Gaining Control Over Rising Complexity, Costs, and Regulation in the Healthcare and Pharmaceutical Supply Chain

The Healthcare industry has an increasing number of challenges which are inhibiting growth and profits. Most healthcare leaders know that agility and aligning resources to meet demand are key to combating disruptions and exploiting new technologies, but few have a strategy for achieving this objective.

The cost of supply chain complexity is high. The industry, across its participants, including patients, doctors, hospitals, group purchasing organizations (GPO), and healthcare suppliers, are affected. Some examples of challenges to address the priorities and satisfaction of patients include:

Challenges Faced by Hospitals

  • Hospitals over-procure 20-30% of their moveable assets.1
  • The budgets for medical supplies and equipment (which represent as much as 30%)2 and labor costs to operating the supply chain (close to 20%) are rising.
  • Nurses spend more than 6% of their working time to manage supplies.3 Frontline clinicians spend five hours a week on supply chain tasks, including manual counting, searching for supplies, and dealing with supply-related documentation, while department managers are spending nine hours per week. In addition, 81% of procedural department managers surveyed mentioned that their organization had problems with overutilization or wasting supplies.4
  • U.S. hospitals see $5 billion in waste each year from the high-value medical device supply chain alone, with most of the waste attributed to poor inventory management, according to PNC Healthcare.5

Challenges in Providing Quality Patient-Care

  • Supply shortages put economic burdens on the health system, interfered with patient care, and have led to delays in care, cancellation of surgeries, and patient dissatisfaction.6
  • Delays in the operation room (OR) can cost a hospital or ambulatory surgery center millions per year. Stock-outs lead to delays, frustrated patients and higher supply costs.
  • The supply chain must be aligned with patient care, but this has proven extremely difficult to achieve.

There is a great opportunity for the industry to update the way it works with network trading partners and upgrade its processes, to leverage recent innovations in supply chain management. This will enable the industry to maximize quality of care, as well as efficiencies, at every location and every moment in time, throughout the entire system.

One Network’s Resilient Healthcare Network Solution is specifically designed to get companies that serve the healthcare industry up and running fast.

Why One Network Can Enable the Patient-Driven Supply Chain Network in Healthcare

The One Network is a cloud multi-party business network platform with applications and services tailored for the Healthcare Industry and supply chain. The Healthcare industry has identified transformation from current healthcare supply chain models to patient-driven supply chains as a major opportunity to improve patient outcomes and reduce healthcare operations costs. One Network Enterprises (ONE) has developed innovative multi-party shared network solutions focused on automating the continuous alignment of supply and logistics to patient demand to dramatically lower hospital supply administration overhead, improve in-hospital in-stock service levels, decrease IT and operational costs, while also providing benefits to healthcare professionals, suppliers, GPOs, and payers. Attributes of the network include:

  • Shared solution, shared costs, shared reward
  • Shared business networks – hospitals, patients, suppliers, GPOs, carriers, private fleet networks
  • Rapid low risk deployment – one instance of software for all hospital departments and partners
  • Highly extensible – adapts and grows with evolving enterprise needs and emerging technologies

Healthcare Supply Chain Challenges and Opportunities

  • Hospitals over-procure 20-30% of their moveable assets but 69% of providers have to delay care over hospital supply chain shortages.7
  • Each year, hospitals spend billions of dollars to purchase medical supplies and equipment needed to provide quality of health care. These assets are an important and growing part of hospital budgets representing as much as 30%.8
  • The supply chain must be aligned with patient care, requiring multiple dynamic processes where each patient’s unique situation triggers new inputs from various medical professions. In order to improve the efficiency of this complex process, patient information and needs must be properly communicated, and accurately and rapidly disseminated throughout the supply chain.
  • Supply chain management in hospitals must be patient-centric and based on actual demand at the point of care to improve the delivery of health care services
  • Nurses spend a significant portion of their working time to manage supplies, search for misplaced, stolen or lost mobile assets for the specific equipment they need for patient care delivery. Manual supply chain tasks, such as physical counting or documentation, had a negative impact on day to day productivity.9
  • Operating rooms accounts for approximately 40% of total hospital expenses, and generates about 70% of revenue.10 Delays in the OR can cost a hospital or ambulatory surgery center millions of dollars over the course of a year. Stock-outs lead to delays, along with frustrated patients and doctors as well as higher supply costs.
  • Operational failures arose not just from inefficient training (14%) but also from a lack of integration across supply chains (23%).11
  • Nurses may take to removing stock from stocking locations and squirreling away supplies to avoid future stock-outs, resulting in over-stocking, inflating the demand signal to suppliers, and loss of inventory accountability.
  • Hospitals currently lose up to 15% of their assets due to inappropriate and inefficient monitoring procedures.
  • Supply management complexity is increasing as hospitals have more medical device and pharmaceutical options to select from a larger number of suppliers. This increases manual supply chain labor requirements, and results in missed opportunities to provide doctors with better supplies at a reasonable cost that improves patient outcomes.

