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Supply Chain Strategies in the healthcare sector. The purchasing perspective in the Dubai Health Authority

Master's Thesis 2017 82 Pages

Business economics - Trade and Distribution

Excerpt

Table of Contents

Chapter 1: Introduction
1.1 Background
1.2 Research aim
1.3 Research objectives
1.4 Research questions
1.5 Dubai Health Authority profile
1.6 Research structure

Chapter 2: Literature Review
2.1 Introduction
2.2 Supply chain Strategy
2.3 Supply chain management in healthcare
2.3.1 Patients flow supply chain
2.3.2 Supply chain management challenges in healthcare
2.4 Lean management
2.4.1 History of lean management
2.4.2 Lean management in healthcare
2.5 Agile concept
2.6 Purchasing portfolio
2.7 Literature review summary

Chapter 3: Research Methodology
3.1 Introduction
3.2 Research philosophy
3.3 Research approach
3.4 Research strategy
3.5 Research techniques and choices
3.6 Time horizons
3.7 Data collection
3.7.1 Primary data
3.7.2 Secondary data
3.7.3 Data Sampling
3.8 Data analysis
3.9 Research ethics
3.10 Methodology summary

Chapter 4: Findings
4.1 Introduction
4.2 Respondents profile
4.2.1 Respondent’s job profile
4.2.2 Years of experience
4.3 Supply chain strategy
4.4 Products characteristics
4.4.1 Functional products characteristics
4.4.2 Innovative products characteristics
4.5 Supply chain strategy characteristics
4.5.1 Lean Supply Chain (stock-products)
4.5.2 Agile Supply Chain (nonstock-products)

Chapter 5: Research Analysis
5.1 Introduction
5.2 Supply chain strategy
5.3 Products characteristics:
5.3.1 Functional products characteristics (stock-products):
5.3.2 Innovative products characteristics (nonstock-products):
5.4 Supply chain strategies (lean / Agile):

Chapter 6: Conclusion
6.1 Introduction
6.2 Answers to research questions
6.3 Limitations of this research
6.4 Recommendations for future academic research

References

Appendices

Appendix 1: Synthesis Table

Appendix 2: Interview questions

Appendix 3: Ethics approval form

Acknowledgement

This dissertation is presented for the award of MSc certification in Logistics and Supply Chain Management at Heriot-Watt University.

I would like to express my sincere appreciation and gratitude to the Program Director and my supervisor; Ms. Carrie Annabi for her endless support and guidance during the whole period of the program and during the process of my dissertation writing.

Besides my supervisor, I would like to express my appreciation to the respondents involved in this research for their valuable time and contribution. Last but definitely not least, I would like to thank my parents, family, friends, and the special people whom had steadfastly supported and encouraged me throughout the programme.

Finally, I would like also to express my appreciation to my parents, family, friends, and the special people who have directly supported me in this research and the whole period of the program.

Abstract

This research aims to investigate the application of supply chain strategies in healthcare sector from the perspective of purchasing in Dubai health Authority. The objectives of this research is twofold. First, to examine the relation between the products characteristics and its related supply chain strategies in healthcare supply chain from the purchasing perspective in Dubai Health Authority. Second, to investigate the current supply chain strategies characteristics in the healthcare sector from the purchasing perspective in Dubai Health Authority.

This qualitative research obtained its data from a semi structured face-to-face interview. The interview is crucial in providing a more in-depth insight on the products’ characteristics and its related supply chain strategies characteristics. The data gathered from the interview is examined using a mathematical analysis before it is subsequently divided into main themes.

The data analysis concluded the correlation between products characteristics and supply chain strategies in Dubai Health Authority, and also suggested a mutual focus on both applications of lean and agile strategies. However, further studies on the development of product classification is essential in deciding the right supply chain strategies.

It is also important to highlight that this research limits its study to that of Fisher’s model and this includes the criteria used to classify the products and the related supply chain strategies.

List of Figures

Figure 1.1: The right supply chain based on products category

Figure 2.1: Research onion.

