Health Care Providers Demonstrate Business Value of B2B Automation
- May 17th, 2013
- By: Loraine Lawson
One of our themes at B2B.com is that automating B2B transactions in the supply chain is the first step to cutting costs and creating more efficient processes. It seems intuitive to us, but if you want concrete examples, check out this recent TechTarget story on the adoption of supply chain automation and management technologies at medical centers.
If you’re not directly involved in health care, you may not think of it as a B2B industry, but it very much is. Hospitals, pharmaceuticals and insurance companies all engage in B2B transactions and manage various types of supply chain activities, from ensuring a pill is in the right room at the right time to dealing with chemical manufacturers.
When it comes to business technology, hospitals are notorious laggards. Many have even developed “dysfunctional” processes designed to deal with problems that other industries solved using technology.
For example, hospitals often overstock supplies as a matter of policy, “just in case” something is needed. As anyone in retail or manufacturing can tell you, that surplus increases storage costs, but on top of that expense, many healthcare supplies expire before the provider can use them, which adds significantly to operational costs.
To solve these supply chain problems, medical providers are investing in health care supply chain management technologies, including the automation of orders, according to the article. For hospitals, this is an opportunity to realize more control and improve processes. For the rest of us, this gives us a bird’s eye view of what happens when an industry adopts mature B2B technologies.
The University of Pittsburgh Medical Center (UPMC) is one of the examples used in the article. UPMC consolidated purchasing into one centralized department and automated many of the procurement processes, thus reducing costs and surplus.
This brought order to the hospital’s order management, eliminating “pockets of buying” among the departments.
Here on B2B.com, we’ve often pointed out that automating B2B transactions is a foundational step for business analytics. UPMC provides a concrete example of how simply automating orders and gaining supply chain visibility can create far-reaching implications upon the business.
“Part of the reason why costs differ so much from hospital to hospital and physician to physician is because few providers have a true understanding of their own supply costs, which makes it impossible for them to charge uniform rates for care,” the article notes. “But when orders are digitized, it will enable administrators to analyze costs more closely and help them start to squeeze out variations.”
Less waste, reduced storage costs, new insight into business processes: That’s a pretty good starting place for an ROI on B2B technology investments, not just in health care, but in any industry.