How supply chain innovation can drive efficiency amid cost and labor headwinds

Healthcare organizations continue to experience a difficult landscape, with many facing high costs, slim operating margins and persistent labor shortages.

Given these challenges, leading healthcare organizations are embracing innovation in the supply chain to encourage greater productivity, resiliency and cost savings. The supply chain is a critical area of focus for healthcare organizations to realize growth and efficiency because the supply chain represents a significant portion of a health system’s external spending, which accounts for up to 40% of total costs.

There are signals from the C-suite that they are recognizing the supply chain’s pivotal role. In a 2022 survey from McKinsey & Co., 67% of health system C-suite and supply chain executives said they now view the supply chain function as more strategic and less transactional.

As healthcare leaders strategize to enhance supply chain operations for improved efficiency, e-commerce solutions emerge as a potent tool. E-commerce represents a strategic shift for healthcare organizations by allowing them to build supply chain operations that are cost-efficient, agile and offer a better user experience for employees.

The power of an e-commerce supply chain strategy

The traditional means of sourcing and buying healthcare supplies can often be lengthy, tedious and inefficient. Contracted vendors may fail to fulfill product demands, limit access to alternative purchasing solutions and need more transparency on inventory and where raw materials are sourced. This puts healthcare providers at a disadvantage.

By contrast, e-commerce solutions, which provide access to a wide selection of products via an online store, empower healthcare organizations by enabling them to shop for an array of high-quality supplies from many sellers without a contract. In short, e-commerce solutions remove the product choice limitations that are a byproduct of working with contracted vendors, giving healthcare leaders a sense of control and confidence in their procurement decisions.

Importantly, with e-commerce solutions, healthcare providers have a clearer path to cost savings. E-commerce allows healthcare organizations to see the competitive prices of sellers and select what works best for them, all without vendor contracts.

Maximizing reliability, minimizing risk

Furthermore, e-commerce offers a sense of assurance and reliability for healthcare organizations, which is especially important when faced with supply shortages and unforeseen events like weather-related emergencies. Shortages are a consistent challenge for healthcare organizations. In a recent survey of nearly 200 healthcare workers, 60% of respondents reported shortages of more than 20 drugs, single-use supplies or durable medical equipment during the six months before the survey.

E-commerce solutions can address these supply chain disruptions for healthcare organizations by providing access to a variety of certified sellers who can provide the needed items in bulk quickly and easily, offering a sense of reassurance and security in times of need. This can also be a source of relief when local supply chains, which must also serve the surrounding communities, are under strain.

A common argument against using e-commerce for healthcare supplies is the potential risks involved. For example, healthcare organizations don’t want to risk receiving counterfeit or black-market products when purchasing them online. However, by partnering with reputable e-commerce providers, it's easy to compare product specifications, prices and delivery options to prevent these issues.

For example, Amazon Business is an established e-commerce solution offering reliable procurement tools for smart business buying. With numerous sellers consolidated on a single site, Amazon Business minimizes the risk associated with purchasing directly from many individual suppliers. Amazon also has a comprehensive vetting process for e-commerce partners, including vendor reputation and product sourcing, reducing the risk of buying low-quality or counterfeit products.

"Amazon Business is leading the e-commerce frontier, which will give many industries more sourcing options for supply resiliency, along with increasing speed to market,” said Régine Villain, Chief Supply Chain Officer of Ochsner Health System. “The transparency of customer feedback ratings and detailed page information helps with first-time buying.”

Streamlining buying processes for lean teams

Completing the purchase is made easier through Amazon Business, as well. Traditionally, ordering unplanned supplies requires manual and lengthy authorization processes such as tracking down stakeholders for purchase approvals. With Amazon Business, the digital tool streamlines, centralizes and automates procurement activities. As a result, employees spend less time on sourcing and purchasing supplies and more time on high-level initiatives for the organization.

Greater workflow efficiency is especially important considering the staffing shortages healthcare providers are experiencing. Employees are increasingly being asked to do more with less time and resources. Using an e-commerce solution that reduces manual processes and approval time dramatically improves supply chain teams’ overall efficiency and experience, making teams feel more productive.

"Using Amazon Business allows our staff to find a wide array of healthcare products. And while some vendors only have one or two options, we find that Amazon Business will have 20 or more options for us to choose from,” said Dara Koppelman, Executive Vice President of Health Services and Programs of Mary’s Center based in Washington, D.C. “When we’re able to get what we need cost-effectively, that allows us to put our resources into what matters most: providing high-quality care for our patients.”

Amazon Business even takes out some of the risk associated with non-contract spending. It can quickly become difficult to track and manage purchases made unexpectedly without contracts.

This can lead to wasted resources. Amazon Business consolidates all spending in one place, allowing healthcare leaders to access real-time reports and data on purchases. 

“With Amazon Business, we no longer have to sort through credit card statements, trying to determine which department items get expensed to — everything is connected to a purchase order and makes our accounting system run smoothly,” said Jodi Weimer, Manager of Materials and Purchasing at Sheridan County Hospital in Hoxie, Kansas. “Our employees can find the items they’re looking for, and send them to me to order, which makes it easy to know exactly what the need is and get it purchased quickly.”

A better future for the healthcare supply chain

As healthcare leaders focus on bending the cost curve, e-commerce is an impactful strategy organizations can leverage to thrive during uncertain and complex market conditions.

"E-commerce is helping us find the balance between supply chain efficiency and multiple sources for resilience,” Villain with Ochsner said. “For healthcare, back orders literally mean life and death.”

Healthcare is complex. Buying shouldn’t be. Amazon Business is improving the way healthcare organizations source and purchase products, making supply chains more efficient, streamlining contract administration, and bringing comparison-shopping to healthcare.