Figure 4.1: Ranking of purchasing focus for buying stock-product

Figure 4.2: Ranking of purchasing focus for buying nonstock-product

List of Tables

Table 4.1: Respondents position

Table 4.2: Respondents years of experience

Table 4.3: Respondent’s awareness about organization strategy

Table 4.4: Respondent’s awareness about purchasing objectives

Table 4.5: Respondent’s perception on importance of purchasing objectives

Table 4.6: Respondent’s perception on stock-products life cycle

Table 4.7: Respondent’s perception on stock-products variety

Table 4.8: Respondent’s perception on demand pattern of stock-products

Table 4.9: Respondent’s perception on stock-products cost

Table 4.10: Respondent’s perception on stock-products delivery lead-time

Table 4.11: Respondent’s perception on nonstock-products life cycle

Table 4.12: Respondent’s perception on nonstock-products variety

Table 4.13: Respondent’s perception on demand pattern of nonstock-products

Table 4.14: Respondent’s perception on nonstock-products cost

Table 4.15: Respondent’s perception on nonstock-products delivery lead-time

Table 4.16: Lean supply chain characteristics significance - number of votes

Table 4.17: Agile supply chain characteristics significance - number of votes.

Chapter 1: Introduction

1.1 Background

The implementation of an effective and efficient supply chain management has been a continuing interest in the manufacturing as well as the service sector. This interest is further driven by the expansion of market globalization, business environment complexity and more importantly the growing demands of consumers.

According to Ellinger (2000), the strive to select an effective management of the supply chain is crucial not only for the purpose of internal efficiency, but also for the enhancement of external effectiveness. In other words, the right supply chain management strategies help to facilitate the relations and communications between traders and suppliers while at the same time fulfill the consumers’ demands such as the demands for flexibility and efficiency. Due to this, the application of supply chain management strategies set to improve the aspect of management and also to provide competitiveness advantage for and within an organization. Subsequently, the competitiveness advantage becomes the key determinant to which strategies to adopt. This also has created the need for a structured framework that aligns the products with the chosen supply chain strategies (Stavrulaki and Davis, 2010) The strategies are also taken into account when deciding the goal of the supply chain and other main characteristics such as purchasing, inventory management, and logistics (Tarafdar and Qrunfleh, 2016).

Despite that many studies pertaining to the application of supply chain strategy and its related factors in the manufacturing and service sectors, there is not much of research done to examine its application in the healthcare context. This scarcity is unjustifiable as supply chain is typically accountable for around one third of the operating budget in hospitals (McKone-Sweet, Hamilton and Willis, 2005). For this reason, this research is imperative to fill in this gap by investigating the application of supply chain strategies in healthcare sector and its related products characteristics in Dubai Health Authority.

1.2 Research aim

The aim of this research is to investigate the application of supply chain strategies in healthcare sector from the perspective of purchasing in Dubai health Authority.

1.3 Research objectives

1- To examine the relation between the products characteristics and its related supply chain strategies in healthcare supply chain from the purchasing perspective in Dubai Health Authority.
2- To investigate the current supply chain strategies characteristics in the healthcare sector from the purchasing perspective in Dubai Health Authority.

1.4 Research questions

In order to achieve the above objectives, the research aims to answer the following research questions:

1- Do products characteristics matter in the determining supply chain strategy (lean / agile) in the healthcare sector?
2- Are both strategies (lean / agile) mutually exclusive or can a combined strategy be pursued?

1.5 Dubai Health Authority profile

The Dubai Health Authority is the government appointed organization responsible for the administration of the overall aspects of healthcare sector in Dubai, United Arab Emirates. Established in June 2007, Dubai Health Authority is accountable to provide and oversee the healthcare facilities spread throughout the Emirate of Dubai which includes hospitals, specialty centers and primary health centers. DHA aims to provide an accessible, effective and integrated healthcare system while at the same time ensuring that public health protection is expansive and quality of life for residents in Dubai is improved. (Government of Dubai, 2017).

1.6 Research structure

This research consists of six chapters listed below:

Chapter One: Introduction. This chapter provides introduction to the research, research aim, research objectives and research questions.

Chapter two: Literature Review. This chapter presents the academic literature related to supply chain strategy and overview of healthcare supply chain management. Moreover, an illustration of related literature of agile and lean concepts. Lastly, this chapter introduces different purchasing portfolio categorization models and supply chain strategy framework.

Chapter three: Research Methodology. This chapter presents the research methodology adopted in this research.

Chapter four: Research findings. This chapter presents the data collected during the research.

Chapter five: Analysis and discussion. This chapter provides analysis and discussion over the main findings of the research.

Chapter six: Conclusion. This Chapter provides answers to the research questions, furthermore, it presents the research limitation and recommendation.

