Investigation of Barriers: Healthcare Upstream Supply Chain in India

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This report investigates the barriers affecting the upstream supply chain in the healthcare sector in India. It begins with a literature review, exploring the supply chain system of the healthcare industry and identifying factors influencing upstream supply chain management, such as supplier relationships, specifications, after-procurement services, compatibility, timely delivery, responsiveness, and safety. The report also delves into issues from a doctor's perspective, including misplacement of medical equipment, late delivery of medicinal products, poor product quality, and lack of sustainability certification. It identifies challenges like lack of awareness, deficient top management support, poorly integrated information systems, and limited communication. The report concludes with recommendations for improving the supply chain management process, such as encouraging top management commitment, enhancing logistic synchronization, improving communication, and staff training, providing a comprehensive analysis of the current state and potential improvements in India's healthcare supply chain.
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Running head: LOGISTICS AND SUPPLY CHAIN MANAGEMENT
AN INVESTIGATION ON BARRIERS OF HEALTH CARE UPSTREAM SUPPLY
CHAIN IN INDIA
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Table of Contents
Chapter 2- Literature Review..........................................................................................................3
2.1 Introduction............................................................................................................................3
2.2 Supply Chain System of Health Care Industry......................................................................4
2.3 Factors affecting the upstream supply chain management in healthcare in India.................5
2.3.1 Relationship with suppliers.............................................................................................5
2.3.2 Specifications and standards...........................................................................................5
2.3.3 After procurement service..............................................................................................6
2.3.4 Compatibility..................................................................................................................7
2.3.5 Timely delivery...............................................................................................................7
2.3.6 Responsiveness...............................................................................................................7
2.3.7 Safety..............................................................................................................................8
2.4 Issues related to healthcare supply chain upstream for a hospital in doctor’s perspective....8
2.4.1 Misplacement of medical equipments............................................................................8
2.4.2 Late delivery of the medicinal products.........................................................................8
2.4.3 Poor quality of the products............................................................................................9
2.4.4 Lack of sustainability certification.................................................................................9
2.5 Challenges to the upstream supply chain management in health care in India...................10
2.5.1 Lack of awareness regarding the supply chain management........................................10
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2LOGISTICS AND SUPPLY CHAIN MANAGEMENT
2.5.2 Deficiency in of top management support in the supply chain management...............10
2.5.3 Poorly integrated information system...........................................................................11
2.5.4 Lack of coordinated effort, strategic alliance formation and knowledge sharing........12
2.5.5 Inconsistent and inaccurate product information..........................................................13
2.5.6 Inability to meet changing demand pattern..................................................................13
2.5.7 Limited communication among all parties...................................................................14
2.5.8 Incompetent cold chain management during transportation.........................................14
2.6 Recommendations for improving the supply chain management process...........................15
2.6.1 Encouraging top management commitment.................................................................15
2.6.2 Enhancing logistic synchronization..............................................................................15
2.6.3 Improving the communication at every stage...............................................................15
2.6.4 Staff Training................................................................................................................16
2.7 Summary..............................................................................................................................16
Reference List................................................................................................................................18
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3LOGISTICS AND SUPPLY CHAIN MANAGEMENT
Chapter 2- Literature Review
2.1 Introduction
Logistics and supply chain management gains its importance in recent years to see
through the process integration from upstream to downstream for health care institutions. Burns
(2002) stated that around the 40% to 5% of the healthcare expense of healthcare systems and
hospitals comes from the supply chain management. The function of supply chain emphasizes on
determining the amount of supply that is to be purchased and carry in storerooms of healthcare
organization. Christopher (2016) moreover depicted that healthcare organization also gain
competitive advantage through logistic system through effective innovation, speed and flexibility
in the system. Kwon et al. (2016) on the other hand argued that supply chain management is
more complex in healthcare industry and there are many barriers of health care upstream supply
chain in Asian countries especially in India and Thailand. These barriers can be inefficient
process, inaccurate data information and inconsistent data management and manipulation.
