Supply Chain Management

Supply chain means the network of all individuals, organizations, activities, technology, and resources involved in the production/creation and sale of a product. It entails every aspect, from acquiring raw materials to manufacturing to product delivery to the end user. Supply chain management is the centralized management of the flow of services and goods, including the processes that entail transforming raw materials into the final product (Khorasani, Cross & Maghazei, 2019). supply chain management enables organizations to reduce costs, cut on excess costs, and deliver products to consumers faster and more efficiently. This essay reports on Tenet Health organizations supply chain management and its impact on its brand. The report will entail the impact of the market economics on the supply chain of the organizations, the impact of the supply chain management on the expenses of the organization, the state of supply chain management and operations in the organization/recommendations based on supply chain best practices, and the available opportunities for the organization to co-brand with its supply chain partners.

Market Economics and the Organization’s Supply Chain Management

The economics in the market considerably affect the organization’s management of its supply chain. One of the major economic trends in the market is the technological advancement that has created an opportunity for innovation and the development of more devices and applications. Due to the increase in new devices and applications in the market, competition has also intensified, thus mandating changes in supply chain management in the organization. These market economic trends have impacted supply chain management in several ways. First and foremost, it has forced the supply chain manager to revisit acquiring the raw materials to ensure they are the most cost-effective and will produce the required quality to ensure that the product is competitive. The initiative will also mean lowering the production cost to maintain the profit margin and maximize profits. The supply chain manager has to source cheaper but good-quality raw materials, thus reducing production costs.

Secondly, the distribution network had to be restructured. As mentioned earlier, supply chain management ensures that the products get to the end user faster and more efficiently. Therefore, working on the distribution network is essential. The organization has increased the efficiency of the distribution network by reducing channel intermediaries and consolidating different channels into one major distribution channel, thus reducing the distribution cost and easing oversight. Fewer distribution channels will reduce the distribution time, thus enhancing faster product delivery to consumers.

Furthermore, market economics has led to the improvement of branding and customer service to enhance competitive advantage. The high competition in the market requires the organization to have some competitive advantage to attract more customers and maximize profits. The supply chain management department greatly enhances branding and customer service (Kharosani et al., 2019). The organization is maintaining a focused consistency in the quality of the products, and maintaining credibility, by ensuring good quality raw materials are purchased and the production process maintains good quality.

Impact of the Supply Chain Management on the Organization’s Expenses

The expenses of Tenet Health Organization are impacted positively by how the organization’s supply chain is managed. The primary way supply chain management impacts expenses are by reducing the organization’s overall operation cost. The overall operating cost is reduced by decreasing the purchasing, production, overhead, and overall supply chain costs.

According to Iyengar et al. (2020), purchasing costs significantly contribute to high operating costs, especially when purchasing expensive products and inventories. Supply chain management of the organization identifies the fast-moving goods with lower inventory costs and stocks them, rather than stocking high inventory products whose demand is low, thus reducing the operating expenses. Availing low inventory costs also prevents storing high inventory costs in the stores longer than necessary, thus also reducing storage and maintenance costs/expenses.

Production cost is the other operating expense reduced due to supply chain management. Supply chain management ensures the organization determines the correct amount of raw materials required to produce its products, thus minimizing wastage and purchasing unnecessary materials. By managing the supply chains, the organization can identify reliable suppliers to deliver their materials, thus avoiding shortages that would cause delays in production and increase costs. Therefore, fast material delivery facilitated by supply chain management reduces production cost expenses.

Additionally, effective supply chain management helps reduce the organization’s expenses by identifying unnecessary spending and looking for ways to reduce or do away with the expense. For instance, if the supply logistics costs are unnecessarily high, and other operations are providing the same service at a cheaper cost, the overhead costs are reduced by making the changes.

Effective supply chain management also helps the organization reduce operating expenses by reducing the overall supply chain costs. The organization heavily depends on the supply chain manager to design a supply chain network that gets production materials at the most favorable cost and produces goods and services that meet the customer service goals at the least total cost possible. Thus, reduction of the overall supply chain cost reduces the operating costs and expenses, increasing profits and customer base.

