Analysis of Blood Supply Chain Logistics & Management in Australia

This report examines the logistics and supply chain management of blood within Australia, focusing on the National Blood Authority (NBA). It identifies the type of supply chain employed, inventory management strategies, and distribution networks across the country. The report includes a case study demonstrating cost reductions achieved through multi-variable linear programming. It covers key aspects such as blood collection, production, inventory, and distribution, highlighting the NBA's role in coordinating blood supply and managing demand forecasts. The analysis also includes a SWOT assessment of the NBA's blood supply system, providing a comprehensive overview of the Australian blood supply chain.

Blood Supply Chain
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Logistics and Supply chain management

Blood Supply Chain
Executive Summary
The is no industries in the world which does not require improvement in terms of supply chain
management. Blood supply chain is also one of them. In this report we have included logistics
and Supply chain related with blood supply industries in Australia, which solely handled by
national blood Authorities. We have tried to identify what kind of supply chain in it. How they
are doing inventory management, and how their distribution networks operate in all over
Australia. We have discussed a brief case study results about their reduction in cost using multi
variable linear programing. The result helps to reduce the significant cost in organization.
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Blood Supply Chain
Contents
Introduction......................................................................................................................................4
Supply Chain...............................................................................................................................6
Distribution Chain...........................................................................................................................7
Contract and Procurement...............................................................................................................9
Inventory management....................................................................................................................9
SWOT for NBAs Blood supply system.........................................................................................11
Conclusion.....................................................................................................................................12
References......................................................................................................................................13
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Blood Supply Chain
Introduction
The cost of health care in Australia is growing rapidly like other countries. The cost incurred due
to supply chain system may goes up to 30% of total expenditure in hospitals (Alexander &
Eugene, 2017). From previous research it well evident that implementing supply chain practices
in healthcare industries reduce the cost in very significant manner. The operation in healthcare
industries are bounded by tight institutional and regulatory pressure. Due to this institutional and
regulatory pressure, the accurate forecast of sales can be determined with the help of lot of labor
and long term plan, this is mainly due to difficulties occurred in measuring the magnitude of
generic market player in this industries (Bolumole, 2009). The other reason includes that the its
product development cycle is longer than any other industries, due to longer development cycle,
the lead time also affect the capacity planning and managing supply chain industries. But most
significant challenge is, inventory management in this industry. Some product has very longer
lead time where as some product has very short lead time such as supply of blood. The blood
supply chain in Australia is governed by National blood authority of Australia. Its supply chain
process is named as Australian blood supply chain (ABSC).
The establishment of NBA was taken place in 2003, when national blood authority act came into
action. It is a government organization and working under Australian government health
portfolio, the prime job for this department is to manage and coordinates the supply of blood and
their product to the entire Australian territory. The organization structure of NBA is as follows.
Figure 1-Organization structure of NBA
The head office situated at Canberra, including 53 number of staffs, and 25 contract staff, whole
is managing whole Australia with their premium service.
Since as discussed above, the NBA deals with supply of blood and blood products. In the annual
general meeting, there is an approval process as per supply plan and budget is provided by the
Australian government, this budget is formulated based on demand forecast, which is done by as
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Blood Supply Chain
per demand forecasted from different states and territories. The administered revenues for
financial year 2017-18 are kept around $ 1072 million, which is based on last year expense
generated by $ 1032 million.
2006 2008 2010 2012 2014 2016 2018
0
200
400
600
800
1000
1200
Investment done by NBA
Year
AUD million
Figure 2-Yearly expenses by NBA
From growth of in expenses we can see that, the yearly expenses are down by 0.3% from
previous year. The expense done includes grant rendering of goods and services, different
procurement of product and services for blood supply, the consultation done for the improve and
other miscellaneous expense. From graph we can see that there is sharp decrease in expense
which is around $ 180 million for the period of 2013-14, this is due to lot of improvement
initiative taken during this period, the inventory analysis and improvement were done with the
help of stochastic model, this will be explained in inventory management section at later stage
(Cahill, 2017).
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Yearly Growth in Expense (%)
Yearly Growth(%)
Figure 3 - % growth in expenses
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Figure 4-Supply Chain Process of Blood authority
Blood Supply Chain
Supply Chain
Since blood collection and distribution comes under national policy, for Australian government,
therefore, all the supply of blood and its product are available at subsidized cost. It means that it
looks like NGOs, which is working based on no profit or no loss system. The working process of
supply chain process is given above in figure 4.