However, only the country India is considered for this research.
This research aims for evaluating the details on barriers of health care upstream supply
chain in India. The major objectives that will be addressed in this chapter is the determination of
the factors that affects the upstream supply chain management of healthcare in India and
evaluation of the issue of healthcare SCM upstream in a hospital that affects both the doctors and
hospital perspective. Several theories will also be discussed for addressing the objectives to
evaluate challenges that put an adverse impact on upstream SCM in healthcare providers in
India.
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2.2 Supply Chain System of Health Care Industry
A healthcare business in India mostly deals their business with the service enterprises that
includes pharmaceuticals, medical consumables, information technology, catering, waste
management, laundry cleaning, home-care products, general supply and vehicle fleet
management (Adebanjo et al. 2016). Parmar and Shah (2016) suggested that there are four major
types of key individual in the supply chain management of health care organization-
manufacturers, distributors, healthcare providers and payers.
Image 1: Key Individuals in Supply Chain Distribution of a Health Care Organization
(Source: Parmar and Shah 2016)
In this case, the primary manufactures acts as a supplier for secondary manufactures and
after getting the supply materials these secondary manufactures is liable for transforming active
ingredient into consumable products like capsules, tablets, syrups and other pharmaceutical
solution. Razak et al. (2016) highlighted that the finished products then distributed the final
developed goods to healthcare providers by distributors, wholesalers and manufacturers. In this
case, some manufactures formulate their own medicine distribution cycle in order to give
discount on distribution fees. This process helps in overcoming the problem of supplying
substitute products of the medicines in the hospitals. Moreover, there are some cases where the
cost related to inventory stock of the competing product is reduced by cutting the expense of
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5LOGISTICS AND SUPPLY CHAIN MANAGEMENT
stock control. Govindan et al. (2014) moreover highlight that healthcare industry play their role
as both supplier and customer. Manufactures supply pharmaceutical items directly to the
professional healthcare providers and thus the later act as a customer to the former one. The
professional healthcare providers then sell the products to the end-customers but they also offer
more functionality to the end-users like adding value to the material flow and providing new
information flow through the supply chain.
2.3 Factors affecting the upstream supply chain management in healthcare in India
2.3.1 Relationship with suppliers
Uthayakumar and Priyan (2013) stated that supply chain management is about
developing effective links with network and links. These relationships are with those suppliers,
who supply medicinal equipment, vaccines and medical technology to the hospitals. Acharyulu
and Shekbar (2012) depict that effective relationship with suppliers allow the organization to
develop effective system by aligning their company’s goals and objectives. It is also stated by
Belien and Force (2012) that collaborative relationship facilitates innovation that is crucial for
growth and improving resilience of the organization (Cho et al. 2012). Partnership with supply
chain third party service provider also enhances the accuracy and timely delivery of the final
products to the consumers.
2.3.2 Specifications and standards
Every nation has different procurement standard where the local government and
organization’s authority set the legislations. These legislations pays a crucial role in supply chain
management. The legislation is based on the chemical compositions, weight of the freight,
temperature requirement of the medicines and tax payments for each shipment. Moreover,
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Singhal and Singhal (2012) highlight that these specifications are required during the
transportation for police verification and custom verification. Thus, it is said that involvement of
governing regulation also impacts the supply chain management system.
