Healthcare supply chains shift focus to margin protection amid visibility challenges

Healthcare supply chains are increasingly being judged as a source of margin protection rather than a back-office buying function, according to a new Black Book Research survey that says hospital systems are still struggling to give executives timely visibility into performance.

The study, based on responses from 1,335 supply chain professionals across 1,019 provider organisations, found that 90% see supply chain as one of the top three non-labour levers for improving financial...

performance over the next two years. Even so, 83% said executive or board reviews of supply chain key performance indicators happen less often than quarterly, pointing to a gap between operational importance and board-level oversight.

Black Book founder Doug Brown said the findings suggest the function is now tied directly to margin protection, working capital discipline and continuity of care. “The data indicates that when disruption signals are delayed, substitute approvals remain manual, and boards lack timely visibility into supply chain performance, providers are not just absorbing inefficiency,” he said in the report’s accompanying statement.

The survey also points to persistent operational fragility. Most respondents said they still lack near-real-time visibility across suppliers, sites of care and critical categories. Many described substitute identification and approval as a major bottleneck, while more than two-thirds said poor source-of-origin visibility or supplier transparency limits efforts to diversify sourcing.

The report argues that the biggest cost pressure is now latency rather than inflation: delays between a disruption and a response. That can force hospitals to hold more stock, rely on manual escalation and absorb extra labour costs, according to the findings.

A separate summary of the report from Clarium said hospital and health system leaders increasingly recognise the savings potential in supply chain, but often do not have the real-time visibility needed to act on it. The result, it said, is a move among more advanced organisations from transactional purchasing towards supply chain as an enterprise operating discipline.

Black Book also found a governance mismatch at board level. Only 32% of trustees currently rank supply chain IT among their top five digital investment priorities, although 64% expect it to become more important within two years. By contrast, 77% of supply chain executives and managers said the technology should already be treated as a standing enterprise priority.

The survey suggests a replacement cycle is underway, with 71% of respondents expecting to replace or significantly upgrade at least one major supply chain application or module within 24 months. Buyers, Black Book said, are becoming less tolerant of systems that identify problems but do little to help resolve them.

The company said categories it rated highly in its user satisfaction polling included Infor for ERP and procure-to-pay platforms, Coupa for strategic sourcing, Premier for purchasing support, BlueBin for inventory automation and symplr for supplier networking and vendor credentialing.

Black Book said 74% of respondents now expect measurable value from new supply chain technology investments within a year, while 68% expect supplier-risk transparency and source-of-origin visibility to become formal buying requirements. It also found that 66% see substitute-management and clinically informed product conversion as a top automation priority.

Brown said the broader implication for boards is that healthcare supply chains are no longer best understood simply through unit prices. “The future of healthcare supply chain will not be defined only by lower prices,” he said. “It will be defined by faster decisions, cleaner data, safer substitutions, stronger governance, and a more resilient operating model across the care network.”

Source: Noah Wire Services