In general, the, the supply chain, for blood service system works under the four stages, which
consists of Collection, Production, Inventory and distribution. The collection of blood is done
through Australian as well as overseas donors, with the help of red cross society and some other
overseas manufacturers. The next process consists of processing the blood unit or its different
components is separated mechanically into red blood cell, plasma, or platelets. After mechanical
processing, these packets come into inventories and stored at different blood banks, hospitals,
where it is ready to be distributed as per their requirement. The whole process of blood supply
chain is being performed with the help of five different processes. In which the first stage
consists of Assessment of past historical data in different territory, in which the introduction of
patients were done with the help of different system, in this introduction the reason of
requirement were assessed as per their disease, so that in future the blood is being supplied to
their platform such as hospital or blood bank near patient so that they can avail easily. The
second stage is the establishment of demand forecast, the basis of demand forecast has many
factors like, review of product plan, customer interaction to blood agencies, demographic and
population data and some emergency services. The NBA has established forecasting system,
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Blood Supply Chain
which is accurate up to 95%. The third stage includes establishment of annual blood supply
planning for incoming and outgoing of blood and their product. The supply plan is based on 3
years of forecast done in previous stage. The BSC covers the plan of arranging blood donors,
collection, testing and after that inventory management. The supply and demand are managed by
review meeting done on monthly basis. The function at forth stage is to manage the supply of
blood and its component at hospitals and blood banks on weekly basis. The collection plan is
being broken to the daily basis, and in the same way consumption is also monitored. It is being
done by monitoring the availability between two controlled line which is nothing but safety
stocks for blood system. These controls limits signify lead time, production and allocation to
different hospitals. The fifth stage consists of assessment and review from their customers end.
Each blood service agency is capturing and monitoring the review from the patients and their
relatives so that the service can be improved (John, 2013).
2006 2008 2010 2012 2014 2016 2018
32
33
34
35
36
37
38
RBC Supply/1000 Population
Year
No of packets
Figure 5-Decrease in RBC supply per 1000 population
Distribution Chain
The distribution and service done by NBAs is one of the examples of state-of-the-art facilities,
especially in government organization. The information and communication system by which,
the NBAs is being operated are world leaders in their field. Some of them are mentioned below
with their function in servicing the blood supply.
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Figure 6- Hub and Spoke distribution network
Blood Supply Chain
ABDR stands for, the Australian bleeding disorder registry system is a retails software, which is
being used by the clinicians in all the hospitals and blood banks, so that the required patient can
be registered and provide service they required from he NBAs facilities. BloodNet is an online
software, for NBAs which is being used for updating the inventory status and used for ordering
the blood and their component by some special authorities. At the same time authorities can also
update the discarded and damaged blood product, so that they can avail the replacement. Blood
STAR is the system by which the NBAs can get information for states and territories level. It
provides state level overview for managing the supply chain of blood. MyABDR is the Android
or OS level app for user who is suffering from bleeding disorder (Ellie, Fabricio, & Babak,
2017).
The whole Australia is covered by hub and spoke distribution network, by four zonal system,
each zone has above figured network distribution system. In one zone There are five metro labs,
which is supposed to be largest blood bank facilities in that zone, each metro lab capable of
fulfilling the requirement of other metro lab as well as regional lab site, which is about eleven in
number in each zone. Each regional lab covers around 35 hospitals or blood bank, where the
blood and components are given to the patients. Each zonal network covers almost one forth of
Australia to supply the requirement of blood and their components.
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Blood Supply Chain
Contract and Procurement
Most of the contract’s services done by NBAs are based on Commonwealth procurement rules.
They have developed a robust approach for contracting and procuring blood related product and
services under the guideline of Australian government procurement framework. The regulation
governs the whole system comes under Therapeutic goods administration. The various tools used
for procurement of product and services are competitive tendering, price benchmarking and
negotiation approach. The main aim for this method is to avail safe and secure product and
services. The common things which is being found in tender is as follows.
 The collect all related information from global market
 The data collected form customer review in stage 5 which is in the form of customer
feedback and stakeholder’s information.
 The supply arrangement promised by contractors should satisfy the guideline which is
given by Therapeutic goods administration.
 The specific period of service given by contractor in that filed, experience.
 The price quoted by contractor/supplier should be optimum from NBAs point of view.
 The quality of product and services, security and safety.
 Should be aware of NBAs supply chain network, and able to do commercial arrangement
as per design given by NBAs, and able to sustain in that environment.
Now, there are fifteen number of contracts being managed by NBAs, which is solely related with
blood and blood product. Some important type of contract is described below.
 Procurement of Fresh blood and their product- Red Cross society is the main supplier
through NBA procures fresh blood and their product.
 Procurement of Plasma, and RBC – The Plasma and RBC is being supplied by National
fractionation agency of Australia, and these agencies are Shire, Pfizer, Novo and CSL
Behring.
 Procurement of Red Blood Cell diagnostic product – There are four supplier who is
providing RBC diagnostics tools to NBAs, these are Bio-Rad laboratories, Grifols
Australia, Ortho-Clinical diagnostic, and Immu-lab.
Inventory management
Blood related inventory management done by NBAs includes he function such as ordering,
storing, handling and issuing of blood and blood related components. Inventory management is
one of the important parts for any organization, and if it is medical related then its importance is
increasing by much higher degree, at one point of time, there is emergency of blood, and another
time, we must store the product in such a way that, it must keep safe for long time. The ten-point
policy adopted by NBAs areas follows (Gilmore, 2010).
