Third Party Logistics–SPD Model in Hospital Supply Chain

Abstract

The complexity of the hospital supply chain results in numerous unfavorable outcomes, including out-of-stock situations, excessive inventory levels, product expiration, and medical errors. SPD, which refers to supply, processing, and distribution, has come to light as a solution for mitigating some complexities-related burdens. Nevertheless, the SPD is still immature and has limited applications. Adopting supply chain management approaches successfully implemented in other industries with the desired outcomes to strengthen the SPD's capabilities is therefore promising for the hospital. This study's objectives are to examine the third-party logistics (3PL) model functioning as SPD and to enhance its performance by incorporating it with vendor-managed inventory (VMI) and inventory policies in managing the SPD of continuous ambulatory peritoneal dialysis (CAPD) service. Therefore, this research proposes four logistics models, including an SPD with VMI (SPD-VMI) and three SPD-VMI models integrated with three different inventory policies, which include average inventory level and out-of-stock (OOS), are analyzed using discrete event simulation (DES). The results show that integrating the SPD with VMI improves inventory levels and out-of-stock incidents. When three inventory models are implemented, the results indicate a comparable out-of-stock reduction for all three policies. Additionally, the SPD-VMI with an order-up-to policy has the best performance in minimizing inventory and out-of-stock occurrences.