend their product range with accurate and enriched data across the end to end supply chain.
The reason that healthcare has not fully embraced this technology and has not evolved its supply chain to the same extent as retail, is because it hasn’t been forced to in the way that the digital revolution impacted the retail sector. The stretched procurement teams in healthcare have been dealing with contract compliance and rolling out internal process changes and stock management systems, as well as many other projects and directives that have consumed their time. Healthcare procurement can be byzantine in its complexity, requiring teams to know about everything from the changes in legislation affecting implantable medical devices to the sweeping changes in tendering requirements being proposed in the government’s latest White Paper.
But as the healthcare industry deals with responding to a crisis that has seriously affected the supply of products, and procurement teams having to be more reactive and to rethink planning the supply chains for routine care, maybe now is the time questions about technology will start to be asked more frequently. Have we got the right systems in place? Where do investments need to be made? Who is best placed to accelerate the change?
For e-commerce, the pandemic forced a lot of learning in a very short space of time. Maybe it’s healthcare’s turn next.
