1. Outline three different applications and explain the utilization of information systems in the healthcare supply chain. 2. Discuss and give three examples of the different uses of information systems and technology of those systems in the operation of the supply chain. 3. Relate, discuss and provide two examples where information systems in the healthcare supply chain provide the availability of performance metrics and statistics to inform decision making for improved efficiency, effectiveness and efficacy of the supply operation in the healthcare organization. 4. Distinguish the functional areas two different aspects of information systems, such as sourcing, EDI, vendor management, warehousing/storage and dispensing to points of care with regard to the healthcare supply chain. 5. Relate one business operation such as warehousing or storing or dispensing to points of care, how work is accomplished, to the information systems, how information and data from operations flow, within the healthcare supply chain. 6. Evaluate three different benefits of improved information systems and utilization of at least three metrics for healthcare supply chain operations and management in terms of performance, health outcomes and stakeholders’ perceptions. Chapter 5 – Informing: Information Systems in the Healthcare Supply Chain Learning Objectives Outline and explain the utilization of information systems in the healthcare supply chain. Discuss and give examples of the different uses of information systems and technology of those systems in the operation of the supply chain. Relate, discuss and provide examples where information systems in the healthcare supply chain provide the availability of performance metrics and statistics to inform decision making for improved efficiency, effectiveness and efficacy of the supply operation in the healthcare organization. Distinguish the functional areas of information systems, such as sourcing, EDI, vendor management, warehousing/storage and dispensing to points of care with regard to the healthcare supply chain. Relate the business operation, how work is accomplished, to the information systems, how information and data from operations flow, within the healthcare supply chain. Evaluate the benefits of improved information systems and utilization of metrics for healthcare supply chain operations and management in terms of performance, health outcomes and stakeholders’ perceptions. Introduction Information systems are valuable assets to healthcare organizations. Data in context, such as a healthcare supply chain context, is information; information that is ‘actionable’ or useable is knowledge. Information systems foster knowledge for operators, managers, leaders and strategists. Efficient, effective and most importantly, efficacious business practices are reinforced and complemented by well developed, built and deployed information systems for a trained team of professionals a ...

1. 1. Outline three different applications and explain the
utilization of information systems in the healthcare supply
chain.
2. Discuss and give three examples of the different uses of
information systems and technology of those systems in the
operation of the supply chain.
3. Relate, discuss and provide two examples where information
systems in the healthcare supply chain provide the availability
of performance metrics and statistics to inform decision making
for improved efficiency, effectiveness and efficacy of the
supply operation in the healthcare organization.
4. Distinguish the functional areas two different aspects of
information systems, such as sourcing, EDI, vendor
management, warehousing/storage and dispensing to points of
care with regard to the healthcare supply chain.
5. Relate one business operation such as warehousing or storing
or dispensing to points of care, how work is accomplished, to
the information systems, how information and data from
operations flow, within the healthcare supply chain.

2. 6. Evaluate three different benefits of improved information
systems and utilization of at least three metrics for healthcare
supply chain operations and management in terms of
performance, health outcomes and stakeholders’ perceptions.
Chapter 5 – Informing: Information Systems in the Healthcare
Supply Chain
Learning Objectives
Outline and explain the utilization of information systems in the
healthcare supply chain.
Discuss and give examples of the different uses of information
systems and technology of those systems in the operation of the
supply chain.
Relate, discuss and provide examples where information
systems in the healthcare supply chain provide the availability
of performance metrics and statistics to inform decision making
for improved efficiency, effectiveness and efficacy of the
supply operation in the healthcare organization.
Distinguish the functional areas of information systems, such as
sourcing, EDI, vendor management, warehousing/storage and
dispensing to points of care with regard to the healthcare supply
chain.
Relate the business operation, how work is accomplished, to the
information systems, how information and data from operations
flow, within the healthcare supply chain.
Evaluate the benefits of improved information systems and

