CUHK Medical Centre: Establishing a Logistics Services System

The chief executive officer (CEO) of the soon-to-be completed CUHK Medical Centre Ltd. (CUMC) in Hong Kong must make a decision regarding health care logistics services. The hospital’s tender board is scheduled to meet in June 2019, and the CEO must recommend whether the logistics services needed by the hospital should be provided internally or by a third-party logistics (3PL) provider, and, if a 3PL provider, which provider should be awarded the business.

The case is suitable for a senior undergraduate- or graduate-level course on operations and supply chain management (SCM), covering elements of 3PL, or for an MBA or EMBA global business course that touches on logistics, SCM, or management of innovation in services. No course prerequisite is necessary, but students with a background in analysis of comparative costs will find the case easier to solve.<br><br>The case applies the classic make-or-buy decision to the provision of health care logistics and considers the health care supply chains of Hong Kong, the nature of 3PLs, and the process of tendering for 3PL services. It outlines the specifications of the tenders and problems of tender variance from the specifications in the call for tenders. Students must use quantitative and qualitative analysis to assess which course of action to recommend. After working through the case and assignment questions, the students will be able to understand<ul><li>issues of supply chain management for a medium-sized, state-of-the-art hospital;</li><li>the cost and benefit trade-offs involved in keeping logistics in house versus opting for a 3PL supplier;</li><li>the mechanisms and challenges involved in running a tender process; and</li><li>analysis of competing bids for 3PL.</li></ul>

• supply chain management
• third-party logistics supplier
• digitalization
• procurement
• warehouse management system
• enterprise resource planning
• hospital management
• medical consumables and pharmaceuticals