Supply Chain Network: Benefits for Hospitals

  • Improve hospital supply in-stock performance and eliminate supply shortage impacts on patients.
  • Reduce labor costs in managing the inbound supply chain – automate and optimize supply ordering, forecasting, replenishment, inventory management and transportation.
  • Improve cash flow and supply performance – optimize inventory at all tiers in the supply chain, including at hospitals, warehouses, distribution centers (DC) and Supplier DCs.
  • Streamline hospital logistics deliveries, reduce expedites and reduce transportation costs to support lower inventory buffer levels, reduce supply delivery variance which improves safety stock level optimization.
  • Streamline the reverse flow of medical supplies for refurbishment and recycling

Supply Chain Network: Benefits for Doctors and Patients

  • Improve patient outcomes with adaptive hospital department and doctor specific supply polices.
  • Enhance visibility to manage product recalls.
  • Streamline, automate and decrease the amount of time required to prepare for patient visits.
  • Eliminate stock-outs and provide doctor and patient tailored supply options at the best price.
  • Allow doctors more flexibility to change operation supply menus with confidence that the desired medical suppliers will be available when needed.
  • Gain supply resiliency with proactive mitigation of critical Tier 1 and Tier 2 supply issues, regulatory and environmental events.

Supply Chain Network: Benefits for GPOs

  • Provide more accurate supply demand forecasts to drive better price optimization
  • Get forecasts further into the future tailored by hospital department
  • Link patients to supply to enable better patient outcome analytics and procurement decisions
  • Automate many supply chain processes to serve customers better at a lower cost
  • Differentiate and increase customer value by offering more advanced services to hospital networks
  • Enable larger networks to improve volume pricing

Supply Chain Network: Benefits for Healthcare Suppliers

  • Provide accurate real-time, patient-driven demand signals for each supply tier and supplier site in the network, which aligns production schedules to demand, enables supply optimization and improves supplier on-time and in-full (OTIF) performance.
  • Automate supplier planning and order execution with the healthcare network and GPOs reducing the cost to serve and improve service levels and responsiveness to the hospitals.
  • Automate and optimize reliable direct supplier-to-hospital delivery with third-party carrier networks.
  • Enable high speed same-day and next-day delivery on dynamic micro logistics networks to serve emergency or unexpected hospital situations.
  • Decrease the frequency and cost of expediting
  • Reduce global and domestic transportation costs and improve pickup and delivery reliability
  • Block security risk components from entering the supply chain – eliminate counterfeit leakage

Our services and modules are built on industry-tuned cores that are designed to embrace Healthcare industry-specific nuances across workflows, algorithms, machine learning, planning, transaction flows, data models, alerting, KPIs, and reports. ONE provides a full aPaaS platform with multi-party enabled development tools and over 1000 public APIs that allow IT and third parties to tailor existing, or build new sophisticated, network applications.

One Network’s platform and solutions are transforming industries. Our platform uses the vast amount of network data across different industries to train artificial intelligence agents via machine learning to make and execute automated decisions and coordinate multiple parties. It does all this on a single version of the truth (SVOT) on private, scalable, multi-party ledgers.

One Network Enterprises has been recognized as a Leader in Gartner’s Magic Quadrant for Multi-enterprise Supply Chain Business Networks. ONE is also rated as the Leader by Nucleus Research in the Control Tower Technology Value Matrix for the fourth consecutive year.

One Network increases resiliency to patient demand fluctuations, supply partner issues, and environmental changes.

