Improvements of the Logistic Information System of Biomedical Products

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1 Sensors & Transducers 2013 by IFSA Improvements of the Logistic Information System 1, 2 Huawei TIAN 1 Department of economic management, 2 Small and medium-sized enterprises management institution, Zhoukou Normal University, Zhoukou, Henan province, , China Tel.: , fax: t_hw123@163.com Received: 2 August 2013 /Accepted: 25 September 2013 /Published: 31 October 2013 Abstract: Introduced the current situation of biomedical products industry in China first, then this paper analyzed the biomedical products logistics system on the aspect of transportation information system and transferred inventory center information system. For transportation information system, this paper suggested to combine RFID, temperature sensor, optimized paths, joint distribution and logistics information platform together to assure the quality and cut down the logistics cost. In the aspect of transferred inventory center information system, this paper advised to adopt bar code technique, professional inventory information software to execute first in first out method and economical order quantity method and manage inventory information system. As the lack of essential products logistics information is a main advantage in biomedical logistics, biomedical logistics enterprises and biomedical products manufacturing companies could get enough relevant information to build a good logistics information system through these improvements. Copyright 2013 IFSA. Keywords: Biomedical products, Logistics, Information system, Transportation, Inventory management, Path optimization, Joint distribution. 1. Introduction Bio-medical project, which combines biology and medical field together with engineering approaches, is developing quickly in recent years since the 21 th century of China. The basic task of biomedical engineering is focused on the use of engineering techniques to study and solve problems in life sciences, particularly the issues related to medicine and health care. Combining with the use of electronic information technology and medical clinical information together, biomedical engineering researches on the extraction and processing of human body with slightly damage or no damage, which would be a significant direction of medical development. With the steady growth of economy, more and more people are caring about their health and medicines. In the past ten years, the GDP of medicine industry of China increased from billion RMB in 2002 to trillion RMB in Specific statistics about the GDP of the increase of medicine industry in China are shown in Table 1. At the same time, the profit of medicine industry increased from17.6 billion RMB in 2002 to billion RMB in Consequently, more and more enterprises are preparing to enter into this market to share some interests. With the increase of market size and volume, other relevant industries, such as medical logistics, are also stimulated. Specific statistics about the profit of medicine industry in China are shown in Fig Article number P_1447

2 Table 1. GDP of medicine industry in China: Year GDP(billion) , ,570.7 Increase rate (%) Fig. 1. Profit of medicine industry: profit of medicine industry As a main branch of medicine industry, biomedical products are made through biomedical engineering technology. The successful application of biomedical engineering technology into medicine has contributed a lot to the development of medicine industry in China. However, the relatively high price of biomedical products is still a major barrier of the popularity of the biomedical products. Generally, cost plays an important part in the composition of price. Besides production cost, circulation cost is another significant part of the cost of biomedical engineering products. This is because many kinds of biomedical products have specific time and temperature requirements, or other rigid stock and transportation environment requirements, which caused a lot of expense in logistic field. Especially, as the logistic information system is not well designed because of the small scale of enterprises in China, logistics cost became a real black box of the total biomedical products cost. Logistics information system refers to the system for the transmission of necessary information of logistics, including what to be transported, how many to be transported, how to transport, when to transport, when to reach, who to transport and how long of the transportation. There may also other kinds of logistics information that needs to be transmitted in the logistics information system. For biomedical products, the logistics system must be more accurate to satisfy the requirements of specific transportation. Therefore, logistics information system is of great significance to biomedical products. If the right information of biomedical products were transmitted at the right time, we could control the stock and transportation links more validly and thus low down the logistics cost of biomedical products. This paper would research on the logistics information system of biomedical products and offer some improvements. 2. Current Situation of Biomedical Products Logistics Information System According to the statistics of SFDA (State Food and Drug Administration), there are already 409,246 drugstores in the first half year of 2011 in China. Besides, there are also more than 11,000 official hospitals and many other kinds of private hospitals according to the statistics of Almost all of these hospitals and drugstores need some biomedical products in a certain degree. However, the government made strict regulation on the transportation and use of biomedical products. In this way, many professional logistics companies could not enter into biomedical products market. Of course, the third party logistics platform is beginning to forming under the organization of government, though there is still a long way. In addition, scholars are also beginning to pay attention to the information system of medical logistics, while seldom specified in biomedical products in the former years Transportation Information System Information system, which is composed of all kinds of information, is necessary to transportation, especially in biomedical products transportation. Generally, there are three kinds of information that are not well used of during the transportation. First, though the logistics enterprises are qualified with related equipment, they could only control and record the overall temperature of biomedical products, for example, the cooler s temperature, rather than the temperature of biomedical products. This is inaccurate in some degree and thus causes degeneration. Besides, generally, they could only control and record the temperature of the coolers in the beginning and end of the transportation, while only a few could record the temperature with some facilitates that put into the coolers. This means logistics companies could not find the degeneration of biomedical products in time and prevent it during the transportation. Second, time information is also of great importance to transportation. For one thing, time is relevant to the degeneration. The more time the transportation takes, the more danger of degeneration biomedical products would face because of the worse stock environment compared with stock room. For another, time always means cost. As the logistics 407

