Transformative innovation in healthcare logistics requires change across its vast and long-fragmented network of manufacturers, technology suppliers, distributors, group purchasing organizations and care providers. Retail and similar fields adopted global standard product and business partner identifiers more than 35 years ago to great advantage. Studies relating to the retail industry's adoption of UPCs (universal product codes) show $8.1 billion or 2.76% of revenue in hard savings.
By contrast, healthcare, which is the nation's largest industry, still lacks uniform and unambiguous identifiers (except on pharmaceuticals). Allowing players to invent their own numbering leads to confusion, duplication and waste at every level. It also presents major hurdles to computerization and electronic data interchanges, which thrive on unique record keys that can be readily shared among business partners.
Through the efforts of hundreds of supply chain professionals (and academics such as the Center for Innovation in Healthcare Logistics), a solution is at hand. The GS1 standards organization, which manages UPCs in retail, has developed global standard identifiers for healthcare products (GTINs) and locations (GLNs), along with the registries needed to facilitate interchange and maintain single sources of truth. A recent CIHL survey reported that 76% of supply chain organizations are in the process of adopting GLNs. Computer-readable GTINs on products come next, with a target of December 2012 for widespread use.
Adoption of standard identifiers may also open the door at last to widespread implementation of the automation and IT solutions that have energized other industries for decades. Automation and data synchronization efforts in the retail industry have resulted in efficient replenishment, new product introductions, category management and increased focus on customers.
Unfortunately, an American Hospital Association survey on hospital use of IT showed that only 16% of healthcare materials processes currently use bar codes, and 10% have fully or partially implemented radio frequency identification systems.
Opportunities abound for gains from healthcare automation. In the simplest cases, bar-coding of GS1-labeled merchandise can enrich routine replenishment decisions, avoid time lost to misplacement of goods, and keep track of outdated material. More sophisticated RFID approaches can track the inventory of valuable medical implants by sensors in storage areas, or record materials used in surgery by sensors on waste disposal containers.