Many inventory management systems applying just-in-time (JIT) approaches were working well prior to the COVID-19 pandemic however, the pandemic created unprecedented challenges for these systems. Hence, many HCOs are looking for innovative tools that will allow more efficient supply chain practices, helping to reduce costs without affecting the quality of their services ( Lee et al., 2011, Mathur et al., 2018). Reducing costs while improving the quality of care is essential in the healthcare industry. Poor inventory management is one of the largest causes of inefficiency in healthcare, and efficient supply chain management can help hospitals to reduce costs and optimize their operations. Conversely, understocking leads to shortages and disturbs the stability of the services provided by the organization( Moons et al., 2019).
Inadequate management can potentially lead to overstocking, meaning that extra assets are retained in inventory, thereby restricting cash flow and the development of the organization. Inappropriate inventory management results in substantial losses for healthcare organizations and negatively impacts the quality of patient care( Brandon‐Jones et al., 2014). These management systems help to protect organizations from both material and financial losses by maintaining an efficient and accurate record of items and supplies. Supply chain management in healthcare settings requires skills in managing costs, inventory forecasting, and space management, while inventory management involves in-depth knowledge of logistics and financial aspects of stock ( Dwivedi and Kothiyal 2012). Supply chain management is key for organizing workflow and tracking inventory, purchases, orders, and payments. Inventory and supply chain management primarily focuses on improving efficiency, controlling costs, and receiving and distributing the needed supplies on time to provide improved patient care( De Vries 2011). These activities are critical for their operations.
Healthcare institutions are responsible for planning, purchasing, managing, handling, tracking, and transporting stock (e.g., medications, medical equipment, and supplies). hospitals waste approximately USD 25.4 billion each year on unnecessary supply chain spending( NAVIGANT 2018).
Furthermore, the amount spent on inventory-related activities such as handling, storage, transport, and restocking inventories is extremely high, accounting for more than one-third of hospital budgets( Dennision et al., 1994, Kua-Walker, 2010). on hospital supplies such as disposable gloves and gowns every year( Scanlin, 1997, Kua-Walker, 2010). Approximately USD 83 billion is spent in the U.S. Inventory accounts for a large proportion of the costs of healthcare organizations (HCOs) ( Kelle et al., 2012). The healthcare industry has faced many challenges in improving quality of care and patient satisfaction while reducing costs( Moons et al., 2019).
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