The Network Benefit is Enormous

  • Automate hospital, distributor and suppliers supply chain processes
  • Reduce hospital inventory stockout to near zero
  • Reduce network-wide inventory by 10% to 30%
  • Improve resiliency for robust business continuity
  • Improve logistics utilization by 2% to 5%
  • Enable precision delivery of critical supplies to hospitals and for patient homecare
  • Enable reverse logistics and sustainability

Create Digital Healthcare Trading Communities

One Network provides a unique multi-party network platform that allows companies to make instant virtual connections on the network. Companies join the Network and manage one company node instance regardless of the number or types of partner connections. Once on the Network companies can search, invite and connect to other companies on the network virtually, using the ONE permissions model to control the partner relationships in terms of shared visibility, collaboration, execution and collaborative planning. Master data is mapped and cross-referenced automatically when connections are made between parties. In addition, parties can create micro communities between multiple companies to optimize network dimensions that involve those parties. Network hub instances can choose to share application capabilities and data with their partners.

The One Network platform is designed to allow each party to create communities quickly using trusted connections with both trusted and “un-trusted” partners with precise and configurable control over information sharing. Network partnerships must be accepted by all parties entering into a bilateral or multi-party micro-network community. Partnerships are categorized and created in the context of business processes such as any combination of visibility, shared planning or shared execution (workflows, order management, process controls) including demand planning (hospital department forecasting, events, and patient appointment schedules), point of consumption visibility, order management, fulfillment, transportation planning, delivery, supply planning, replenishment, inventory, allocation, production, chain of custody, recall, returns, procurement, invoicing, and claims. Types of partnerships can be tailored and customized using the ONE aPaaS multi-party network development tools.

Multi-Party Permissions Give You Control Over All Dimensions of the Platform

The ONE platform and network functions are all controlled with patented multi-party permissions algorithms. These algorithms control everything from the development tools on the aPaaS layer, to how data is stored, to workflow branching, to the GUI, cloud to cloud, cloud to mobile, cloud to internal IT network data transfers, and data mapping. Geo permissions and general permissions also apply to physical models such as Network bills of materials (BOM) physical supply chain entities (sites and lanes). This allows multiple parties to maintain the segments of master data that represent the real world such as Network Bills of Material (BOM), supply and logistics models, catalogs, capacities, stores, store areas, warehouse sites, warehouse bays, production sites, and production lines.

A Multi-Party Master Data Model is Foundational to Healthcare Networks

The permissions model applies to both the community master data and connectivity and cross-referencing across model dimensions. Companies map their master data once into the ONE data model, with incremental bidirectional synchronization as needed. When partnerships are created or parties engage, ONE dynamically maps the master data between each party’s models to enable each party to see the world through their master data perspective. Compare this with the legacy point-to-point solutions which are costly and error-prone, where mapping is required for legacy single enterprise B2B software solutions.

One Network’s capability is invaluable for efficiently enabling large, fast-changing healthcare networks. For example, if you have thousands of suppliers, many providers and hospitals, and you desire forecast and sales visibility, or some form of shared planning and execution capability, it is not practical to cross-reference, pair-by-pair, each party’s master part, catalog, and packaging data into your company’s model. Instead. ONE uses a standard on-boarding process that each party goes through, which includes tools for each party to map and load their models to One Network’s canonical models. Once this is done the cross-referencing and mapping is performed automatically and continuously based on the types of partnerships that are established between the parties on the healthcare network.

Intelligent Control Towers for Healthcare Supply Chain Networks

One Network provides Supply Chain Control Tower functionality organized into three logical layers:

  1. Visibility Control Towers
  2. Autonomous and Semi-Autonomous Control Towers
  3. Strategic Multi-Party Healthcare Network Planning & Optimization

These layers operate across any combination or slice of:

  1. Multi-Tier Inbound Medical Supply Networks
  2. Multi-Tier Warehouse to Hospital and Clinic Distribution Networks
  3. Internal Hospital Inventory Management Processes

Each Control Tower layer builds on the other, providing a transformational path to automation and dramatic improvements in healthcare network performance. Each is designed to be used by multiple organizations and operate across any number of internal hospital and medical supplier IT systems connected to the Network.