Chapter 2: Literature Review

2.1 Introduction

This chapter illustrates the related literature for this research, and provides the main references to answer the research questions. This chapter highlights the supply chain strategy concepts; lean and agile. Additionally, it provides insight of related literature about the supply chain management in the context of healthcare service. Finally, it discusses purchasing portfolio categorization and the relation with supply chain strategy.

2.2 Supply chain Strategy

In the last decades, the business environment has witnessed a change in the view of the competition between companies, the competition having being moved from the classic competition between companies to supply chain versus supply chain competition (Li et al., 2006). This shift in the competition due to the globalization in the market and the business environment complexity, inspire the companies and organizations to pursue not only the internal efficiency in the supply chain operations but also the external efficiency while dealing with partners such as suppliers (Ellinger, 2000; Skjoett‐Larsen, Therne, and Andresen, 2003). As discussed by Qrunfleh and Tarafdar (2013) the view of supply chain becomes more as a strategic view to manage the related practices and processes in order to achieve a competitive advantage, this competitive advantage become as concept of supply chain strategy . Supply chain strategy determines the goal of the supply chain and influences the main characteristics of the supply chain such as procurement, inventory management, and logistics (Tarafdar and Qrunfleh, 2016).

Likewise, as supply chain management view became more strategic than transactional, this created the need for a structured framework to align the products with the supply chain strategy (Stavrulaki and Davis, 2010). Many researchers discussed different frameworks for supply chain strategy, one of which is the commonly cited Fisher (1997) known as Fisher’s model. Fisher (1997) suggested to categorize the products based on the product’s characteristics into two groups: functional products and innovative products. Furthermore, the functional and innovative products are linked with different supply chain strategies, which are efficient, and responsive supply chain strategies respectively. As suggested by Fisher the efficient supply chain referred to as lean supply chain, focuses on cost efficiency and lean practices, while responsive supply chain, referred to as agile, focuses on a quick response and flexibility for demand uncertainty.

Similarly, Many researchers discussed the supply chain strategy from different perspectives. For instance, Huang et al. (2002) suggested categorizing the products based on lean and agile characteristics. Another proposal by Lee (2002) suggested a new framework that include supply uncertainty and four different strategies which are efficient, risk hedging, responsive, and agile. Lastly, Christopher et al. (2006) suggest a hybrid strategy between lean and agile characteristics, referred to as Leagile, which claims that the lean and agile strategies are not mutually exclusive.

Different studies have discussed the supply chain strategies in different sectors, yet a limited literature discusses the supply chain strategy in the healthcare sector from the purchasing point of view. Therefore, this research aims to fill this gap by investigating the application of supply chain strategies in the healthcare sector.

2.3 Supply chain management in healthcare

Supply chain and healthcare has witnessed a rapid improvement and change in the last decades, and the supply chain management concepts have a proven application in the manufacturing and service sectors (Drake, Myung Lee, and Hussain, 2013). Moreover, supply chain management has a proven application mainly in the manufacturing sector with reference to processes and cost optimization (Rahiminezhad Galankashi and Helmi, 2016). In addition, different researchers discussed supply chain management in different sectors such as fast-moving consumer goods and fashion industry (Christopher, Lowson, and Peck, 2004).

In the same regards, the medical perspective in healthcare service sector has observed major accomplishments due to research and developments projects along with the related the advanced technology (Aronsson, Abrahamsson and Spens, 2011). However, the best supply chain management practices are hardly implemented in the healthcare sector, although the healthcare sector strives to achieve a high service level in comparison with other industries (McKone-Sweet, Hamilton, and Willis, 2005).

2.3.1 Patients flow supply chain

The academic literature related to supply chain management in the healthcare sector is focused more on the patient flow inside the hospitals and not on the material management related to supply chain. For example, a study conducted by Smith, Nachtmann, and Pohl (2012) and another study conducted by Böhme et al., (2013), succeeded in reflecting the concepts that applied in the manufacturing sector of products flow and lean management, in the sense of considering the patients as the center of the health service processes with respect to hospital capacity and waste management.

Another study discusses the lean management in the production sector and examines the principle in the health care sector setting done by Shah et al. (2008). The study findings confirm that lean management can be implemented effectively in healthcare sector in terms of patient flow. Likewise, an empirical study conducted in Swedish healthcare sector for patient flow and processes done by Aronsson, Abrahamsson and Spens (2011) presented an argument to emphasize that the application of supply chain management should not be exclusive to lean management, but also the supply chain should be prepared for a quick response more particularly in the emergency department. Accordingly, from a strategic point of view lean and agile concepts should be followed simultaneously referred as lea-agile.