3. utilization of metrics for healthcare supply chain operations and
management in terms of performance, health outcomes and
stakeholders’ perceptions.
Introduction
Information systems are valuable assets to healthcare
organizations.
Data in context, such as a healthcare supply chain context, is
information; information that is ‘actionable’ or useable is
knowledge.
Information systems foster knowledge for operators, managers,
leaders and strategists.
Efficient, effective and most importantly, efficacious business
practices are reinforced and complemented by well developed,
built and deployed information systems for a trained team of
professionals across the healthcare personnel continuum.
Introduction
Information systems are vital since:
Clinical Complexity is Reality: Over 10,000 unique situations
(diseases, injuries, etc…) can present by patients to the
healthcare organization;
Complexity of Knowledge is Reality: Over 500,000 new
additions to the knowledge-base (literature of medicine and
healthcare) each year and increasing each year given that
460,000 additions were available in 2003 – 2004;
Operational Complexity is Reality: Multiple players in the
healthcare value chain with hospitals, physicians, health plans,
pharmacy benefit management companies (PBM), disease
management companies, commercial laboratories, etc… when
all combined translates into a navigational nightmare for a
consumer of healthcare services; and

4. Technological Convergence and Integration is Reality: Medical
devices, equipment and software applications are converging to
create new technological innovations coupled with changes to
the professional standard of care due to technological
innovation.
Information Systems in Healthcare Supply Chain
Computers and information technology has an important role in
healthcare.
However, due to the rapid changes that occur in both the
healthcare and computer technology industries, it can be
difficult to take full advantages of the opportunities for process
improvement that occur through a partnership between
healthcare and information technology.
Today there are a multitude of information systems available
with applications for the healthcare industry ranging from
process simulation, to metric tracking, and supply chain
optimization.
Pencils to Keyboards to Touchpads and Electronic Systems
The evolution of hospital information systems can be traced
back nearly to the start of computing.
In order to reduce costs, both adaptive and technical changes
need to be considered.
6
Changes Throughout History
In the 1960’s the main force behind healthcare information

5. systems was Medicare and Medicaid.
By the 1970’s computer technology had advanced to a point
where computers decreased in price and became small enough to
install a system for each key department within a healthcare
organization.
The 1980’s saw the largest changes since Medicare and
Medicaid. These changes focused around diagnosis-related
groups (DRG) and reimbursement rates for Medicare and
Medicaid patients.
Throughout the 1990’s, increased competition in healthcare lead
to consolidation of health systems resulting in the need to
integrate hospitals and providers.
The 2000’s saw the focus of healthcare systems start to shift to
an outcomes-based approach.
The use of technology in healthcare is likely to continue to
increase given past history and current government programs
such as Healthy People 2020.
Interface Map
In addition to the cost savings, utilizing information systems is
critical because of the complexity of the healthcare system, both
in clinical and support areas.
This complexity is perhaps best illustrated with a flow diagram,
designed to show the movement of information within the
supply chain.
the foundation of managing the supply chain is the management
of data.
Figure 5-1
Reproduced from (2012). Designing the Standard for a Healthy
Supply Chain - mThink. Retrieved December 7, 2014, from
http://mthink.com/article/designing-standard-for-healthy-
supply-chain/.

6. Data Management and Information Flow
Managing data and the flow of information in the healthcare
supply chain is a continuous challenge.
Information flows in the organization are affected by both the
functional layout of the organization and the task at hand.
Managing this flow of information through the organization is
important in the healthcare supply chain in order to prevent
stock-outs or excess inventory.
9
Data Management and Information Flow
With process improvement plans methods such as lean that push
inventory levels down, problems with information flow in the
supply chain are quickly uncovered.
Some basic information that can prevent supply chain issues is
easily communicated across the supply chain some variation of
three questions:
What needs to be ordered next?
What has not yet been delivered? And
What types of products will we need in the future?
10
How does Information Flow in the Organization?
The formal communication network includes all communication
along official lines of authority within an organization.
These formal channels typically have certain functional
communication barriers.
These functional barriers to communication result when
information needs to pass between various divisions of the
supply chain.