Tenet Health Organization’s Supply Chain Management and Operations State/Recommendations

Currently, Tenet Health has a supply chain management department that deals with all the activities in the supply chain. The areas covered by supply chain management include supply, production, inventory, capacity, and distribution planning. Dutta et al. (2020) note that the operations of the supply chain manager include developing systems, structures, and processes to plan and execute the whole process involving the flow of goods from the supplier to the customer. The specific activities include spearheading the purchase of production materials, overseeing production, and developing product distribution channels.

The office begins with Supply planning. Being the largest provider of ambulatory surgery services and revenue cycle management services, supply chain management sources for the best and cost-effective materials and services to facilitate the organization’s running. In this case, the supply chain manager contacts the care providers whose services are needed and discusses with them to develop the contracts to be used.

Inventory and capacity planning are the other areas covered by the supply chain management department. The over 600 care facilities under Tenet health require supplies to facilitate care delivery. The supply chain department oversees purchasing the supplies and determines how they will be used to facilitate care provision and the capacity needed. Additionally, the department oversees distribution planning by developing distribution channels and managing the distribution of products and services. However, the current supply chain management can be improved to enhance performance within the healthcare context.

The recommendations I would make to improve performance in supply chain management include developing a supply chain management council, creating alliances, and leveraging technology. These are some of the supply chain management best practices that enhance performance improvement. According to Craighead, Ketchen &Darby (2020), the supply chain management council reviews the plans, structures, and processes developed by the supply chain manager, thus ensuring the best plans are developed. Despite being the leading umbrella healthcare organization, making alliances with other organizations will improve the organization’s brand, market reach, and customer base. Leveraging technology in supply chain management would also help improve organizational performance using supply chain management software and learning from other similar institutions.

Opportunities for Co-Branding

Co-branding is a strategic alliance and marketing strategy in which two or more brands work together to boost their products, and co-branding benefits each brand. There are various opportunities for Tenet Health organization to co-brand with other organizations in its supply chain network. For instance, the organization can co-brand with Johnson & Johnson, a leading medical device producer, and its medical devices supplier. Additionally, co-branding with local healthcare institutions, which are their customers, is another golden opportunity.

There are different merits of co-branding. Some include increasing the customer base, enhancing brand recognition, and joint advertisement. Co-branding increases the customer base since the organization can now reach customers in new demographics and build trust with the other brand’s customers. Co-branding also enhances brand recognition, especially by co-branding with a renowned brand. For instance, if Tenet Health co-brands with Johnson & Johnson, a famous medical device brand, Tenet stands a chance to gain more recognition. Additionally, co-branding enhances joint advertisement, giving the organization a broader scope.

Conclusion

In summary, supply chain management is the direction of the processes entailing the network of individuals, organizations, or resources used from the supply and production to distribute goods and services. Supply chain management helps reduce the organization’s expenses. Best practices in supply chain management should be utilized. Co-branding opportunities should be embraced since they increase the customer base and brand recognition.

References

Craighead, C. W., Ketchen Jr, D. J., & Darby, J. L. (2020). Pandemics and supply chain management research: toward a theoretical toolbox. Decision Sciences51(4), 838-866. https://doi.org/10.1111/deci.12468

Dutta, P., Choi, T. M., Somani, S., & Butala, R. (2020). Blockchain technology in supply chain operations: Applications, challenges, and research opportunities. Transportation research part e: Logistics and Transportation Review142, 102067. https://doi.org/10.1016/j.tre.2020.102067

Iyengar, K. P., Vaishya, R., Bahl, S., & Vaish, A. (2020). Impact of the coronavirus pandemic on the supply chain in healthcare. British Journal of Healthcare Management26(6), 1-4. https://doi.org/10.12968/bjhc.2020.0047

Khorasani, S. T., Cross, J., & Maghazei, O. (2019). Lean supply chain management in healthcare: a systematic review and meta-study. International Journal of Lean Six Sigma. https://doi.org/10.1108/IJLSS-07-2018-0069

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