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How the cloud will address healthcare’s procurement challenges

The supply chain has been an increasingly important driving force in the healthcare industry’s transformation. During the past decade, the focus on automating supply chain processes has enabled the industry to significantly reduce waste and save billions annually.

In today’s era of declining reimbursements and rising costs, it’s imperative that healthcare continues to make the supply chain a priority and focus on building next-generation supply chain processes.

The cloud enables organizations to re-imagine the supply chain’s potential because they can scale the architecture and processing power as demand dictates. It also enables greater interoperability, as well as enhanced levels of communication among trading partners—challenges that currently hinder critical supply chain processes, such as procurement, from delivering greater value.

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workes on the factory floor making Medical supplies made by Fisher and Paykel heathcare in East Tamaki Auckland ,North Island ,New Zealand , 21/11/07 picture By Brendon O'Hagan/ Bloomberg news

Procurement, in particular, is critical to a well-functioning supply chain. Yet, it’s one of the last supply chain processes to be touched by newer technology. When it comes to procurement, most hospitals still rely on disparate systems, disconnected business processes and inaccurate, unreliable data.

The cloud presents an enormous opportunity to redefine procurement. It can facilitate the move from paper-based procurement to an environment where all product data is online, enabling vendors to become more agile and conduct transactions faster.

Moving to a cloud-based platform eliminates obstacles, such as people and processes, and ensures transactions and shipments happen more smoothly. Imagine the benefits, for example, of speeding the replenishment process or, eventually, a world in which replenishments refill automatically.

Let’s consider how the cloud can address three of today’s common procurement challenges.

Product data. One of greatest challenges in procurement is being able to determine which product is the one that needs to be purchased. To date, the healthcare industry doesn’t have an ideal process for simplifying products and product catalogs. New products enter the market. Others are discontinued. Meanwhile, a robust M&A climate results in changes to product identifiers for both providers and suppliers.

New cloud-based technologies enable visibility, clarity and intelligence to ensure the trading partner community has the right data, can maintain that data and can detect data errors. Buyers can see all products without limitations. In a cloud environment, updates to shared supply chain data are made and errors are fixed in real-time before products are ordered and needed.

Price discrepancy. Price in healthcare is dynamic. Hundreds, if not thousands, of prices change on a monthly basis. The ability to get accurate, updated information is very difficult, making price accuracy one of the most labor-intensive and error-prone issues for healthcare organizations.

Cloud-based technology can create an integrated environment that enables trading partners to communicate and align contract and pricing information electronically in real-time. The cloud provides a common technology platform to automate the contract management process and synchronize pricing data.

Collaboration. Gaining visibility to the right people at the right time within procurement is challenging. That’s because different people are involved at each procurement checkpoint. Who determines when a product needs to be ordered? Who approves or rejects that product request? Are there issues (such as pricing or discontinued products) that will delay the delivery of the product? Was the product received?

With so many (often manual) touch points, the margin for error is great. Cloud-based tools can enable higher and improved levels of collaboration that give providers and suppliers visibility into all transactions and to intervene as necessary.

As organizations further embrace cloud technology to overcome long-standing challenges, it’s possible to imagine how the speed and scale afforded by the cloud will simplify and speed the procurement process.

Today, when a requisition is placed, a buyer must find the product in the supply chain ecosystem. This requires multiple steps as the buyer communicates with warehouses, distributors and manufacturers. In the cloud, the requisition is immediately visible across the trading partner community. This enables buyers to move with greater speed and efficiency, eliminating steps as they determine the best source for the request.

And, when data sits in the cloud instead of on-premise systems, organizations can finally tap the power of data with analytics. For example, the cloud enables suppliers to see not only which products have been ordered and shipped, but also when those products are used. The availability of historical data in real-time will improve demand forecasting in healthcare procurement, allowing suppliers, distributors, group purchasing organizations and health networks to better optimize inventory levels, improve distribution planning and logistics and enhance service levels.

Cloud technology is the future of the healthcare supply chain. It provides the best technology, support, scalability and security at the lowest cost. Today, we are witnessing an exciting inflection point in procurement. New technologies, such as cloud-based ERPs as well as best-in-class procurement solutions, are coming to market and will further improve supply chain processes. The industry is also opening its door to those outside the industry who bring new skillsets and expertise in solving some of healthcare’s more complex operational challenges. All of these changes are necessary and will help healthcare realize the benefits of modern procurement processes.

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