Collaborative management of inventory in Australian hospital supply chains: practices and issues

The purpose of this paper is to develop an understanding of the nature of collaborative arrangements that partners in Australian hospital supply chains use to manage inventories.

A case study involving a supply chain network of ten healthcare organisations (three pharmaceutical manufacturers, two wholesalers/distributors and five public hospitals) was studied. Data included 40 semi‐structured interviews, site visits and examination of documents.

This study highlights the existence of a variety of collaborative arrangements amongst supply chain partners such as the “Ward Box” system (a variant of the vender managed inventory system) between wholesalers/distributors and hospitals. The materials management departments were more willing than their pharmacy counterparts to participate in a variety of partial and complete outsourcing arrangements with wholesalers/distributors and other hospitals. Several contingent factors were identified that influenced development of collaborative arrangements.

This study is limited to the Australian healthcare sector. To improve generalisability, this study could be replicated in other industry sectors and countries.

Application of collaborative arrangements between manufacturers and wholesalers/distributors would improve inventory management practices across the supply chains. Also, learning from materials management departments could be transferable to pharmacy departments.

Several contingent variables for the implementation of collaborative inventory management arrangements between healthcare supply chain partners have been identified. Methodologically, data across three echelons in the supply chains (manufacturers, wholesalers/distributors and hospitals) were collected and analysed.