Information Systems Supply Inventory and Supplier Relations

Posted: March 27th, 2020

Information Systems Supply Inventory and Supplier Relations

Student’s Name

Institutional Affiliation

Information Systems Supply Inventory and Supplier Relations

Supply Inventory

            The contemporary business scene has introduced people to the concept of electronic commerce and technology. Most organizations have incorporated technological facets into their operations owing to derived advantages such as flexible payments, practical purchases, and the management of clients, suppliers, and inventory. The healthcare sector is one of the areas that have adopted information technology. The segment uses technology to measure the supply chain costs and to evaluate whether the organization is making any advancement. Therefore, today’s healthcare leaders need to have a better understanding of expenses associated with the distribution platform through the integration and automation of the supply chain. Institutions need to measure strategic supply chain costs over specific periods with an objective of increasing the level of accountability among institutions. While it increases accountability in handling the charges, information technology is also essential in enabling relationships between suppliers and the organization. Information systems are critical in supporting supply inventory and supplier relations within the healthcare sector.

            Supply inventory is a stock of the available goods required to run the hospital. Hospitals deal with countless forms of merchandise that include surgical equipment, sanitary equipment, and company assets (Bhakoo, Singh, & Sohal, 2012). These facilities spend a significant part of their current assets and working capital to invest in inventory. Therefore, a strategic approach is required if the hospital is to ensure that it does not incur a loss. Supplier inventory control and management may be active through the implementation of information technology components. For instance, institutions have used Enterprise Resource Planning (ERP) systems to acquire a comprehensive understanding of the financial, inventory, and other pertinent systems through access from a single database (Bhakoo et al., 2012). The process will ensure that the stock is availed in sufficient quantity, minimizing the investment. It is also possible to ascertain quality through improving patient safety.

            Hospitals have enhanced supply chain management that employs the economic order quantity technique to manage their inventory. The pharmacy section is among the areas that handle a variety of suppliers as well as merchandise. For instance, a hospital pharmacy may possess more than 5,000 different items from intravenous catheters to topical lotions. Such products tend to vary based on cost, volume, weight, and storage requirements making it difficult to track and account for manually. Expenses associated with pharmacy inventory management contribute primarily to the total operating charges (Bhakoo et al., 2012). Consequently, economic order quantity ensures that the institution calculates the essential components used in the pharmacy providing an estimate of the most common and utilized equipment that the department should restock. The sole aim of the respective measure is to take advantage of the value and decrease the expenses of the commodities. The approach ascertains a balance between inventory carrying cost and procurement cost.

            ABC analysis, also known as Selective Inventory Control, is an inventory management technique that categorizes stock based on the control aspect. It incorporates three dimensions such as “A” to imply large investment items, “B” to imply less firmly controlled items and “C” to imply reduced investment with a large number of items. An organization incorporates ABC analysis into information technology systems to control the amount of supplier inventory within its constituent institutions. For instance, the Pharmacy Store of Veterinary Hospital in Yogyakarta, Indonesia uses ABC analysis to account for its stock within its offices (Fitriana, Satria, & Setiawan, 2018). The institution understands that inventories are not of equal value warranting the need for grouping. FSN Analysis is an inventory management system used within hospitals to classify items based on the usage frequency. The measure categorizes the products using fast moving, slow moving, and non-moving dimensions. The categorization ensures the integration of consistency in upstream and downstream supplier exchanges and client demands.

            Radio Frequency Identification (RFID) technology is among the information technology systems that have been employed in various supplier and health institutions to track their goods and assets. This form of technology uses radio waves to achieve communication between a tag and a reading device. The tag often consists of a microchip that is attached to an antenna and capable of reading information and writing data. Hospitals use RFID technology to track their assets such as machinery used for necessary procedures. For instance, the North York General Hospital in Toronto was one of the institutions to launch restocking medication trays using RFID technology (Rolko & Chan, 2015). The hospital integrated various information systems, notably the Intelliguard Kit and Tray Management System, which improved accuracy and restocking speed. In other cases, tags possessing RFID technology often highlight the shape, size, color, and manufacturing detail of any equipment used within the hospital. Institutions use these features because they own unique identification codes, and can tag numerous products simultaneously.

            Supply inventory has been tracked using barcodes and scanners. The methods have been applied significantly in various areas because of their feasibility and efficiency during the traditional epoch. The codes exist in machine language and institutions can use them to track goods at different levels within the supply chain. These elements usually possess a laser, linear imager, and 2D area imagers based on the scanned products. Shipped products such as pharmaceutical drugs have stacked barcodes that suppliers issue based on the hospital patient needs. For instance, St. Patrick Hospital in Lake Charles, Louisiana uses barcodes to assess the distribution of medication among patients (Dubin, 2010). Some barcodes possess wireless connectivity components while others can work without tethers to a power station.