2.3.3 After procurement service
In this context, the post maintenance of the supplied products service and supply parts in
the hospital. Dobrzykowski et al. (2014) stated that this after procurement service also allows the
organization to make any amendments in their orders or develop a string relationship with their
supplies and other stakeholders. Wisner et al. (2014) depicted that if services procurement is
handled ineffectively, several consequence can occur like poor visibility of the entire procedure
which leads to suppliers leading to throttled relationships. Another consequence that can arise is
adhoc purchases where unauthorized suppliers can access the details and products in the
warehouse and hampers the products and their quality (Cantwell and Ikeda 2003). Disintegration
of manual processes and unclear visibility of suppliers are other two adversities that can be
caused from improper procurement service. The former aspects results in some process are not
automated and thus accomplishing those process take more time; while the former aspect refers
to a situation, where suppliers don't get completely involved in the business that furthermore lead
to ineffective supplier collaboration (AbuKhousa et al. 2014). Thus, Monczka et al. (2015)
suggests that centralized management of the supply chain management with different service
categories that gives a top view of different categories purchased from the inventory. Moreover,
supplier collaboration and automated process are two aspects that can be utilized for the
enhancement of the SCM through collaborating suppliers in confirmations and invoice
management and make automatic accomplishment of work respectively.
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2.3.4 Compatibility
In order to provide supply chain capabilities, compatibility in cultural values of business
partners and strategic objectives is required. Yao and Minner (2017) define that in health care
supply chain management, the compatibility refers between the company that supplied medical
equipment and administrator in the hospital. This compatibility also illustrates the
appropriateness of medical equipment and maintaining the supplies to the specifications.
2.3.5 Timely delivery
Timely delivery is one of the most important factors that affect the upstream supply chain
management in healthcare in India. There are more than 2 billion of populations in India and
there are thousands if disease through with these people is sufferings. Moreover, every disease
has different treatment requirement (Yap and Tan 2012). Thus, all the medicines have to be
present on the inventory or warehouse so that on demand, the medicines can be timely delivered
to the hospitals and health care centers.
2.3.6 Responsiveness
The response that hospitals give to the customer demands is known as responsiveness of
a system (Chan et al. 2012). This factor can be considered as a classification of the above factor
that is “timely delivery”. Chen et al. (2013) furthermore depicts that responsiveness also
illustrates the speed- and- accuracy and validity- and- reliability of the quality of the services that
the organization is providing. Thus, it can be said that if all the medicines are always available in
a health care centre, people consider the organization as a reliable company.
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2.3.7 Safety
Cantor et al. (2012) portrays that safety plays a crucial role in supplying the materials to
one place to another. Managers should develop a risk management plan so that emergency risks
can be avoided. However, Attaran (2012) argued that there are sometimes natural calamity like
fire, earthquake and flood can create problem in transportation of the products from
manufacturing site to the final location. Safety is required in supply chain process so that all the
needed patients can get their medicines on time and people can be treated timely.
2.4 Issues related to healthcare supply chain upstream for a hospital in doctor’s perspective
2.4.1 Misplacement of medical equipments
In doctor’s perspective, the issue that is related to the health care supply chain
management is misplacement of medical equipments. Kwon et al. (2016) stated that this
adversity delay in operation and other medical functionalities in the hospital. Burns (2002)
moreover depicted that this problem mainly occur due to consolidated warehouse, where all the
products from different suppliers are kept together. Thus, in such cases, while loading the
materials some shipments gets misplaced by other products. This took much time to supply the
actual products to the hospital and finally to the doctors. Doctors also think that this delay occur
due to poor documentation during the transportation process (Bhakoo and Choi 2013).
2.4.2 Late delivery of the medicinal products
There are several cases for the accidents and deaths in the health care due to
inappropriate treatment and late operations. Mangan and Lalwani (2016) stated that one of the
main factors is the late delivery of the required products. These delay can occur due to many
reasons- misplacement in warehouse, late police can custom verification, tax payments at portals,
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road congestions, bad weather and negligence of the suppliers (Bhakoo and Choi 2013).
However, the adversity affects the organization and their internal functions that’s affects their
reputation and the health of the patient.
2.4.3 Poor quality of the products
Doctors often complaints that the quality of the materials is so poor that the shipments
has to be cancelled and re-ordered from the supplier end. In India, this problem is high due to
corruption in business. Kumar et al. (2015) also highlight that political parties are associated
with each business and that affects the usual procedure of the business. Suppliers often cut cost
by reducing the quality of the material that affects the patient’s health. Bhakoo and Choi (2013)
also depicts that the lack of improper maintenance of the vehicles also diminishes the quality of
the medicine as the temperature of the medicine have to be marinated during the transportation.