7. For Example, without the aid of an information system, passing
information about a stock-out from departmental storage, to
central storage, and then to acquisitions is a slow process that
moves forward step – by –step.
Through the use of an information system, the level in the
departmental storage area can be remotely monitored and
restocked from central storage without risk of a stock out.
(2012). 8.5 Communication Channels - Flat World Knowledge.
Retrieved December 8, 2014, from
http://catalog.flatworldknowledge.com/bookhub/7?e=collins-
ch08_s05.
11
What Data Should Be Managed?
Information to be managed within the supply chain includes
inventory, vendor information, transaction history, and contract
related information.
This information is usually managed through the use of an
enterprise resource planning software package or ERP.
Some examples of healthcare ERP vendors include McKesson,
SYSPRO, QAD and Lawson.
SYSPRO is the vendor for an ERP system for the medical
devices and pharmaceuticals industry and has a specific system
for each industry.
The McKesson system is designed to serve both the health and
medical practice industry through their ERP offering.
The Lawson ERP offering is a system that was not specifically
designed for the healthcare industry originally.
Through the acquisition of other companies such as
Healthvision

8. Solution
s, its ERP system gained the functionality to become a leading
ERP option for healthcare organizations.
Data Standards in ERP System Development in SCM
Data standards are determined within the project management,
building and deploying/launching of the supply chain
information system or the ERP aspect of the supply chain
operation.
Table 5-1
Table 5-1
Item Master
Figure 5-3

9. Item Master
An item master is a master record for a particular item kept in
inventory.
This includes the description, warehouse specific information,
fulfillment, sales, and handling specifications.
Figure 5-2
Vendor Master
A vendor master system contains information about the vendors
that supply an organization. Typically, this information is
stored in individual vendor master records. The master record
for a vendor includes the vendor’s name and address as well as
additional information such as:
The contact information for important individuals associated
with the account, typically sales representatives
Terms of payment
Currency used for order from the vendor
(2005). Vendor Master Data - SAP Help Portal. Retrieved
December 8, 2014, from
http://help.sap.com/saphelp_47x200/helpdata/en/75/ee0b1c55c8
11d189900000e8322d00/content.htm.

10. Transaction History File
The transaction history file is a part of the ERP system that
tracks the status of customers based on the frequency of orders
they place within the organization and what business
transactions have occurred with the health organization to
external suppliers and vendors.
Typical statuses are new, recent, lost, and dormant.
18
Contract Elements
Contract elements are linked specifically to the vendors in the
Vendor Master File and are used to set parameters on
operational transactions between the vendors and the healthcare
organization.
Both the monitoring of contracts for performance problems and
the managing of amendments can be administered through most
ERP systems.
Contract information such as delivery and payment terms, items
to transact and other elements are loaded in the ERP system and

11. linked to the vendor master to ensure that the negotiated
contract terms are utilized when business is conducted.
What is Linked to the Information System?
Links to information systems can be found throughout the
healthcare supply chain.
Information systems can be used to track the movement of
goods from the manufacturer to central storage, to the floors
through their use in patient care.
Performing tracking without the use of information systems
would be extremely time consuming and error prone process.
Clinical links to information systems include pharmaceutical
usage, medical / surgical supplies, and usage information.
Acquiring and Procurement: Sourcing and Purchasing
Many healthcare supply chains in the industry are linked to an
‘external hub’ to conduct transactions.
Global Health Exchange (GHX) connects manufacturers,
distributors, suppliers and vendors to healthcare organizations’
supply chains to efficiently transact the business of purchasing.
In healthcare over 50% of medical and surgical items, such as
cotton balls, are processed and transacted electronically
between healthcare organizations and vendors by GHX.

12. Acquiring and Procurement: Sourcing and Purchasing
For a best practice when the supply item(s) will be ordered in
large quantities, over a long period of time or when the cost of
transactions with this vendor will be moderate to high, a
contract should be established with this vendor to achieve the
best pricing and service terms for ordering, receiving, returning,
utilizing and maintaining our supply items.
Electronic Data Interchange (EDI) is an important concept to
electronic transactions in the healthcare supply chain.
Electronic Data Interchange (EDI)
EDI is a set of standards that collectively provide a common
protocol or syntax for transacting business documents
electronically– it is a set of rules and guidelines that are applied
when developing and implementing software and services
designed to transmit business documents electronically
Table 2-4
Reproduced from: TrueCommerce EDI