2.3.2 Supply chain management challenges in healthcare

Bhakoo, Singh, and Sohal (2012) argued that the effective supply chain management practices are behind in the healthcare sector due to the complexity of the supply chain management in healthcare. Moreover, the study discusses that different factors affecting the complexity of the healthcare supply chain. Such as the lack of supply chain management best practices knowledge the practitioners have , considering that they are the decisions maker on the demand side of the chain. In addition, the demand uncertainty in the healthcare supply chain is relatively more difficult to forecast in comparison to other operational services and manufacturing, this difficulty is driven by the patient's mix and the required medical supplies accordingly.

Likewise, McKone-Sweet, Hamilton, and Willis (2005) pointed out some of the barriers to implementing supply chain management practices in the healthcare sector; these barriers included the conflict of objective between the supply chain professionals and the practitioners. The supply chain professionals typically look to reduce cost and inventory level, while the practitioners require a verity of products and a high level of inventory to mitigate the risk of stock out considering the criticality of consequences on patients. McKone-Sweet, Hamilton, and Willis further added that lack of supply chain best practices training for the practitioners causes an extra challenge to supply chain professionals to balance the costs and supply requirements. The product selection by the practitioners adds an extra challenge to the supply chain professionals since the practitioners have a lack of supply chain best practices knowledge.

2.4 Lean management

2.4.1 History of lean management

The start of lean thinking originally developed during the 1980’s, when the Japanese manufacturing sector initiated the lean management concepts, more specifically in Toyota Production System with the main objective to do more with less (Holweg, 2007). Christopher and Towill (2001, p.4) defines lean as “Leanness means developing a value stream to eliminate all waste including time, and to enable a level schedule”. Additionally, Christopher and Towill explained that the lean management concepts are more applicable to products and services with a stable demand and more predictable forecast.

The Japanese term “Muda” used after the Second World War to describe any non-value added activities or process that need to be eliminated. Later on, the non-value added in the processes was described as waste that needed to be eliminated from activities to drive more value to the customer (Al-Balushi et al., 2014). The first step of lean management is to develop the value stream map for the processes of material and services flow, to identify the non-value added and the value-added activities from the customer’s point of view (Bancroft and Saha, 2016). Likewise, Holweg (2007) stated that the activities and the related processes map is often called a value-stream map. This map helps to identify the waste and the opportunities to create value or to maximize value from the processes and to eliminate non-value added processes.

2.4.2 Lean management in healthcare

Many academic studies embraced lean application in the manufacturing sector, the concepts of lean have been broadly introduced in the industrial sector where clear processes for goods and services are in place (Aronsson, Abrahamsson and Spens, 2011). Later on, in the service sector, the lean management thinking was adopted. The application of lean management in the service sector was implemented with the same principle of eliminating waste and adding value to the processes, which eventually adds value to the customers (Al-Balushi et al., 2014). Likewise, Healthcare service sector has the potential to improve the efficiency of the service provided by implementing lean management, since it eliminates waste in the processes and creates value for the patients (Waring and Bishop, 2010). Furthermore, Bancroft and Saha (2016) argued that lean management is the most common practice in the hospitals to improve efficiency, and has a proven impact on the healthcare sector in literature such as increasing quality service, reducing cost.

The healthcare service sector started to adopt lean concept in the last decades, as pointed by Hussain and Malik (2016). In 2001, lean management in the healthcare sector was first applied in UK public healthcare sector known as the National Health Services concerning the patients flow inside the hospitals. Different research conducted at National Health Services, one of which is a study done by Hussain and Malik (2016) who argued that many measurable benefits were achieved in the National Health services with regard to waste elimination and lean thinking such as reduction in paperwork, patients waiting time, and length of stay. Another case study conducted at one of National Health services in the UK to investigate the application of lean management in the healthcare sector by Fillingham (2007) concluded that the application of lean management in the healthcare sector is challenging but at the same time, there is a noticeable potential for successful improvements in the service. In contrast, Matthias and Brown (2016) investigate the application of lean management in National Health Service in a case study at some hospitals in the UK. Matthias and Brown conclude that, despite the fact that lean management is a familiar thinking in the hospitals but the concepts are not fully developed in the wider perspective of the operation strategy. Additionally, the dominant area of lean application is reducing cost from a financial perspective with less focus on other areas such as lead-time, and spaces waste.