Thus, the poor technology that the supplier incorporates is the reason for the raised issue of
delivery of the poor quality materials.
2.4.4 Lack of sustainability certification
Govindan et al. (2014) portrays that it is essential to raise supplier awareness of climate
change threats so that their supply chain management can be improved. According to the result
of Carbon Disclosure Project (CDP), only 58 percent respondents out of 634 suppliers, who are
surveyed across the world, considered that their supply operation gets affected by the problem of
climate change (Jabbarzadeh et al. 2014). Thus, the health care organization and their respective
suppliers should collaborate and develop new technology that can make their supply chain
process greener. Elrod et al. (2013) also stated that due to climate change, the temperature of the
world rise and thus, the lifetime of some critical medicine gets reduce. Thus, the supply chain
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has to increase their delivery speed with accuracy so that patients can consume the medicine
prior to their expiry date and condition.
2.5 Challenges to the upstream supply chain management in health care in India
2.5.1 Lack of awareness regarding the supply chain management
Wisner et al. (2014) depicted that all the staffs as well as top management should know
about the supply chain process. However, in India, studies related to supply chain management
are not so common. On the other hand, not all staffs hired for the supply chain management are
from management colleges who have studied supply chain management. Cho et al. (2012) stated
that this is the main reason for poor understanding of the entire system. In addition to that, low
end labors are mostly work for every organization at lower cost is another big reason. The
adversity rises as there are very few initiatives taken for staff training regarding the entire supply
chain management system.
2.5.2 Deficiency in of top management support in the supply chain management
Kumar et al. (2015) depict that the top management commitment plays a crucial role for
an effective supply chain system. The numerical result obtained in the research of determining
critical success factors for implementing supply chain management shows that the mean value
for the top management commitment is 4.2430 (Kumar et al. 2015). A likert scale of five has
been conducted in this research where 1 refers to the lowest and 5 refer to the highest. This
shows that this factor is crucial for successful SCM but in India most of the manager are
corrupted and overlook many important aspects in delivering the pharmaceutical products
effectively as they are busy in other work like managing patient details. Moreover, Attaran
(2012) portrays that top management are not only liable for performing their regular duty but
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they are also expected to participate during the emergency procedures. India is a country where
climate is humid and thus all the medicines need to be transferred in cool temperature. Adversity
cases like fire or any other natural calamity, participation of the managers for avoiding such
issues also shows their support. Incorporating of technology for the betterment of the SCM
process also shows their support. However, all these aspects is not followed in India especially in
rural regions as a result people suffers from chronic disease and some f the patient even died
without proper treatment and unavailability of proper medicine due to late delivery and lack of
interest of managers.
2.5.3 Poorly integrated information system
The visibility is important in order to see the progress of the distribution process from
the manufacturing site to the en-user site. The subject through which is selected is known as
supply chain visibility (SCV) and working process of inventory management, functioning of
parts and components and the transit process can be tracked. Attaran (2012 stated that this
process allows the organization to overcome the problem of unnecessary stealing. RFID
technology can be incorporated for tracking all the packages and the exact quantity and other
details of the content of the package. Cegielski et al. (2012) highlighted that India is a
developing country and hence incorporating technology takes greater time and budget to
accomplish the entire process. Indian companies still uses the technology of barcodes that can
only identify he type of the item and not each asset tagged in the supply chain. Moreover, most
of the organization develops individual application for promoting their presence and also for
allowing their customer to access their company’s details easily. However, there are very less
companies, who develop mobile application for their supply chain management process. In India,
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companies do not prefer to develop mobile applications for SCM as they need extra budget and
maintenance team for handling the mobile presence.
