Collaborative management of inventory in Australian hospital supply chains: practices and issues

Purpose - The purpose of this paper is to develop an understanding of the nature of collaborative arrangements that partners in Australian hospital supply chains use to manage inventories. Design/methodology/approach - A case study involving a supply chain network of ten healthcare organisations (three pharmaceutical manufacturers, two wholesalers/distributors and five public hospitals) was studied. Data included 40 semi-structured interviews, site visits and examination of documents. Findings - This study highlights the existence of a variety of collaborative arrangements amongst supply chain partners such as the "Ward Box" system (a variant of the vender managed inventory system) between wholesalers/distributors and hospitals. The materials management departments were more willing than their pharmacy counterparts to participate in a variety of partial and complete outsourcing arrangements with wholesalers/distributors and other hospitals. Several contingent factors were identified that influenced development of collaborative arrangements. Research limitations/implications - This study is limited to the Australian healthcare sector. To improve generalisability, this study could be replicated in other industry sectors and countries. Practical implications - Application of collaborative arrangements between manufacturers and wholesalers/distributors would improve inventory management practices across the supply chains. Also, learning from materials management departments could be transferable to pharmacy departments. Originality/value - Several contingent variables for the implementation of collaborative inventory management arrangements between healthcare supply chain partners have been identified. Methodologically, data across three echelons in the supply chains (manufacturers, wholesalers/distributors and hospitals) were collected and analysed.