Another study conducted in Europe, more specifically in Sweden, by Drotz and Poksinska (2014) concluded that lean management has a successful implantation in the healthcare sector based on a three case studies conducted in three different anonymous hospitals. Moreover, Drotz and Poksinska stated that the application of lean has a great influence in different areas such as processes flow and standardization. In addition, lean practices affected not only on the processes inside the hospitals but also on the professional’s job and skills required from the staff. Likewise, Mazzocato et al. (2012) conducted a study at one of the private hospitals in Sweden and concluded that lean management achieved a consistent reduction of waiting time for patients in the hospitals.

Limited literature found regarding lean management application in the healthcare sector outside Europe and one of the studies conducted at a small sample of anonymous private and public hospitals in UAE by Hussain and Malik (2016) concluded the successful application of lean management on a different type of waste, such as waiting time, inventory, over processing. Yet, inventory waste has most of the attention from lean management waste elimination point of view.

Different literature embraces the contribution of lean management in the healthcare sector, However, it is challenging to generalize the result of these researches since it is conducted in a small sample of hospitals and with a different perspective. Similarly, McIntosh, Sheppy, and Cohen (2014) stated that evidence of lean management contribution to the overall organizational performance is inconsistent, due to the mixed results in the literature regarding the application of lean management in the healthcare sector.

The application of lean management in the healthcare sector is relatively recent and there are many areas still not covered in the literature. For instance, the application of lean in the hospitals applied in the sense of processes flow and waste management and not in the supply chain and material management side.

In the healthcare context, Lean supply chain in the sense of material management and purchasing has less attention in the literature. Despite the influence of lean management in the healthcare sector and the recent attention in the academic research , limited literature discusses the broader perspective of the lean as a strategy for material management and purchasing in the hospitals. Therefore, this research attempts to fill this gap by discussing the lean supply chain strategy from the purchasing perspective.

2.5 Agile concept

Agility concept as a strategy in the business context refers to the readiness to change by the best use of responsiveness in a volatile marketplace, Christopher (2000). Unlike the lean management, agility means to adopt a more responsive and flexible reaction to customer demand, where the agility strategy in a business is demand driven (Fernie, 2004). Furthermore, as discussed by Christopher (2000) the supply chain agility is the quick response to customer demand and changes in the patterns by building a more flexible supply chain practices. The objective of quick response as a demand-driven strategy is to increase supply chain efficiency. This can be achieved by the best utilization of communication means between supply chain partners and deploying supply chain best practices (McMichael, Mackay, and Altmann, 2000). The agility in supply chain proves its application in the industrial field (Rahimnia and Moghadasian, 2010). Originally, the quick response concept started in the fashion industry as a practice to mitigate the uncertainty in demand, where the fashion industry is a customer-driven sector requires a quick response to the rapid change in fashion demand (Fernie, 2004). Additionally, ordering from the overseas manufacturers leads to overstocking or stock out in the inventory, due to the long production lead-time and shipping lead time, which forces the organizations and retailers to pursue a more responsiveness supply chain strategy in order to mitigate the risk of overstocking or stock out in the inventory (Birtwistle, Siddiqui, and Fiorito, 2003). Many researchers discussed the successful application of quick response in the fashion industry; one of the well-known examples is the Zara responsiveness supply chain. For example, a study done by Ferdows, Lewis, and Machuca (2003) illustrates that the synchronization between the various departments in the operations including the purchasing department allows Zara to develop a quick response to customer demand and latest fashion trend. Additionally, the information technology (point of sale) helps to give more visibility to customer demand and changing in fashion trends especially for the innovative products (Fashion). As a conclusion, the agile supply chain has a proven application in the retail fashion, which can a shape competitive advantage to increase customer satisfaction.

Generally, the open competition in the market and globalization of the economy in addition to the customer-driven trend raised the interest of the organization to deploy an agile supply chain strategy (Aronsson, Abrahamsson and Spens, 2011). Christopher (2000) argued that different supply chain strategies can be adopted in the same organization and it is not necessary to implement lean or agile solely. This hayride strategy combines lean and agile and seeks to achieve efficiency at some part of the processes and responsiveness in parts where suitable. As further explained by Christopher, the decoupling point is the shift in the lean and agile strategy. The lean strategy can be applied upstream the supply chain as demand is driven by forecast while the agile strategy can be implemented downstream the supply chain as the confirmed demand visibility is possible.