2.5.4 Lack of coordinated effort, strategic alliance formation and knowledge sharing
The main problem arises as the entire supply chain system is fragmented and hence
proper synchronization is mandatory for a smooth supply chain management process. All the
staffs in the SCM process have to plan the entire process effectively and liable for maintaining
developing supply chain enterprise application, planning for asset management, formulation of
procurement and product lifecycle management (Hans et al. 2012). Every department has their
roles and responsibility that they have to accomplish and they have to communicate and update
their working approaches with every other department. Thus, the communication system should
also be enhanced as delay in one process may lead to delay in the entire logistics process. Hans
et al. (2012) on the other hand describes that it is not possible for a single manger to visualize
every functionality of the organization and thus, several department have managing authorities.
All the department details should be properly synchronized and if needed these details are
required to formulate new partnership with third party service provider or with other
organization. Taken for instance, if an organization desire to give their IT working approach to
some 3rd party provider, they have to give them proper details so that the provider can utilize the
business goals and objectives of the former organization to develop a customized IT projects that
can enhance their productivity. However, in India such collaboration is hard to find as there are
very less organization which are capable to provide effective services to their clients or
companies hire 3rd party from foreign countries that need extra budget allocation.
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2.5.5 Inconsistent and inaccurate product information
Warehouse management is one of the crucial factors in supply chain management system.
Some companies use consolidates warehouse process where small shipments from a number of
suppliers or from different geographical areas combined into bigger shipments loads (Hans et al.
2012). Chong et al. (2015) stated that in this process maintaining data for each shipment is a
difficult job for a single person or manager. In India, where automation process is not so famous
and utilized in factories, managing data for individual shipment become vulnerable. In such
cases, loss of data is a common issue that every organization faces. In context of healthcare
system, medical equipments and medicines with same chemical compositions from different
suppliers are loaded from same warehouse and there the probability of wring shipments becomes
every high. In such cases, the obtained products may have huge difference from the consumer’s
demand. Acharyulu and Shekbar (2012) also highlight that in such cases, the supplied products
and shipped products may not attached with the products details that the manager forward.
2.5.6 Inability to meet changing demand pattern
There are millions of people living in the earth and every person suffering from some
health issues are different from each other. This results in formulation of a diverse range of
medications. Moreover, the technology that is used to produce the medicines is also different like
in recent times; medicines are formulated with the use of biotechnology and nanotechnology (Hu
et al. 2012). Cho et al. (2012) furthermore depicts since these medicines are greater in cost, the
formulation of these medicines done only there is a demand so that no medicine gets wasted. On
the other hand, Mangan and Lalwani (2016) depicted that sudden demands of the medications
results in delay of the medicine shipment that not only hampers the entre transportation proves
but also affects the health of the patient.
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2.5.7 Limited communication among all parties
According to Monczka et al. (2015), communication in supply chain management system
can be comprised of two aspects- effective communication between systems and effective
communications & collaboration between stakeholders. In former case, the computer device,
that both the supplier and customer uses should support same program for uninterrupted
communication (Wisner et al. 2014). Taken for instance, if one operates on SAP ERP, while
there vendor have Oracle ERP they can communicate effectively. On the other hand, in context
of communications & collaboration between Stakeholders, both the suppliers and customers need
continuous monitoring to ensure supply meets demand (Cegielski et al. 2012). In India, not all
supplier uses the new system that can provide platform for all applications thus communication
among the stakeholders creates gets interrupted.
2.5.8 Incompetent cold chain management during transportation
This is the most vital problem faced by Indian supply chain management especially in
pharmaceutical industries that is proper maintenance of cold chain management. Chen et al.
(2013) mentioned that in such cases, all the items are ensured to be present at constant
temperature between +2°C and +8°C for vaccines, serums and other medicines. Since vaccines
are sensitive to heat and extreme cold, such products should be carefully handled to the hospitals
and health care centers. India’s temperature is humid and thus, it is the liability of the
logistician’s to manage the cold chain in their supply chain process. Lack of interest and extra
financial resources are the major reason may organization utilized the tradition way of supply
chain in which most of the medicine gets destroyed. There are moreover improper training for
staffs where they can control the temperature of the vehicle timely and safeguard the medicines
so that patients can consume proper medication.
