Introduction
Efficient supply chain management (SCM) is one of the essential premises for the successful development of any organization. Car, Pilepic, and Simunic (2014, p. 209) define the SCM as “the systemic, strategic coordination” of tactics aimed at ensuring the availability of “the right products in the right quantities.” The supply chain includes the flow of materials, information, and funds (Car, Pilepic & Simunic 2014). The basic supply chain includes such segments as the supplier, manufacturer, distributor, retailer, and customer (Car, Pilepic & Simunic 2014). Companies often employ various IT solutions to manage their supply chains.
It is important to note that the vast majority of companies have to manage the direct and reverse flow of materials and information (Grant, Trautrims & Wong 2015). Arabic companies have started investing more in the development of effective SCM strategies, but there are still gaps to be filled. It is possible to examine some peculiarities of a supply chain as well as its role in the effective performance of an organization. This paper focuses on the internal and external flows of products and information as regards an Emirati healthcare company. The paper also includes some recommendations to improve the company’s performance.
Background
Al Zahrawi Medical is one of the leading suppliers of pharmaceutical products founded in 1989 (About us 2016). The organization operates in the UAE and Qatar as well as other countries of the Gulf. The company’s major clients are the Ministry of Health, several medical schools, and facilities. It is necessary to note that the industry is rapidly evolving, and the market for medical products and services is becoming more competitive. Firms, healthcare facilities, and medical schools often need high-quality medical equipment and materials within a short period. Al Zahrawi Medical has to respond timely to remain competitive. The organization specializes in nuclear medicine, laboratory equipment, analytical chemistry, and diagnostic lab, radiotherapy, informatics, surgical and medical medicine (About us 2016).
Internal Flow
The company includes such central units as the surgical division, lab division, medical division, nuclear medicine division and service unit (Welcome to Al Zahrawi Medical 2016). These units do not have well-established information flow patterns. Each division operates separately. As for the internal flow of information, the units have sales departments that develop external flow patterns (Lenin 2014). The internal flow of products and information involves the interaction between the sales departments and the company’s warehouse. The materials ordered are delivered to the warehouse.
It is necessary to add that the information flow often occurs between the service unit and other departments. This unit provides support related to the assembling, maintenance, and exploitation of equipment. Close cooperation between employees of this department and corresponding units is crucial for the provision of high-quality services to the customer. The internal flow of information involves close cooperation of the units with the IT, financial and HR departments.
Since the company is not a manufacturer, there is no internal reverse flow of products. Reverse logistics is often associated with the quality of products that can be sent back for reassembling or even disposal (Grant, Trautrims & Wong 2015). At the same time, the flow of information often occurs in both directions especially when it comes to the service unit. This division often closely communicates with other units to elicit all the necessary data to provide high-quality service to customers.
External Flow
As far as the external flow of products and information, the supply chain pattern does not include such segments as the distributor and retailer as Al Zahrawi Medical is the supplier that provides customers with products directly from the manufacturer. The company has a wide range of suppliers who are well-known in the market, which is one of the positive features of the SCM. The major suppliers of the company are “Covidien, Mallinckrodt, Dako, Sakura, BD-Surepath, Sysmex, Cepheid, Shimadzu, Hitachi-Aloka, Sebia” and so on (About us 2016).
At the same time, Al Zahrawi Medical does not have a comprehensive SCM strategy based on the use of such tools as ABC or FSN and so on. This has led to various issues associated with delays, a significant number of inventory days, inadequate lead time variability assessment (Lenin 2014). These issues often translated into penalties.
The external flow of materials has two directions (direct and reverse). As for the direct flow, the customer places an order, and the employees process it. There is no specific transportation department, and the organization resorts to the services of such companies as FedEx, Expenditure International, Inchcape Shipping Services, and CEVA Logistics. This strategy is associated with additional costs. Importantly, the vast majority of suppliers provide only Ex-works (EXW) option (Lenin 2014). Therefore, Al Zahrawi Medical has to make sure that the products are delivered from the supplier to the company’s warehouse or the customer directly in some cases.
The company has the warehouse, but the order forecasting is poorly managed. This has led to various occasions of the overloaded warehouses. For example, such divisions as biochemistry, imaging, molecular diagnostics, and soft tissue implants increased the quantities of the inventory, but the sales did not increase, and this led to the increase in inventory days (Lenin 2014).
As for reverse logistics, the company has to collect radioactive dose containers from customers. These products are transported to disposal companies. At that, Al Zahrawi Medical has to make sure that the radioactive doses are within certain limits. As has been mentioned above, the company uses transportation companies to collect the products from the customers.
It is noteworthy that the issues mentioned above, negatively affect customers’ satisfaction (Lenin 2014). Delays are the most crucial problems in the healthcare sphere. Al Zahrawi Medical often fails to deliver the materials and equipment on time, which harms its image. Of course, it is also associated with direct financial losses as the company has to pay penalties.
Recommendations
One of the central recommendations for the organization is to utilize such inventory management tools as FSN, ABC or VED analysis. It is also important to employ effective sales forecasting strategies that can improve inventory flow and reduce inventory clearance intervals. The improved warehouse management system is also necessary. Finally, it can be beneficial for the company to negotiate other than EXW delivery options.
Conclusion
On balance, it is possible to note that the company in question tries to develop effective SCM strategies, but it has many downsides. The company should consider using up-to-date SCM tools related to inventory management and sales forecasting. This can help the company improve its performance and remain competitive in the Emirati market.
Reference List
About us, 2016. Web.
Car, T, Pilepic, L & Simunic, M 2014, ‘Mobile technologies and supply chain management – lessons for the hospitality industry’, Tourism and Hospitality Management, vol. 20, no. 2, pp. 207-219. Web.
Grant, DB, Trautrims, A & Wong, CY 2015, Sustainable logistics and supply chain management, Kogan Page Publishers, Philadelphia, PA. Web.
Lenin, K 2014, ‘Measuring supply chain performance in the healthcare industry’, Science Journal of Business and Management, vol. 2, no. 5, pp. 136-142. Web.
Welcome to Al Zahrawi Medical 2016. Web.