Medical and Pharmaceutical Asset Tracking, Chain of Custody, and Track and Trace

Detailed serialized lifecycle tracking of pharmaceuticals and medical supplies from manufacturing through to patient care and patient outcome monitoring is becoming more important as value-based healthcare becomes an important goal for healthcare networks. Asset tracking includes serialized asset tracking, associated accessories, associated documents, hardware tracking, equipment, device and drug usage, performance and patient outcome history. As assets flow through the production, transportation and patient care networks, all key events, including transactions, order and shipment associations, environmental conditions, lot-level expiration tracking, custody transfers, ownership transfers, proof of delivery, physical locations, and packaging are tracked with supporting traceability, alerting and patient care services.

Autonomous Medical Supply Forecasting, Ordering and Hospital Supply Replenishment

One Network’s Platform is designed to optimize processes that span hospitals, supply, logistics and warehouse distribution networks, unlocking tremendous value that is not achievable with single enterprise systems strung together by ad hoc B2B connections and manual B2B or internal Hospital Department-to-Department (D2D) processes. Our solutions are focused on bringing continuity, alignment and optimization between traditionally siloed solutions and processes. Planning and AI agents run in parallel directly on transaction streams across corporate boundaries, enabling fast response to unexpected conditions and automating everyday decisions that drive continuous improvements. This allows different types of agents to make or recommend decisions and, in near real-time, create or modify transactions and objects across any combination of parties tied into the healthcare network.

Operational Kitting

The hospital processes where One Network can help drive improvements through operational kitting include:

  • Kitting of supplies and direct delivery execution to hospitals from distributors or any DC (or multiple DCs) to fulfill patient engagements based on patient schedules and P-Cards, which are the physician defined supply/item sets required for each patient engagement.
  • Kitting of supplies within the hospital to ensure supplies are available during doctor-patient engagements (also based on patient schedules and P-Cards).

With the following information, One Network can generate a kind of profile (predictive analytics) to better predict demand. In addition, ONE can identify P-Cards that need to be updated and even recommend the likely usage of items by P-Card. ONE leverages the following categories of information:

  • Operations kit usage to track what items are used and which ones are not used at the hospital for each patient engagement
  • Serialization item tracking for critical items on kits
  • Supply item usage tracking by doctor, operation type, patient profile, and operation-patient intervention
  • Hospital stocking point returns

In short, this set of capabilities and related information enables ONE to improve demand forecast accuracy for future supplies by solving the number one demand-side problem with medical and pharmaceutical supply chains, lack of visibility to actual consumption and a false picture of demand.

Doctors almost always put multiple alternate supplies for items on the P-Cards which drives the Operations Kit Item list. For some items, usually the important and expensive items, the doctors decide shortly before (a few hours) or during the operation which products/items they will use. The unused supply items are returned to the hospital inventory rooms. Hospitals do not usually make a direct connection between what was not used and what was put in the operations kits delivered. This drives low forecast accuracy and false demand profiles for many items including hip and knee implants, for example.

In addition, P-Cards are often not kept up to date with the doctor’s preferences, which causes other staff members who are maintaining the P-Cards to add more supplies to the P-Card, just in case, or the nurses are dispatched during or just before the operation to get the supplies missing from the operation kit instance.

In summary, with access to the hospital patient schedules, along with hospital inventory, operating kits, and operating room to stock location returns, hospitals can leverage One Network to greatly improve on-time in-full (OTIF) deliveries and forecast accuracy.

Patient-Driven Demand-Pull Distribution Networks

Hospitals can allow Suppliers, GPOs and Payers access to point of consumption data to enable autonomous replenishment ordering, inventory optimization, delivery and demand forecasting. Hospitals and Suppliers can engage in shared demand and replenishment planning and share forecast scenarios. With the One Network platform, autonomous AI agents can continuously sense and learn about supply consumption (by hospital, by department, by SKU and by Doctor), replenishment patterns, and tune forecasts (DC forecasts, hospital/clinic forecasts, regional and product group aggregate forecasts), hour-to-hour and day-to-day, considering patient schedules, hospital and regional events, as well as detect and predict hospital supply consumption patterns.

Hospital supply consumption predictions can then be directed by a machine learning driven correlation of patient appointment schedules and patterns, with external environmental information, including seasonality, weather and social media patterns.