Supplier Relations

            An organization creates and maintains its supply relations in several ways. Information technology has provided an opportunity where suppliers and hospitals can build healthy, long-lasting, and beneficial relationships that would accelerate the efficiency of the supply chain. Among the information technology elements that have improved relations is the Electronic Data Interchange technology (EDI). Healthcare EDI provides an opportunity where electronic data trade-off may occur between the institution, care providers, patients, and suppliers. The framework ensures that secure and effective data processing is achieved in case of claims made by any party. Supply chain partners often use EDI technology to carry out stock transactions for the effective running of the hospital. For instance, St James’s Hospital (SJH) in Dublin has extensively used EDI to actualize its proof-of-concept (POC) project with suppliers (Grimson et al., 1998). The objective of the system is to eliminate the conventional paper system and accommodate direct links between financial and clinical operations within the hospital.

            EDI improves supplier relations by ensuring that suppliers can access useful institutional needs on the computer or database systems to enhance transaction flow. Transactions carried out through EDI technology strengthen claims and benefits processes in case of any inconsistency as it acts as a point of reference for suppliers. Institutions augment supplier relations through guaranteeing that they deal with only those organizations that meet the requirements set by the Health Insurance Portability and Accountability Act (HIPAA). Standardization improves the accuracy and efficiency of health information, which is essential in propelling hospital activities (Subramani, 2004). EDI technology is considered secure and cost-effective as information is handled digitally, eliminating the need for any intermediaries. Additionally, it reduces the level of error experienced in manual systems improving the scope and scale of productivity.

            An organization builds supplier relations through open and transparent communication. Communication ensures the smooth flow of information between the hospitals and the suppliers. Among the information systems that enable interaction includes web services. Web services consist of application interfaces that are accessible through internet standard protocols. More often, the web services provide Simple Object Access Protocol (SOAP), Universal Description, and Web Services Description Language (WSDL). For instance, the Cleveland Clinic uses Amazon Web Services (AWS) to trace products that they provide to consumers online. Initially, supplier relationships were created through unique methods that warranted the need for partners to install similar software under the same platforms to communicate and share information (Subramani, 2004). However, an extendable markup language that is availed through web services has allowed hospitals and suppliers to integrate software through the web, further reducing the arduous approach of communication. Such services enable the organizations to transfer intellectual and data capital to supplement their robust supply chains.

            The interoperability of web services in the supply chain process supports business-to-supplier models. The method offers an understanding of the approaches that organizations and suppliers make to communicate and integrate their products. For instance, the pharmaceutical department within the hospital provides medication of different kinds to patients. The hospital needs to manage stock levels within the warehouse to accomplish the issuance of drugs. In this case, the supplier receives a notification once a particular product is out of stock after communication between the pharmacy and the relevant hospital departments (Subramani, 2004). The framework is a typical business-to-business model that is applicable in cases where medication stock is below the appropriate threshold. In such cases, the supplier needs to issue a production run in collaboration with the pharmacy to generate an inventory of the finished goods. Through the web services, the flow of communication can be consistent, and the organization can maintain a high standard of accuracy.

            Information systems promote supplier relationships by ensuring that they make accurate and informed decisions regarding their supply chain. Hospitals need to make informed decisions during the purchase of pharmaceutical and hospital-based goods to deliver quality services to patients. Decision support systems promote the pursuit of appropriate choices that are based on acquired information. Institutions rely on available data and business models regarding goods and services to make rational decisions. For instance, hospitals need to assess and evaluate the products that they procure based on factors such as cost, quality, and availability. Such a decision is often made by determining information in the systems and comparing the suppliers. The measure includes examining the sales figures, projected figures, and current information assets of suppliers (Subramani, 2004). The relationship between suppliers and the hospital is also intensified through electronic commerce. It entails electronic data interchange, image processing, and shared databases regarding the interaction between organizations. Such a system increases relationships between suppliers by providing a background of different clients and additional information such as geographical location. An organization can enhance both supply inventory and supply relations through the application of information systems. However, leaders need to recognize the various forms and their uses to create a feasible and effective supply chain.

References

Bhakoo, V., Singh, P., & Sohal, A. (2012). Collaborative management of inventory in Australian hospital supply chains: Practices and issues. Supply Chain Management: An International Journal17(2), 217-230.

Dubin, C. H. (2010). Bar-code scanning at four health care facilities in the US. Pharmacy and Therapeutics35(4), 212.

Fitriana, I., Satria, R. G. D., & Setiawan, D. C. B. (2018). Medicine inventory management by ABC-VED Analysis in the Pharmacy Store of Veterinary Hospital, Yogyakarta, Indonesia. Asian Journal of Animal and Veterinary Advances, 13, 85-90.

Grimson, J., Grimson, W., Berry, D., Stephens, G., Felton, E., Kalra, D., & Weier, O. W. (1998). A CORBA-based integration of distributed electronic healthcare records using the synapses approach. IEEE Transactions on Information Technology in Biomedicine2(3), 124-138.

Rolko, E., & Chan, T. (2015). Implementation of radio frequency identification for medication tray management. The Canadian Journal of Hospital Pharmacy68(5), 412.

Subramani, M. (2004). How do suppliers benefit from information technology use in supply chain relationships? MIS Quarterly, 45-73.

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