Building a demand-driven, vendor-managed supply chain.

Vendor-managed inventory (VMI) software can help both stand-alone and IDS-based hospitals significantly reduce supply-chain management costs. The software tracks an organization's actual supply demand and generates automatic purchase orders, providing the supplies on an as-needed basis. As a result, a hospital's inventory-carrying and purchase-order processing costs may be reduced significantly. To make optimum use of the VMI software, IDSs and hospitals first need to ensure that their methods of collecting data on supply consumption are efficient and accurate. They then need to either establish a relationship with a distributor offering VMI capability or, if the organization is a large IDS with its own distribution center, acquire the software for internal use. A collaboration with a distributor requires establishing effective electronic communications for data sharing.