Hospitals can also allow partners access to order status, delivery status, order commitments, forecast commitments and delivery ETAs, alerts, predicted late supply, late deliveries, stock-out predictions and associated issue mitigation case status and resolution strategy.

Hospitals collaborate with suppliers and GPOs to approve or adjust shared planning and execution decisions regarding demand forecasting, events, inventory service levels, replenishment plans, order fulfillment and delivery commitments along with carrier transportation timing. Hybrid planning and fulfillment models are supported, including:

  • Supplier to DC or warehouse
  • DC to warehouse
  • DC or warehouse to Hospital
  • warehouse to Patient Home
  • Supplier direct to Hospital
  • Supplier direct to Patient Home

Replenishment and inventory agents continuously adjust replenishment orders to ensure orders are fulfilled on time and to ensure that inventory is positioned optimally across the network. Inventory and replenishment agents can make decisions on where and how much inventory should be stocked at each inventory buffer across internal, Vendor Managed Inventory (VMI) and consigned inventory stocking points. Replenishment agents can also remove the need for hospitals and GPO partners to create orders by leveraging predicted consumption, sales, and pickup/delivery schedules to automatically create hospital and DC orders.

Replenishment, inventory and order fulfillment planning agents consider projected inbound supply, carrier pickup and delivery schedules or available fleet capacity (captive and/or on-demand) on the network to ensure feasible delivery commitments. Inventory levels are adjusted based on service levels, real transportation times, carrier appointment schedules, and service level targets. Alternatively, inventory stocking levels and order fulfillment times are optimized based on flexible delivery scheduling based on real-time carrier availability and fleet capacity. Carriers see real-time changes to order commitments, scheduled pickup and delivery times, and recommended loading instructions. Carriers can also collaborate via soft appointment scheduling which in turn is reflected in adjusted order fulfillment and delivery timing.

Patient Demand Driven Supply and Production Networks

Patient demand is continuously translated across each tier and site in the Network providing real-time visibility shaped by real patient demand for each hospital. Demand propagation across the supply network considers the current end patient schedules, inventory, production schedules, in-transit supply, supply commitments, Network BOMs, new product introductions, product succession, carrier pickup and delivery schedules, and the transportation network between sites. This provides each site (across n-tiers) with accurate real-time demand visibility, as permitted by the network relationships each party has agreed to, at each site, upstream and downstream to the patient.

Supply planning agents generate procurement orders, order forecasts, Supply Chain model constraints, and time-phased capacity contract parameters. Digital learning, planning and execution agents consider purchase orders, order commitments, transport orders, production orders, replenishment orders, carrier capacity, and carrier pickup and delivery schedules. Supply chain partners can use the same shared applications and shared “single version of the truth” (SVOT) to collaboratively plan and approve or override agent-generated order and forecast commit dates, production order schedules, procurement order schedules, and shipping schedules.

Constrained site supply plans, driven by doctor-patient schedules and hospital department forecasts, are continuously matched to demand, at both hospital site and aggregate hospital site clusters. Demand plans and orders are used to generate pull signals to direct the propagation of supply through the network to the most appropriate warehouse, DC, and post postponement buffer locations down to the hospital or clinic sites. Channel allocation can be used to reserve and direct supply to regions of the network. Allocated supply is in turn used to promise order deliveries to hospitals and regional DCs.

Execution agents continually monitor plans (demand, supply, transportation, patient schedules), create and adjust execution orders, plans and schedules, to direct all parties to achieve the target plans. This includes order fulfillment commitments, production, procurement, allocation, inventory staging and rebalancing, domestic and global transportation, patient or hospital device service and equipment maintenance schedules.

Replenishment agents monitor demand, carrier pickup and delivery schedules, inbound and outbound supply, projected stock-outs, inventory buffers to automatically generate optimal replenishment orders between sites anywhere in the network including to hospital and patient home sites. A range of replenishment and inventory policies can be defined by individual inventory buffer or recommended and tuned by machine learning agents on local hospital subnets.

At each tier and each site in the network intelligent agents monitor inbound and outbound supply plans, forecasts, pickup and delivery history, actual transportation timing, lead time variances, demand variances, to recommend or continuously adjust replenishment and inventory policies and policy parameters.

