What’s inside:

There are proven tricks to reducing healthcare supply chain costs and we’re going to share them!

Effective healthcare inventory management requires tight control of expensive medical inventory, as well as lower value implants and bulk medical supplies.

This blog will look at five common cash-burners for the hospital supply chain and look at the role of hospital inventory management software in adding speed and efficiency to healthcare supply chain management.

Avoid these mistakes to stop burning your budget!

Healthcare providers the world over strive for two key financial objectives: to reduce costs and improve value. 

The healthcare supply chain is a critical area with great potential cost-cutting and efficiency enhancement – which can have an impact on organizational performance.

So, let’s dive into the five major culprits that drain supply chain budgets in IDNs, hospitals and ambulatory surgery centers. 

1.  Bloated Medical Supplies Inventory:

A bloated inventory, filled with excessive stock, can be a major drain on a healthcare organization’s budget. This excess may consist of: 

  • Products that are no longer in use, 
  • Expired items
  • Surplus stock


To tackle this issue, organizations must strive for real-time inventory visibility and automated expiry management. This will give a clear picture of stock and consumption, which will in turn inform demand forecasting. By harnessing accurate, data-driven insights, hospitals can more efficiently manage their inventory, reducing the cost of unnecessary stock.

2.  High Healthcare Supply Chain Waste:

Insufficient inventory control can lead to a staggering 10% wastage, imposing substantial costs on healthcare facilities. 

Addressing this problem may involve the implementation of:

  • An automated expiry management system that monitors stock and helps to prioritize the usage of older items. 
  • Accountability through user and item tracking. Loss can be reduced by prompt action, for example, identifying any items that were removed but remained unused – and immediately investigating these.


Reducing wastage not only optimizes the budget but also aligns with sustainable and responsible healthcare practices.


IDENTI Platform Report on Soon to Expire Items
IDENTI Platform Report on Soon to Expire Items

3. Product Variance and the Goal of PPI Standardization:

Minimizing product variance plays a pivotal role in supply chain budget optimization.

 Healthcare organizations can achieve this by: 

  • Consolidating the supplier base
  • Reducing orders of similar products from multiple vendors. 
  • Benchmarking pricing variance to identify the best-value products 
  • Involving clinicians in supply chain discussions and promoting standardization through Value Analysis Committees 


Having accurate and up-to-date supply chain data helps to identify supply chain inefficiencies and discuss these with clinicians too. Data-driven conversations and informed decision-making can lead to more cost-effective choices.

4. High Upfront Costs in Hospital Materials Management:

The regular process of purchasing inventory based on anticipated demand and then holding it in stock for extended periods until it is used, can place a financial burden on cash flow.

This way of working results in:

  • Expensive holding costs
  • Store room capacity issues
  • An increased risk of waste due to expiry or loss.


To address this challenge, exploring consignment inventory arrangements can be beneficial. With this arrangement, suppliers retain ownership and responsibility for items, until they are actually used. Stock may be stored at the supplier’s location or at the healthcare provider.

Consigned inventory minimizes upfront costs and mitigates the risk of unnecessary waste.

The right smart cabinet makes managing consigned items a transparent and collaborative process.

5. Non-Optimized Healthcare Vendor Contracts:

Many healthcare providers unknowingly enter into contracts with suppliers that do not offer the best deals.

To optimize contracts providers can: 

  • Leverage inventory data to demonstrate purchasing and consumption figures. 
  • Negotiate volume-based discounts, rebates, and more favorable payment terms.
  • Improve forecasting based on data-driven insights. 


Establishing transparency and trust with supply chain partners by sharing access to the inventory management system can foster collaborative decision-making. Employing AI-driven forecasting can also aid in predicting demand accurately, further enhancing the negotiation process.


A combination of Total Sense smart cabinet and Snap & Go for usage capture and automated charting in a cath lab
Full tracking looks like this: Total Sense smart cabinet plus Snap & Go for 100% item and charge capture in the EHR – this image from a Cath Lab.


Improving hospital supply chain management

Effectively managing the supply chain budget is a vital component of financial performance by healthcare organizations. 

By using innovative healthcare supply chain systems that addresses these five common pitfalls, healthcare executives can optimize costs, increase efficiency, and enhance overall value. 

Embracing data-driven insights, advanced technologies, and collaborative decision-making ensures a streamlined and sustainable supply chain that aligns with both financial and patient care goals. 

If you need to add efficiencies into your hospital supply chain management then it’s time to contact us for ideas on the role technology can play in reducing labor, lowering costs and adding efficiencies.


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About the author

Olivia Walker is IDENTI’s Global Marketing Director and has a wealth of experience in the health-tech sector. Her innovative marketing strategies have successfully driven IDENTI’s growth in multiple worldwide markets. Her strength is the ability to identify what truly resonates within the industry. She is passionate about building relationships and her expertise lies in creating meaningful partnerships with healthcare providers, distributors, and suppliers.
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