3 companies are not in very large scale plus the scattered transportation destinations, there are not optimized transportation paths and time for the logistics. Consequently, it would waste some time and transportation expenses. For most biomedical products logistics companies, they did not make good use of schedule and send the exact distribution time information to the transportation staff. Workers just know when to ship the medical products and when to reach, the specific paths are chosen by experience. In addition, in order to satisfy the elasticity of transportation time, logistics companies need to keep the cooler in certain temperature, which would also increase the transportation cost. Third, large public transportation information platform is not put into practice now in China. Biomedical products have strict stock requirements and valid time. What is more, it is more expensive than other common medical products while the demand is not as much as common medicines. These features of biomedical products determined the distribution of biomedical products would be low volume and rich varieties. This kind of transportation would increase the distribution expenses. In logistics area, joint distribution is emerging and it could cut down the cost in a certain degree. While in biomedical products distribution, there is still no similar pattern. If the logistics companies of biomedical products could share information with each other, maybe they could also cooperate and reduce the total distribution expenses Transferred Inventory Center Information System Stock is an essential part of logistics. It is common that the transportation would take so long that biomedical products need to be stock in warehouse for some time and then be transferred to the drugstores and hospitals. During this procedure, there are also three main problems caused by bad information system. First, degeneration problem is a serious question. For the warehouse staff, they must pay attention to the stock environment and decrease the degeneration of biomedical products. Therefore, they need to know the detail product information and how to minimize the degeneration. In order to work with efficiency, they should deal with information by computer with professional software and label technique. While in fact, many warehouses are still managed by hands, with computers just as a record machine. Second, managers and warehouse employees did not pay enough attention to the term of validity of biomedical products. Biomedical products have shorter period of validity than common medicine products. Moreover, the longer of storage time, the less value of biomedical product. If the manager could make good use of biomedical product information and ship the goods out in time, a lot of loss could be avoided. Third, inventories information did not keep up with need information and order information. There are often the occasions that some kinds of biomedical products are out of stock while another kind of biomedical products is out of validity due to long time of stock. For transferred inventory centers and warehouses, they could also make reasonable estimation of the need and safe stock, and then the quantity of orders could be obtained. In this way, the inventory of biomedical products could be managed more efficiently than the situation of lack of inventory, need, and order information. 3. Improvements of the Logistics Information System 3.1. Improvements of the Transportation Information System Temperature is a common problem of many kinds of biomedical products. With the development of information technology, RFID (radio frequency identification devices) has been widely used in logistics. There are many kinds of RFID devices that could be installed into trucks or packages or containers and so on. It is not difficult for biomedical logistics companies to purchase them directly or make them to order from RFID devices enterprises. Together with temperature sensors, distribution center could have the information of biomedical products synchronously. Temperature sensor could also be put into coolers or transportation vehicles, which is decided by the needs of specific situations. When in transportation, temperature sensors would measure the temperature of biomedical products and their surroundings. Then, these kinds of information could be sent to information center through RFID to offer original data synchronously and help managers to monitor and make decisions. When distribution center employees found that biomedical products are going to degenerate for the reason of bad shipping environment or some other reasons, they could take valid remedial measures in time to avoid or low down the damage. Consequently, the proper use of RFID devices and temperature sensors could improve biomedical logistics information system in a certain degree by providing much essential information of biomedical products synchronously during transportation. However, RFID and temperature sensor machines are expensive, which is a huge barrier for implementation. Whether to use RFID and temperature or not, it would depend on the cost and loss. Time is another factor that would influence this determination. If logistics companies could have exactly time information of transportation, they could 408

4 control the degeneration of biomedical products in a large degree by the set of cooler. Of course, if logistics companies put more refrigerant into the cooler to ensure the low temperature, the cost would be higher. Of course, logistics companies could decide the proper volume of refrigerant according to the exact time of transportation, but this is not an easy thing. Before distribution, logistics companies should design several optimal paths to deliver the goods, with an order of best and suboptimal. What is more, as road condition is contingent, several optimal paths are advisable. In this way, distribution path optimization is essential. Logistics companies could set navigators on the vehicles if necessary, while sometimes the navigator would lose effect in cloudy days or changed road conditions. Therefore, computing out the optimal paths with traditional path optimization algorithms before starting the distribution is still significant. With the rapid development of computer science and technology, a lot of new path optimization algorithms have been designed. Traditional Dijkstra algorithm is a classical one with advantage of easy and simply. Neural network and ant colony algorithm are newly emerging approaches with higher search efficiency. There are many kinds of distribution path optimization software on sale in the market based on the principles of above algorithms. Biomedical logistics companies could choose the one they need with some consideration of cost and simplicity. Generally, the cost of introducing new software includes purchasing cost and training cost. From the view of profit, biomedical logistics companies should purchase the optimal one, rather than the lowest cost or the simplest one. With distribution path optimization software, biomedical logistics companies could greatly improve their transportation information system as it is easier to control the distribution time with definite paths. Beside path optimization information for the transportation, joint distribution is another valuable idea to low down logistic cost. However, this needs a lot of information to cooperate well. Several big biomedical product transportation enterprises may join together to distribute goods in case of high distribution cost of small volume and multiple variety conditions. Joint distribution has been proved to be feasible in some developed countries such as Japan, USA and so on. To realize this is not an easy thing. First, they should share the information of logistics and biomedical products together with each other. This needs a public information platform and uniform data with EDI (Electronic Data Interchange) system. In developing countries like China, there are rarely any biomedical product logistics companies that have the ability to organize other companies together to build a public information sharing platform except the government, who is with a role of monitor. However, the distribution cost of biomedical logistics companies does not have direct interest with the government, while the construction of public logistics information sharing platform is a huge and complex project with large risk. Consequently, it would need some time if biomedical logistics companies still wait for the government to do this. Actually, several big biomedical logistics companies may join together to build the platform. After all, it would save their distribution cost and be good to the development of their industry in the long run. What is more, this could help them to take the leader position in the market. Then together with biomedical products information as well as destination information, loading information and time requirements, information system should work out a set of optimized distribution paths and send corresponding information to the distribution employees immediately, who would check all these information and make decisions to minimum the damage of biomedical products and logistics cost of distribution. The improved transportation information system is shown in Fig. 2. Fig. 2. Improved transportation information system. 409