Continuous multi-tier tactical planning and automated execution agents can automatically create and adjust procurement and production orders, transportation orders, shipping and loading instructions, and pickup and delivery carrier appointments. Planning agents continuously monitor execution streams in real time to adjust plans and respond to changing conditions, including predicted disease outbreaks, weather impacts on-site capacity, transport lanes, cancelled orders, seasonal and unexpected patient demand fluctuations, and more.

Here are some examples of the types of automated decisions that intelligent agents can make or recommend for approval before execution:

  1. When, how much and where to procure
  2. Automated order expediting, aggregation, and consolidation
  3. Decide how (e.g. by which transport lane or mode) and when to move product from site to site
  4. Schedule movement of supplies from site to site directly with carriers
  5. Pickup and delivery-aware last-minute allocation of supply to site or hospital orders in cases of supply shortage

Collaborating to Optimize Shared and Internal Decisions

All decisions made by automated agents in One Network’s solutions are tracked and visible, as well as the reasons behind each decision. Users can use the “workbenches” to control which types of decisions are executed automatically and which require user approval before being executed on the Network. Sample workbenches include:

  1. Buyer/Procurement Workbench
  2. Transportation Planning and Execution Workbench
  3. Supply/Demand Planning and Allocation Workbench

In summary, the One Network Platform is designed to simultaneously optimize and automate healthcare business networks and hospital supply management processes, delivering unprecedented value to all parties participating on the Network.

The Path Forward with a Dual Platform Strategy

One Network’s platform is a unique “Tunable System of Control” for business planning and execution across multiple parties and systems, leveraging new network technology while empowering legacy systems, to deliver optimal results fast. This enables your team to assign system-of-record responsibility to each state and action in the Network process — either to the ONE business network platform or a legacy application. It’s your choice, and the ONE platform enables you to manage end-to-end processes, even as designated steps are still processed by your legacy systems.

We call this a “Dual Platform Strategy”, where your business network platform actually becomes the primary platform for planning and operations, and legacy technologies become bolt-ons to the Network for financial processing.

With One Network, the financially related inputs and outputs of business transactions easily flow from the cloud to the financial modules of your legacy ERP systems. Whether you are working to eliminate technology silos or collaborate more closely with logistics service providers, the Dual Platform approach ensures that your daily, weekly, and monthly effort is focused on your organization’s most important execution objectives, and is done in the most efficient way.

Thus, the Dual Platform approach solves three major problems:

  • How to improve the patient-driven supply chain performance and cost structure in today’s environment
  • How to eliminate the tremendous costs of maintaining and migrating the current legacy system landscape
  • How to achieve advanced business network performance across multiple technology silos in supply chain management

In summary, a dual platform strategy enables you to leverage legacy systems without wasting prior investments – while dramatically advancing your capabilities and decision-making with a business network platform.

1 McGinness & Rideout, 2007 and ABI Research, “The Current State of Global Healthcare Wi-Fi Market Size, Segmentation, and Forecasts”, Q3 2009.
2 “Hospital Supply Expenses: An Important Ingredient in Health Services”, Abdulsalam and Schneller, and “Hospitals could save about $10 million a year
in supply chain, study finds”, Morse.
3 “Designed for Workarounds: A Qualitative Study of the Causes of Operational Failures in Hospitals”, Tucker, Heisler, and Janisse.
4 Cardinal Health Supply Chain Survey Fielded January 16-28, 2019.
5 PNC Healthcare; GHX quantitative research study, August 2011.
6 “The impacts of medication shortages on patient outcomes: A scoping review”, Phuong, Penm, Chaar, Oldfield, Moles, and “69% of Providers Delayed Care
Over Hospital Supply Chain Shortages”, LaPointe.
7 ABI Research, “The Current State of Global Healthcare Wi-Fi Market Size, Segmentation, and Forecasts”, Q3 2009, and “69% of Providers Delayed Care Over
Hospital Supply Chain Shortages”, LaPointe .
8 “How Much Do U.S. Hospitals Spend on Medical Supplies?”, Abdulsalam and Schneller, and “Top Hospitals by Medical & Linens Supply Costs”.
9 Cardinal Health Supply Chain Survey Fielded January 16-28, 2019.
10 “OR costs: Labor vs materials”, OpenAnesthesia.
11 Tucker, Heisler, & Janisse, 2013.