7 Ways AI Optimizes Healthcare Supply Chain: Balancing Cost and Quality 

Artificial intelligence helps in optimizing end-to-end processes, from procurement and sourcing to distribution and logistics. It even outperforms the traditional models to manage, predict, and optimize the supply chain operation. 

Key Challenges in Healthcare Supply Chain Management

1. Unpredictable Demand and Inventory Management

Overnight the world learned a hard lesson when the world faced a shortage of N95 masks, PPE kits, and other medical supplies during COVID-19. Even the full inventories were insufficient to handle massive outbreaks. 

Not necessarily in a health crisis, even under normal situations, managing the supply chain is complex due to macroeconomic factors like price inflation. Shortage is not always the result; many hospitals face overstocking issues. According to a Navigant report, more than $25 billion of U.S. hospitals go into unnecessary supplies. 

Traditional forecasting models and methods are to blame. These models fail to precisely predict changes in unpredictable emergencies, fluctuations in patient volume, and seasonal outbreaks. 

2. Pressure of Maintaining Quality

Higher inventory cost seems to be the only challenge, but quality is implicit. During the pandemic, hospitals focused only on getting sufficient supplies to handle the patient volume. This shift in focus overlooked the factor, whether products meet the quality standards or not. 

Quality issues arise even when there are no demand-created threats. Rising costs of medical devices and equipment and logistics expenses are behind the scenes.

3. Supplier Risks and Global Dependencies

Globalization has made it easier to procure raw materials and products at affordable costs, but it has also introduced risk. Over reliance on global suppliers or politically unstable regions can lead to disruptions, particularly during global crises. Healthcare providers should focus on a resilient supply chain to mitigate dependencies and risks and ensure the smooth flow of essential medical supplies.

4. Regulatory Compliance

Healthcare supply chain operations are also complex due to compliance and regulatory standards. There is a constant burden of following the FDA guidelines or CDC protocols, whether during procurement or using medical supplies. 

5. Limited Visibility 

Siloed data systems across departments obstruct the view of the supply chain managers. Fragmented data and limited visibility into inventories further create gaps in accurate demands and order fulfillment. 

How AI Optimizes Healthcare Supply Chain

Hospitals can address the challenges head-on with AI-powered solutions for inventory management, supply chain optimization, or automated procure-to-pay. Let’s explore how. 

1. Demand Forecasting and Inventory Optimization

The vast amounts of data within the hospital setting, from historical patient records to seasonal illness trends, can help with strategic planning. AI algorithms can read and scan that data to understand future needs based on current requirements and trends. 

By considering inflation and market scenarios, these algorithms can even help adjust to meet real-time price and demand changes. Hospitals can even automate the reordering processes to reduce the workload on administrative staff.

2. Cost Optimization 

AI can also reduce supply chain expenses. AI-powered cost estimation software can highlight potential areas for cost savings, and price benchmarking further ensures that hospitals pay competitive rates. 

In addition to saving costs from in-house operations, AI can identify logistics and transportation opportunities. A significant feature of such a solution is route optimization, which speeds up the delivery process. 

3. Data Integration and AI-Driven Insights

AIaaS systems for hospital data management are extensions to existing systems, stretching the boundaries of what hospitals and their supply chain managers can view. They combine the data from siloed systems and give clear visibility into the existing SKUs, their location, and quantity. 

4. Automation of Invoices and Accounts Payable

Invoice automation through AI offers significant advantages, reducing irregularities, payment delays, and financial risks. How?

• It extracts the relevant information from invoices for further operations utilizing OCR and NLP. 
• It automatically matches the invoices with purchase orders and receives reports to flag discrepancies. 
• It identifies the patterns in invoice submissions to detect fraud in invoices. 
• It automates invoice approval and sends reminders for pending approvals or payments.

5. Value Analysis

Hospitals need help to optimize cost and quality. Which medicines are most effective, which medical equipment is of the best quality, and which sutures are good for clinical use? 

Answers to these questions can help analyze which products are the most valuable investments for hospitals and patients. GenAI solutions can help in getting insights on these queries to procure items that benefit in the long run. 

6. Predictive Maintenance

Apart from predicting chronic disease development or drug demand, AI can detect malfunctioning medical equipment way before. They are expensive and important for providing quality care to patients. 

Knowing when they may stop working or start malfunctioning will reduce maintenance expenses. This insight also extends the lifespan of equipment, continuously improving patient care.

7. Cold Chain Management

Certain medical products, such as vaccines, biologics, and biopharmaceuticals, are temperature-sensitive. They are stored, handled, and transported under controlled conditions to maintain safety and effectiveness. 

If not handled properly, they can impact patient outcomes and increase the cost of procurement. 

AI and IoT can help in the cold chain management of these sensitive medical products. They can track the real-time conditions of storage containers during transit and warn if the temperature or humidity level exceeds the threshold. 

Besides tracking, they can even predict spoilage situations to ensure that medical products are safely and effectively delivered. 

Get an AI Solution for Your Supply Chain Today!

Uncertainty is the only constant right now. But it comes with great cost, impacting thousands of real lives in the healthcare industry. Therefore, managing supply chains with AI-driven solutions is more than necessary in today’s era. 

These solutions promise benefits beyond cost cutting, bringing positive outcomes in patient care. Healthcare providers can plan strategically to meet even uncertain situations, from predicting supply chain risk early to demand forecasting. 

Softude offers AI as a service to further reduce the cost burden on healthcare providers. We help you adopt and implement AI and GenAI solutions across your supply chain. Consult our experts to discuss your requirements.