Many academic studies discussed the agility concept in the supply chain. Yet, limited literature has covered the agility within the service sector. One of the studies done by Borjesson and Mathiassen (2005) in the information technology sector suggests that adopting agility concepts can help to improve the software process improvement in response to unplanned events and effective coordination throughout the organization. However, this research was done at Ericsson as a case study and the result can be influenced by the context in which it is done. Another research was done by Oloruntoba and Gray (2006) to investigate the relationship between supply chain concepts, more particularly agility in the humanitarian aid supply chain. In addition, they attempted to develop a related a model for the agile supply chain. The research shows potential applicability for agile supply chain in the humanitarian aid, even though there are many differences with business supply chain but there are significant similarities in the short-term emergency aid supply chain. However, this research was done based on the academic literature and internet resources related to humanitarian aid, which leaves a potential for empirical research to investigate the agile supply chain in the humanitarian aid context. Likewise, in the healthcare service setting, both lean and agile strategies have been discussed in the context of the patient flow inside the hospitals. As explained by Aronsson, Abrahamsson, and Spens (2011), the patient flow inside the hospital is ideally supposed to be an efficient seeking economy of scale with a consideration of available capacity by implementing lean strategy concept. However, at the same time, it is difficult to predict the patient’s requirements inside the hospital, which requires having a sort of flexibility in the healthcare service sector to respond ultimately to the patient’s needs. Similarly, in a case study done at one of the specialized hospitals in Iran (Rahimnia and Moghadasian, 2010), it was illustrated how lean and agile can be applied in the healthcare service sector. A semi-structure interview was conducted with the main stakeholder in the hospital to explore the application of lean and agile supply chain with regard to material purchasing and patient service process. The study observes that in the most of the material, purchasing supply can follow lean practices since it is used for most of the patients. Moreover, in the patient service process, it is difficult to predict the severity of the injuries and thus the application of agile is more likely to deliver a high service quality quickly and to manage the capacity more efficiently.

Furthermore, (Christopher and Towill, 2001) remarks that different requirements from the organizational capability point of view are required to adopt the agility in the supply chain such as quality, cost, and lead-time. These capabilities as explained in the study allow the organization to achieve the required service level. A high-quality level of the products or services differentiate the need of agile supply chain whereas a more responsiveness means of supply and transport can be used to fulfill customers demand. Accordingly, the need to respond to customer demand responsively justifies the cost to deliver the product or service. The same point is made by Fisher (1997) that the cost of the obsolete stock is relatively higher than the cost of production. Accordingly, this leads to the need for flexibility in the supply chain of a volatile market.

2.6 Purchasing portfolio

As discussed by Lega, Marsilio, and Villa (2013), purchasing is one of the main functions in the supply chain and can drive the improvement of the organization performance. Moreover, the purchasing function is considered as one of the main support services to the healthcare sector in terms of cost.

Researchers have proposed different classification of products, in order to formulate related strategies and practices which suits each classification. For instance, Kraljic (1983) has developed the commonly cited matrix noun as Kraljic matrix, which classified the purchasing portfolio into four categorized: strategic items, bottleneck items, leverage items, and routine items. The mentioned categorized are classified based on two dimensions: supply risk and financial impact. This model has been adopted in different purchasing studies (Gangurde and Chavan, 2016). However, Krajlic matrix did not determine the appropriate supply chain strategy, lean or agile related to each product category.

Likewise, Fisher (1997) establishes a model to determine the right supply chain strategy for each product category. The model has two dimensions: product nature, and supply chain strategy. The first dimension proposed two product categories based on product characteristics. The first products group is the functional products that are characterized as having long product life cycle, steady demand, long lead-time to produce, high volume, low variety, and lower cost margin. The second group is the innovative products characterized as having a shorter product life cycle, uncertainty in demand, high variety, low volume, shorter lead-time to produce, and higher cost margin. The second dimension is the correspondent supply chain strategy are being either efficient supply chain referred to as lean or responsive supply chain referred to as agile. According to Fisher, the efficient supply chain strategy is linked with supplying the steady demand of functional products in an efficient way seeking cost efficiency. While the responsiveness supply chain reacts quickly to the uncertainty in demand pattern to minimize obsolete stock and stock out. This model as shown in Figure 1.1 proposed the right supply chain for each products category. In a wider perspective, Fisher’s model covers different related supply chain operational strategies such as purchasing, inventory management, and supplier selection. As concluded by Fisher (1997) any mismatch between product category and the related supply chain strategy can affect the ultimate business objectives, as each product category falls into one of the product groups functional or innovative, and are linked to its related supply chain strategy, efficient or responsiveness.