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Blood Supply Chain
 Be aware of inventory levels – The person of associated with blood inventory
management must know how to monitor it. They must aware of reviewing pattern for
blood system, the must be aware of holding of inventories and reason for holding
inventories, what is the trigger level, how much product is getting waste, and rate of
inventories outflows. Each person in this section should have induction with medical
officers for using the blood.
 Trained staff- The staff which has taken training are more useful than untrained staff. The
inventory management done by trained staff makes less or no wastage of blood. Each
staff in this section should be gone through well designed training program.
 It is a well-known fact that, when inventory is high, the wastage is also high, and entirely
true for blood inventory, those hospitals or blood banks who has high level of inventories
is also having high amount of wastage. They musts keep only much amount of inventory
which satisfy the need of clinician. The blood staff must know about this figure.
 Maintain less paperwork – The manual management of inventory is time taking and often
trigger to higher level of inventories. The BloodNet app can provide what is the
minimum order quantity as per your need. Planning well before stock ends is a good
procedure in managing inventories. It is much better if staff anticipate the requirement of
hospitals under your list.
 Good relationship with customers – If staff is maintaining good relationship with
clinician, they can communicate easily. They convince their customer about the
importance of inventory management, as well as they try to figure out the reason of waste
and avoid the unavailability of product.
 For the blood inventory management, the FIFO (first in, first out) system is being used.
The staff must know which product and where it is kept in their storage, so that, at the
right time they can supply the product which is oldest one in their storage system. While
should also know that product is not wasted due to long time.
 The specification as per requirement- The cross matching for red blood cell is very
important procedures for patient, if it is done for patient, then keep it aside, so that
whenever he requires, it can be given very fast.
 Well maintained tools- The tools and equipment used in blood service level, should be in
optimum condition and have as per standard condition and guideline given by NBAs.
 Well plan – If there is time, when there would be shortage of inventory, in such
condition, it should be used wisely. It is better if staff is using local procedure to conserve
the blood and their component.
 Manage a well-defined program – Each patient is different for transfusion of blood, their
requirement varies from other, in this condition, make a schedule for regular patient, so
that blood can be given easily.
As discussed in introduction section, there was a stochastic analysis done during 2013, and result
achieved, which helps to reduce the overall cost of NBAs by optimizing the inventory level in all
over Australia, the brief of that analyses is given below.
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Before, 2013 it was common for the hospital to order the blood without any calculation and keep
it at their own place for emergency purposes. Most of the blood packet got damaged due to high
perishability of blood. There is no definite ordering time and stock sufficiency. There is not
certain demand forecast is provided at that time. AT this point of time Dr dillion and Abbasi
proposed the two-stage stochastic programming model, which includes, minimizing cost and
reducing blood shortage and waste. But first emphasis given on reducing the overall cost. To
minimize the cost all variable is taken care. The target value is set at SUMPRODUCT of 30
different variables, that is related with cost. This was set as mixed integer linear programming
(MINLP), with around 18 different decision variables. The last three decision variable is related
with making linearized version of nonlinear constraints in this decision variable. To forecast the
demand, they have adopted realistic data based on 12 weeks observation and calculating the
demand with Monte Carlo simulation. There are three type of experiments is being performed.
After calculation and analysis, it was found that there is a difference of optimized cost and actual
cost around $ 140 million for all hospitals in Australia. Further implement it with all other Blood
group the Cost was down around $40 million. This result causes the down in total cost of $180
million overall, which illustrated in figure-2.
SWOT for NBAs Blood supply system
From the above five stage of supply chain, integration the monthly planning cycle is the strength
for NBAs BSC, it integrates the whole supply chain as per demand and availability. Its review
system upscale them to improve continuously, this is the reason that its cost of service is
declining year by year, while service is being improved. Its three-year planning based on forecast
system, can reduce the volatility in the demand. Due to monotonous kind of service, there is no
fear of competitors.
Despite state-of-the-art system maintained by NBAs, still there is lack of system integration,
because the partners hired by NBAs is not getting full information on time. Due to this reason,
lack of miscommunication is prevalent among their partners. The other weakness is the
geographical condition of Australia itself, the reach of communication and service offered by
NBAs is still a challenge and need more focus to improve it.
The state of art system established by the NBAs could be an opportunity for neighbor countries,
especially New Zealand, Malaysia etc. The blood supply system of these countries is not good
enough as compared to NBAs in Australia.
The supply of fresh blood is only done by Red Cross blood service, the dependency on only one
supplier may cause difficulties sometime. This is true for this sector also.
Conclusion
As per given details about the National Blood Authority of Australia, we can conclude that, the
supply chain adopted by NBA is continuous replenishment model with hub and spoke
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Blood Supply Chain
arrangement of distribution system. Some important feature of this kind of supply chain is that it
regularly replenishes the inventory while working closely with suppliers and customers. The
improvement program adopted by NBAs has reduced in the around $ 180 million. But this is not
the end of continuous improvement, they must utilize some more innovative ideas, so that it can
reduce their cost and improve the quality of services. Further research can be done to find the
way of further improvement. The dependency on only one supplier on procurement of fresh
blood can also be a major problem in future. NBAs must reconsider to contract with another
supplier also.
References
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