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Executive and professional education


Supply chain management, usually associated with manufacturing, can address inefficiencies in healthcare, argue a team from Cambridge Judge Business School.

Houyuan Jiang, Feryal Erhun and Lidia Betcheva.
Dr Houyuan Jiang, Professor Feryal Erhun and PhD candidate Lidia Betcheva

The term “supply chain management” (SCM) is
often associated with physical goods – think of carmakers and their lean
manufacturing environments.

It is more challenging to conceptualise this
management philosophy for service sectors. Yet, by applying supply chain
thinking, managers can uncover, quantify, and address inefficiencies that
cripple healthcare ecosystems around the world, according to a research team
from Cambridge Judge Business School.

The Cambridge Judge team – PhD candidate Lidia Betcheva, Feryal Erhun, Professor of Operations & Technology Management, and Dr Houyuan Jiang, Reader in Management Science, has worked for the past year on how tailored application of supply chain thinking to healthcare can improve care quality while reducing costs and enhancing the experience of patients, carers and providers.

A rising and ageing global population coupled with
many people living with multiple health conditions creates serious clinical,
operational and financial challenges in the healthcare sector. Thus, the
authors conclude, how healthcare supply chains are designed, operated and
managed carries importance for individuals’ and populations’ health status, life
expectancy and quality of life.

Their findings are outlined in a book chapter, “Healthcare
Supply Chains”, to be published in the Oxford Handbook of Supply Chain
forthcoming from the Oxford University Press.

supply chain management in healthcare has commonly been associated with
procurement and logistics of healthcare supplies and services. Yet the authors
emphasise that there are actually a number of
supply chains in healthcare – capturing stakeholders, processes, information,
finance, products and services, and interactions ranging from care delivery and
drug development to organ transplantation and workforce management.

So the research team identifies several categories of
supply chains within this broad ecosystem, concluding that the efficiency of all
these categories could benefit from supply chain thinking – which requires a
customer focus, a holistic view of the system and its interactions, and
alignment of stakeholder and system incentives.

Lidia, Feryal and Houyuan discuss two particular healthcare
categories that could benefit from application of supply chain management:

Lidia Betcheva: “The health
services supply chain includes medical, community and social care along with
supply and equipment management. It is burdened with inefficiencies such as bed
blocking, when patients who need to be admitted to the hospital occupy limited
A&E beds due to bed unavailability in wards, as well as delayed transfer of
care, when patients stay in the hospital for excessive periods of time due to
the lack of spaces in community and social care.”

Feryal Erhun: “This reflects
how health services supply chains are prone to care fragmentation, which
threatens health outcomes, patient experience, and continuity of care. A more holistic
view of the care ecosystem, with greater customer focus and strategic
orientation, can help improve timely patient flow through supply chain thinking.”

Houyuan Jiang: “Another
inefficient supply chain category captures special services such as organ
transplantations. Each year, hundreds of thousands of patients around the world
wait for organs such as hearts, kidneys and livers, but only a fraction are
lucky enough to undergo transplantation. There are notable challenges in this
supply chain: supply is significantly lower than demand due to donor shortage;
organs from deceased donors are perishable and cannot be stored for long
periods of time; and donated organs need to be matched to patients based on
many factors such as blood type, body size, and patient availability.”

Lidia Betcheva: “Supply chain
thinking could offer better solutions in this area through process innovation,
which borrows from queueing theory. For example, OrganJet in the United States uses
affordable jet services to bring patients to organs rather than organs to
patients – which better addresses the
mismatch between supply and demand across regions.”