Supply Chain Integration under Chaotic Conditions: The Not-for-Profit Sector

Paul D. Larson, Professor and Head, SCM, Director, Transport Institute, University of Manitoba; larson@cc.umanitoba.ca
Ron McLachlin, University of Manitoba; mclachl@cc.umanitoba.ca

Primarily, this session describes and discusses the unique supply chain integration challenges faced by not-for-profit organizations, as opposed to for-profit businesses.  In addition, the session focuses on possible transfer of “best-practices” from business logistics/supply chain management (SCM) to the not-for-profit sector. 

Unlike businesses, not-for-profit organizations rely on volunteer labour and target social (rather than economic) objectives.  In addition, they tend to work with and serve a wider range of stakeholders compared to the for-profit sector.  Donors as suppliers create unique challenges for coordinating what is delivered, and when.  These features have important implications for supply chain integration.

Vendor Enhancement Strategies of Partnership Management in the Healthcare Industry

This is a case study of an outstanding partnering relationship of P. D. Hinduja National Hospital & MRC with suppliers wherein the concept of Vendor Managed Inventory (VMI) has actually been practiced within Indian healthcare industry. Both quantitative and qualitative measures were analyzed, compared with literature findings, and discussed.

The study represents the total value of procurement made during last 5 consecutive fiscal years (2003-2008). The statistical analysis illustrates that the total surgical and medical consumables procurement value is USD 22.95 million per annum. Out of this, the VMI holdings constitutes to USD 11.87 million per annum (51.72%). The actual VMI consumption amounts to USD 1.97 million per annum. The total annual savings from VMI is USD 9.90 million (43.14%) per annum.

This reflects that VMI plays a vital role in substantial savings which can be effectively utilized for other progressive activities. This demonstrates the strong bond and the trust that has been developed amongst the vendors with the hospital. Partnership relationship is purely based on the faith and trust the hospital has been able to build with the vendors. It concludes that the VMI is very unusual in any other industry; but is very effective and efficient in healthcare industry.