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2.6 Recommendations for improving the supply chain management process
2.6.1 Encouraging top management commitment
It is important to make the managing authority to realize the impact of long-term vision
for survival and growth of the organization. These leaders should be aware of the core strength
and devoted resources from their active participation. The organization should also organizes
gathering, seminars and conferences with the business experts on enhancing SCM strategy are
the main CSFs for implementation of SCM in Indian health care organizations.
2.6.2 Enhancing logistic synchronization
This can be attained through effective communication and incorporating technological
advancement in the supply chain management process. Business experts suggest that
organization should facilitate collaboration and engagement of all key stakeholders both
internally and externally. Another aspect through which the logistic synchronization can be
attained is by establishing complete visibility of the process. Different automation technology
and especially RFID tags on each parcel should be incorporate so that stealing of products can be
overcome. However, the process need continuous monitoring, management and execution to
ensure that the system informs everyone in real-time. This will allow the managing authority to
note all the activity or disruption in the SCM.
2.6.3 Improving the communication at every stage
Communication plays a crucial role in making everyone aware of the current situation of
the SCM and the raised issue so that it can be dealt in the initial stage. The Indian health sectors
can use effective technology successfully like- invoicing tools, web-based point of sale (POS)
platforms and traceability software in order to ensure great communication. It is also
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recommended for Indian pharmaceutical supply chain staffs to avoid the interruption in
communication so that they can get all the information of products that need to be supplied with
correct amount to the correct place. All the staffs also learn to focus on accomplishing a
particular task once at a time. Indian staffs have a problem of finishing their tasks once as early
as possible this diminished the quality of work and raise the probability of erroneous work.
Moreover, several modern communication tool like social media presence and official
communication tools like e-mails, notice boards and company’s website so that all the staffs get
aware of any new information regarding the supply chain process.
2.6.4 Staff Training
The problem in Indian industry is that they consider supply chain system not as a primary
obligation and hence they select poorly educated labors for supply chain process. Most of the
problem rises due to this negligence as they do not understand the importance of the products
and problem that can be created by delaying of the supply. Thus, every organization needs to
involve their human resources management to recruit efficient staffs in this sector so that they
can handle the loading and unloading of the shipments. Regular training should also be provided
to all the staffs and the SCM managers regarding the new technology that organization
incorporates so that they can utilize the same for enhancing their productivity.
2.7 Summary
This chapter highlights that the function of supply chain emphasizes on determining the
amount of supply that is to be purchased and carry in storerooms of healthcare organization.
However, in India there are some barriers in the supply chain system of health care industry. The
supply chain of the pharmaceutical industry includes pharmaceuticals, medical consumables,
information technology, catering, waste management, laundry cleaning, home-care products,
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general supply and vehicle fleet management. It is also concludes from this chapter that the
important factors affecting the upstream supply chain management in healthcare in India are
relationship with suppliers, specifications and standards, after procurement service, effective
compatibility, timely delivery, responsiveness and safety of the products that are delivered to the
final location. However, in doctor’s perspective, the issues related to healthcare supply chain
process are misplacement of medical equipments, late delivery of the medicinal products and
poor quality of the products and lack of sustainability certification. Thus, the major issues of the
upstream supply chain management that is addressed in this chapter are Lack of awareness
regarding the supply chain management, Deficiency in of top management support in the supply
chain management, poorly integrated information system, lack of coordinated effort, strategic
alliance formation and knowledge sharing, inconsistent and inaccurate product information,
inability to meet changing demand pattern, limited communication among all parties and
incompetent cold chain management during transportation. The suggestion that is provided in
this chapter for the improvement of the health care upstream supply chain management are to
encourage top management commitment, enhance logistic synchronization, improve
communication at every stage and provide training to the staffs.
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18LOGISTICS AND SUPPLY CHAIN MANAGEMENT
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