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supply chain - Edwards 1 Supply Chain and Cost Cutting...

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Edwards 1 Supply Chain and Cost Cutting within a Hospital Managerial Accounting, BUS 630 Melissa Edwards July 4, 2011 Mark Taylor
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Edwards 2 Supply Chain Supply chain management is commonly used to refer to the coordination of business processes across the companies in order to better serve the end consumers (Brewer, Garrison, & Noreen, 2011). Cost cutting is basically being able to cut the cost safely of some organizations without having to close down. In this paper I will be discussing the issues that many organizations face when it comes to the proper supply chain management. The specific area in which I will be talking about will be hospitals and how a lot of them have not moved from the materials management into a supply chain management. I will also be discussing how supply chain management and cost cutting can tie things together in a hospital setting. Main Issues In the past hospitals would manage the purchasing costs very well and by doing this many hospitals would end up operating very efficiently. In today’s world though the cost of the materials management could end up going over 35% of a hospitals operating budget, with around 20-25% that are going to the supply chains (Mangione & Stark, 2004). There are many issues that face the hospital executives and the supply chain directors. The hospital supply chain directors. The hospital chains have many insufficient linkages to the clinical systems, revenue cycle, and the clinical operations. A supply chain can be viewed as being a “back dock” support service that provides the products and services that are required by many of the clinical departments. When having the supply chain it should be primarily used for all of the third party relationships. Having non-materials, and having trained people ordering supplies and signing contracts without utilizing any of the supply chain procedures could be
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Edwards 3 drastic; all of the purchasing that is conducted should go through the hospital or any kind of organization at that particular supply chain operation (Mangione & Stark, 2004). The supply chain management should really only focus on the total impact of the care of the patients and not the product acquisition costs. They should be able to look at the value and how it will hopefully affect in a positive way on both the patients outcome of care and also the cost of there care. An effective supply chain management can be very rare across any of the hospitals nationwide. Many of the healthcare organizations still work with the materials management and also all the purchasing departments. Many of the hospitals have also changed the name of material management to supply chain, but have been using the tradition materials of the material management operations; many of these departments are unable to take advantage of the new practices (Mangione & Stark, 2004). Many of the supply chain leaders do not have the title or corresponding authority to be able to use the policies that are required for any of the supply chain improvements.
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