Thursday, July 14, 2011

Designing a Sustainable Blood Banking Supply Chain Network

Interestingly, health care facilities in the United States are second only to the food industry in producing waste, generating more than 6,600 tons per day, and more than 4 billion pounds annually. In addition, considerable amounts of drugs have been found in 41 million Americans' drinking water due to the improper disposal of unused or expired drugs placed in domestic trash or discarded in the waste water. In other countries, up to 4 pounds of waste per hospital bed per day is produced, out of which 0.5 percent might be categorized as risky / potentially hazardous waste.

Medical waste, also known as clinical waste, refers to the waste products that can not be considered as general waste, and that is produced, typically, at health care premises, including hospitals, clinics, and labs. Due to the potentially hazardous nature of medical waste, both the American Dental Association (ADA) and the Centers for Disease Control (CDC) recommend that medical waste be removed in accordance with regulations.

Disposal of medical waste is not only costly to the health care industry, but also may harm the environment. Consequently, poor management of such waste may lead to the contamination of water, the soil, and the atmosphere. While many hospitals choose to have their waste burned so as to avoid polluting the soil through landfills, the incinerators themselves are one of the nation's leading sources of toxic pollutants such as dioxins and mercury. Thus, minimizing the amount of medical waste throughout the health care supply chains will lead to a cleaner environment, which may, in turn, also reduce illnesses and death.

When it comes to blood supply chains, the scarcity and vitalness of this highly perishable health care product make such supply chains crucial. Hence, the effective design and control of such systems can support the health and well-being of populations and can also positively affect the sustainability of the environment by reducing the associated waste. Indeed, since blood waste is a significant hazard to the environment, a major step in attaining a sustainable blood supply chain is to be able to minimize the outdating of blood products while satisfying the demand.

In our paper, "Supply Chain Network Design of a Sustainable Blood Banking System," Anna Nagurney and Amir H. Masoumi, we developed a multicriteria system-optimization framework for the supply chain network design of a sustainable blood banking system. The framework allows for the simultaneous determination of optimal link capacities through investments, and the flows on various links, which correspond to such application-based supply chain network activities as: blood collection, the shipment of collected blood, its testing and processing, its storage, its shipment to distribution centers, and, finally, to the points of demand. The system-optimization approach is believed to be mandated for critical supplies in that the demand for such products must be satisfied as closely as possible at minimal total cost. The use of a profit maximization criterion is not appropriate for an organization such as, for example, the American Red Cross, due to its non-profit status.

In particular, the sustainable supply chain network design model for blood banking that we developed is novel for several reasons:

1. it captures the perishability of the product through the use of arc multipliers;
2. it handles the costs associated with the discarding of the medical waste, which could be hazardous,
3. it captures the uncertainty associated with the demand for the product along with the risk associated with procurement of the product, and
4. it allows for total cost minimization and the total risk minimization associated with the design and operation of the blood banking supply chain network.

Our framework is a contribution to the growing literature on sustainable supply chains and to the design of sustainable supply chains, in particular (cf. Nagurney and Nagurney (2010) and the references therein). However, our supply chain network design model for sustainable blood systems focuses not on the minimization of emissions but rather on the minimization of waste. Moreover, it captures the perishability of this product.

We thank the Red Cross for helpful discussions conducted by Amir H. Masoumi as we conducted this research.

Our paper is now in press in the Springer International Series in Operations Research & Management Science, entitled: Sustainable Supply Chains: Models, Methods and Public Policy Implications, T. Boone, V. Jayaraman, and R. Ganeshan.