Abbildung in dieser Leseprobe nicht enthalten

Figure 1.1: The right supply chain based on products category Source: Fisher (1997)

Fisher’s model considers product characteristics as the sole factor to determine the supply chain strategy. Many researchers have challenged this model from a different perspective to explore further other factors for selecting supply chain strategy. For instance, a quantitative study done by Lo and Power (2010) based on a survey conducted within the Australian manufacturing industry, concludes that other factors such as cost have a major role in determining the right supply chain strategy besides the product characteristics, and there is a minimal relationship between the product characteristic. Furthermore, the study argued thatthe two supply chain strategies; lean and agile can be deployed simultaneously regardless of product characteristics, as the organization may consider a more holistic view affecting the supply chain strategy. Accordingly, different product types are not necessarily to follow one of the supply chain strategies solely but a hybrid strategy can be in place in real cases.

In contrast with Fisher’s model, other researchers argued that different products group be followed and accordingly a relevant supply chain strategy be linked to each category. For instance, Wang et al. (2004) proposed a Hybrid product category; in this category, the products have a mixed characteristic between functional and innovative and accordingly cannot be categorized into one of the proposed categories by Fisher’s model. On the other side, some studies examined Fisher’s model and found out a matching result such as Wong et al. (2005), however, the researcher discussed that the different characteristics proposed by Fisher determine the product nature such as customization of products parts. Similarly, Lee (2002) argued that in Fisher’s model only demand uncertainty from downstream the supply chain is taken into consideration, while another source of demand uncertainty coming from upstream the chain presented by raw materials availability or manufacturing lead time deviation. These arguments in the academic sources show that there are no agreed characteristics that can define the product nature and as a result determine the related proper supply chain strategy. This view was supported by Li and O’Brien (2001) who attempted to test Fisher’s model by applying mathematical approach. The result of this study supported one side of the model, which associated the innovative products with the responsiveness supply chain. Nevertheless, it did not confirm the association between the functional products and efficient supply chain strategy. However, this study did not investigate the model from the wider perspective of supply chain strategy but from manufacturing processes related strategies.

In the healthcare context, limited academic literature discusses the supply chain strategy in the healthcare settings. Despite the proven importance of supply chain strategy in the literature (de Vries and Huijsman, 2011). However, some researchers attempt to fill the gap by investigating the supply chain management within the hospital environment. For example, in a study conducted in Greek hospitals pharmacy, Danas, Roudsari, and Ketikidis (2006) proposed a classification for the drugs purchasing portfolio in four categories ranked to importance. This importance ranking categorized the drugs based on different factors such as the criticality of the patient case, drug supply characteristics, demand uncertainty, and inventory management issues. The researchers suggest that each category of the drug portfolio will follow different inventory management techniques by having safety stock for the most important category and less stock for the less important categories spread over the hospital's network. Other research such as (Stanger et al., 2012) test the inventory management theories application in blood supply chain in UK hospitals with consideration of implementation challenges such as demand pattern and target stock level. Despite the importance of the inventory management within the supply chain management in healthcare sector considering the cost reduction and sustaining a high service and quality level. Yet, These researches did not highlight the broader perspective of supply chain strategies, as discussed by de Vries (2011) the operational supply chain perspective influenced by different stakeholders like the practitioners, pharmacy department, health care regulators body, and top management strategy. Such factors affect the setting of health delivery, which as a result shapes the high-level supply chain strategy for healthcare supply chain. In the same context, Rahimnia and Moghadasian (2010) argued that the healthcare service characteristics are comparable with Fisher’s model as lean and agile strategy are applicable in the healthcare sector with regard to functional and innovate service provided. However, generalizing the result in for the services provided in the healthcare sector is questionable since it is only conducted at one of the specialized hospitals.

Fisher (1997) argued that organizations should follow one of the supply chain strategies lean or agile and cannot be followed simultaneously in supply chain setting. In contrast with Fisher’s proposal, Wong et al. (2004) adopted the application of the two strategies at the same time within the same supply chain, which referred to as the leagile paradigm.

