Hospital Glove Supply Chain Proposal
Crystal Luterman, Ephraim Hilliard, Farhiyo Abdulsalam, Joshua Abbott, and Tacha Desir
University of Phoenix
February 7, 2011
Michael SizemoreHospital Glove Supply Chin Proposal
Elms Valley SurgiCare Center has been a successful hospital for a number of years. The hospital has often been at the cutting edge of exciting and new technology but as with many other organizations the economy crisis has affected the hospital??™s bottom line. The hospital is looking for any way possible to cut costs. Currently, the gloves are purchased from a local supplier paper writer, but union issues have caused the price of the gloves to rise and have led to many inconsistent deliveries. One way to cut costs would be to use a different supplier for surgical gloves, and the hospital management considers purchasing its gloves from an international supplier, preferably in China. In this proposal, Team D would discuss a materials management plan for the new supply chain as well as how the hospital could use total quality control and financial forecasting to evaluate the supply chain. The proposal would also present and explain the benefits of using just in time and stockpiling supply methods as well as the benefits of applying ERPs in the supply chain.
Materials Requirements Plan
After realizing the hospital was purchasing gloves from a local supplier with high costs and unreliable delivery, it became a necessity to seek new suppliers from an international market such as Richforth Home Products Company in China. Before the hospital breaks into this new market, it must establish materials requirements plan to ensure cost reductions and consistency in the supply chains. However, variations may exist in the supply chains of international markets and therefore, the hospital needs to develop an effective process that would enable it to receive its supplies in timely manner. The hospital consumes about 2500 medical gloves monthly and may purchase these from Richforth Home Products Company in China by creating clear understanding of the supply chain terms, negotiating, and establishing strong relationships. In addition, the hospital could use the supply to stock (STS) to manage and control purchasing and the flow of the supply chain from the supplier to the hospital receiving ports, where they can be restored (Langabeer, 2008). This supply chain management strategy would allow the hospital to enhance the distributions of its gloves supply chain from the company to the hospital efficiently.
During the process of materials requirements planning, the hospital may establish internal controls by assigning specific managers to create budget planning and accounting principles to manage the supply expenses and to avoid supply shortages because of the lack of resources or other financial crisis. Langabeer (2008) highlighted, the materials management has a huge influence over expenditures and ???it requires accounting to manage inventories and revenues associated with medical supplies??? (p. 244). Using procurement systems to control in inventories such as the amount of gloves the hospital should have in stock periodically would be an excellent way to maximize the supply chains, lower costs, and increase the financial value of the business.
Total Quality Management
Total quality management is used by firms to retain its competitiveness in the market, which is intended to achieve the satisfaction of the customers and it is basically a management philosophy proposed to achieve product quality. This philosophy involves all people in the creation and sale of product. In this case, the hospital should employ supplier quality management to control the supply chain effectively for the gloves to be able to compete in the market. Supplier quality management is one of the targets of total quality management and can achieve the performance of suppliers so as to reach the commodity to the market (Lambert, 2008). Project Management Process
In the supply of gloves, the hospital can use project management tools to change the mode of supply. After evaluating the new supply chain in international market, the hospital should use a management tool called Supply-Chain Operations Reference-Model to access and address the management of the supply chain. This supply chain management model would improve the supply chain by aspiring to deliver the goods physically to the consumers and it ensures better prices for the customers by doing away with middle men. The model will enhance an effective communication between the supplier and the consumers, and that will ensure a continuous and timely supply of the gloves to the hospitals and hence enabling the business to compete effectively (Huan, Sheoran, & Wang, 2004).
Once the new supply chain method is implemented, the hospital should evaluate how the changes are impacting the hospital. To do a comprehensive evaluation the hospital should use financial forecasting. Langabeer (2008), states that the use of forecasting is usually used at the end of the evaluation process to make changes after trends are discovered. The hospital should identify areas where the new supply chain method will be most beneficial and forecast how the change will improve these areas. Using past data from the old method and the forecasted data for the new, the organization will be able to see how the new supply chain method has improved these areas.
Just In Time or Stockpiling Supply Methods
Different supply chain methods will bring different benefits for the hospital. Under the current system, supply shortages have been a major issue, and should be the focus of correction. One supply chain method that could resolve this issue would be the stockpiling method. The stockpiling method involves maintaining large quantities of a specific item to be used over time. With a product that has no expiration date such as the gloves the organization uses, the stockpiling method would allow large amounts to be held on site, and would eliminate the problems the shortages have been causing. The organization will also gain financially as shipping costs and discounts are usually offered on materials when ordered in large quantities. Balicer, Huearta, Davidovitch, and Grotto (2005) explain that, as long as supplies are maintained at a high level and emergency situations are forecasted for, and the level of materials the organization stockpiles will not run out.
Applications of Inventory
When determining if it is beneficial to use an international company to supply gloves to the hospital, it is imperative to determine the appropriate application of inventory techniques to the item in the supply chain. Working with an international supplier it is also crucial to use the appropriate techniques allowing the hospital to go extended periods of time without obtaining more supplies. To assist in the process, an efficient inventory tracking system will allow the hospital to track inventory levels. Implementing a periodic inventory system would be beneficial to the hospital as the process does not require additional staff to monitor the supplies. Langabeer (2008) stated that ???periodic inventory does not keep a running record of items that are sold or purchased, so a real-time balance of inventory on hand is never available. Periodic inventory relies heavily on physical counting and observation of goods because no system is used to track balances??? (p. 286). In addition, a period supply allows the organization to observe various trends in levels of inventory and supplies throughout the year and use the information to for future demands. The Benefits of ERPs In addition to identifying the most appropriate inventory techniques in the supply chain, it is beneficial to understand the benefits of ERP??™s and how they apply to the supply chain. The enterprise resource planning (ERP) is ???the primary ???system of record??? to track products or services provided, costs, customers, and cash associated with the entire operation (Langabeer, 2008, p. 317-318). Although the ERP??™s have a reduced role in health care settings; however when working with an international supplier, it is beneficial to implement an ERP to ensure supplies are distributed effectively.
The hospital has concluded that purchasing the gloves from Richforth Home Products Company supplier in China will be beneficial and cost effective. By using supply chain management tools such as supply to stock and other procurement systems to control inventories, the hospital can maximize the supply chains of medical gloves and reduce costs. TQM will allow the hospital to retain competitiveness in the market, improve product quality, and achieve customer satisfaction. Using the stockpiling method, the hospital can purchase gloves in bulks to eliminate the shortages, and the periodic inventory tracking system will help the hospital to track and maintain inventory levels. ERP is also beneficial to be implemented when working with an international supplier to ensure the supply chain of gloves is distributed effectively.References
Balicer, R., Huerta, M., Davidovitch, N., Grotto, I.,? (2005).? Cost-Benefit of Stockpiling
Drugs for Influenza Pandemic.? Centers for Disease Control and Prevention.? Retrieved from http://www.cdc.gov/ncidod/EID/vol11no08/04-1156.htm
Huan, S., Sheoran. S., & Wang, G. (2004). A review and analysis of supply chain operations
reference (SCOR) model. Supply Chain Management. 23-29
Lambert D. M. (2008).Supply chain management: processes, partnerships, performance.Washington. D. C. United States. Supply Chain Management Institute
Langabeer, J. (2008). Health care operations management: A quantitative approach to business and logistics. Sudbury, MA: Jones and Bartlett Publishers, Inc.
Hospital Glove Supply Chain Proposal