5 From Fig. 2 we can see destination information, temperature information, biomedical product information, time information and loading information have to be collected and sent to the information platform with RFID technology. During this process, EDI system would transform this information into a same form. Then, the information platform would work out the optimal paths for distribution with distribution path optimization software. When receiving the distribution paths information, biomedical logistics companies would cooperate with each other to deliver the goods to the customers. This improved transportation information is built on the base of information sharing system Improvements of the Transferred Inventory Center Information System Transferred inventory center is another significant part of biomedical logistics. The transportation of biomedical products may take some time as it is need to be shipped to lots of local hospitals and drugstores. Then transferred inventory center has to be built to stock biomedical products for a short time. When there are many kinds of products in the same warehouse of a transferred inventory center, it is hard to distinguish them exactly in a short time. In order to strengthen the management of stock information system, bar code technology is essential for biomedical products. Logistics companies should put relevant product information and stock position information into the bar code or in the form of label. It is advisable for the warehouse manager to adopt first in first out method to assure first arrived biomedical products could be shipped out early. First in first out method is an effect warehouse management method, and easy to implement. Besides, biomedical products inventory information system needs to be handled with a certain kind of software, for instance, SAP. The software must could check the information of warehouse and offer some alarming information to managers according to the information of future orders. If some kinds of biomedical products would reach their term of validity soon, this information system should send the message to managers in advance and thus managers could take some measures to ship them out in time to save the loss. However, it is not wise to deal with those biomedical products that would end their term of validity with lower prices if there were another way to reduce this even though the new information system could already save logistics companies some money. This is economic order quantity method, which is also a common method for warehouse management. Economic order quantity is the order quantity that minimizes total inventory holding costs and ordering costs. It is one of the oldest classical production scheduling models. The framework used to determine this order quantity is also known as Wilson EOQ Model or Wilson Formula. The model was developed by Ford W. Harris in 1913, but R. H. Wilson, a consultant who applied it extensively, is given credit for his in-depth analysis. The single-item EOQ formula finds the minimum point of the following cost function: Total Cost = purchase cost or production cost + ordering cost + holding cost. Purchase cost: this is the variable cost of goods: Purchase unit price annual demand quantity. This is c D. Ordering cost: this is the cost of placing orders: each order has a fixed cost K, and we need to order D/Q times per year. This is K D/Q. Holding cost: the average quantity in stock (between fully replenished and empty) is Q/2, so this cost is h Q/2. Then through calculation, they got the economic order quantity, namely, the EOQ 2DK / h. During warehouse management, the transferred distribution center or distribution center could also adopt this method to control the arrivals of the biomedical products to maximize the profit of the whole supply chain. By the use of bar code technology and professional inventory information management software, together with the adoption of first in first out method and economical order quantity method to strengthen management, biomedical products transferred inventory center information system would be more fluent. 4. Conclusions Biomedical product is an essential part of modern medicines and health care. The effective logistics of biomedical products is as important as their production as they are easy to degenerate. During the course of logistics, biomedical products must be kept in proper containers with strict surroundings. In this case, logistics information system is crucial to control the quality of biomedical products during the whole logistics course. This paper analyzed the condition of Chinese biomedical products logistics, and creatively divided the biomedical products logistics into two separated parts according to the features of biomedical products logistics. In China, there are strict control of logistics in biomedical product field, while widely use in all the places of its vast lands. Consequently, there is a strong feature of transferred inventory center from the level of provinces, cities and counties. This paper proposed some ideas in response to the improvements from the aspect of transportation information system and transferred inventory center separately. For transportation information system, this paper suggested to combine RFID, temperature sensor, optimized paths, joint distribution and logistics information platform together to assure the quality and cut down the logistics cost. In the aspect of transferred inventory center information system, this paper advised to adopt bar code technique, 410

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