From the academic related literatures, it is clear that Fisher’s model is a regarded theoretical knowledge in the field of supply chain. Many researchers attempt to discuss Fisher’s model empirically or theoretically and construct a base for various studies in different sectors in the supply chain field. Nevertheless, a very limited literature has been done so far in the context of supply chain strategies in the health care sector. In fact, to the best of found knowledge there is no published study discusses the supply chain strategies in the health care sector settings.

2.7 Literature review summary

The literature review illustrated the academic research related to the supply chain strategy and the importance of the supply strategy to the overall business objectives. Moreover, the review looked into the healthcare supply chain management and discussed different studies done in the context of healthcare service for a better understanding of the healthcare settings. This chapter highlighted the academic literature of supply chain management in the healthcare context, which discussed the supply chain management in the sense of patient’s flow inside the hospitals, additionally, this chapter presented several barriers to implement supply chain practices in the healthcare.

Furthermore, the literature review presented the two supply chain strategies: lean and agile. Different studies were presented in different contexts concerning lean and agile strategy in the supply chain. Lastly, this chapter highlighted the gap in the literature regarding supply chain in the context of healthcare service sector.

The literature synthesis presented in the appendix 1.

Chapter 3: Research Methodology

3.1 Introduction

This chapter discusses the research methodology adopted in this research. Furthermore, this chapter will also justify the rationale behind the chosen research methodology.

Knox and Burkard (2009) discussed that the research methodology illustrates the method of collecting the information in the study and the techniques used to analyze this information. Furthermore, the research methodology defines the practical way that the researcher adopts to conduct the research. Moreover, it comprises the applied research philosophy, the process of data collection, and data analysis.

Similarly, based on a known knowledge and how it is known, the research is about developing the existing knowledge to create new knowledge (Johnston, 2014). As defined by Lee and Lings (2008, p. 6), “research is about generating knowledge about what you believe the world is”.

3.2 Research philosophy

The importance of the research philosophy to the research lies in the determination of a way of data and information collection and which is later on analyzed (Johnston, 2014).

This research will follow the model proposed by Saunders, Lewis, and Thornhill (2009) known as the ‘research onion ’. This model, as shown in Figure 2.1 consists of different layers, starting from the outside shell of the philosophies and following a logical order of its related approach, ending with the inside layer of data collection and analysis.

This research has adopted the interpretivism research philosophy; this research philosophy is considered more suitable for business and management studies since business problems and situations are dynamic and not alike (Antwi and Kasim, 2015). Moreover, Coule (2013) explained that interpretivism allows the researcher to explore the reality based on the subjective experience of the people. Similarly, Naslund (2002) pointed out that interpretivism provides a better understanding of the business situation based on the experts’ perception.

The main characteristic of interpretivism is that it provides in-depth understanding of what is happening by exploring different standpoints of the stockholders (Saunders, Lewis and Thornhill 2009). Accordingly, this will add value to the mentioned research by creating a deep discussion with the stockholders to reach the aim of the study and providing a detailed insight of reality.

Figure 2.1: Research onion

Abbildung in dieser Leseprobe nicht enthalten

Source: Saunders, Lewis and Thornhill (2009)

3.3 Research approach

As per the research onion suggested by Saunders, Lewis, and Thornhill (2009), there are two research approaches: deductive and inductive. The deductive approach is linked to positivism philosophy which is recommended for to theory testing studies. Generally, this approachi used to test different relationships between variables, such as natural sciences, where arguments are based on rules and laws dominate examining the specific outcome (Collis and Hussey, 2009).

Where as the inductive approach is linked to the interpretivism philosophy related to theory building (Saunders, Lewis and Thornhill, 2009). Moreover, in the inductive philosophy, the researcher follows a bottom-up approach to reach the aim of the study (Saunders, Lewis, and Thornhill, 2009). Using a qualitative data, the researcher aims to explore patterns and observation during the study to build a theory (Coule, 2013). However, building a theory is beyond the scope of this research, but the inductive approach can be utilized as it is more appropriate exploring a detailed insight of the situation.

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Details

Pages
82
Year
2017
ISBN (eBook)
9783668916876
Language
English
Catalog Number
v451716
Institution / College
Heriot-Watt University Edinburgh
Grade
Tags
Supply chain Strategies Purchasing

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Title: Supply Chain Strategies in the healthcare sector. The purchasing perspective in the Dubai Health Authority