Revolutionizing Healthcare: How Automation and AI Are Shaping the Future of Supply Chains

Chris Luoma, chief strategy officer at GHX commented on what he’s seen in his career when it comes to automation. He said, “Looking back over the past decade, the focus has been on driving automation, especially in the order-to-cash and procure-to-pay spaces. This includes everything from order automation to invoicing and logistics notifications, whether through EDI transactions or other methods. We’ve worked to extend these processes to various parts of the healthcare supply chain, including acute and non-acute care, and to more complex areas like the implantable space, which involves multiple stakeholders from clinicians to manufacturers to device reps.”

“As healthcare moves to a wider range of locations beyond hospital walls, extending supply chain automation is becoming increasingly important,” he added. “The COVID-19 pandemic didn’t introduce new automation, but it did significantly accelerate its adoption. Before the pandemic, it was business as usual—manual processes, face-to-face interactions, and paper-based systems. By the end of that same week, the world shut down. Suddenly, hospitals had to operate remotely, and paper was no longer an option. This forced a rapid shift toward automation solutions.”

GHX’s Luoma noted, “The pandemic also highlighted the critical need for automation in inventory and logistics, especially within consolidated service centers and warehousing, which have become more important for both healthcare providers and manufacturers.”

Bill Selles, senior vice president, Transformation, Vizient said, “In the last 5-10 years, supply chain automation can be grouped into two primary areas: physical and digital automation. Physical automation often leverages robotics to reduce the cost associated with humans moving goods in warehouses and hospitals, often in very capital-intensive investments.  Digital automation has manifested through the deployment of major IT infrastructure such as enterprise resource planning (ERP) systems, point of use technology, and warehouse management systems. These applications allow for rules-based automation where transactions are minimized and automated, whether natively by the application itself, or through robotic process automation or artificial intelligence.”

Tom Redding, executive vice president, Healthcare at St. Onge Company laid out his thoughts regarding supply chain automation over the past 5 to 10 years. He said, “In the past 5 years, the most recent advancements in automation have focused heavily on the manual and tedious tasks like requisitioning, item master maintenance, and invoice reconciliation, to name a few.  Many health systems are investing in solutions to automate processes that will increase data accuracy, completeness and availability to streamline the decision-making process. Additionally, larger health systems are developing strategies to implement robotics and automation for their distribution operations. Many health systems are prioritizing the integration of automation tools with their existing ERP systems, electronic health records (EHR), and supply chain platforms to create a more seamless flow of data. This interconnectedness reduces silos and ensures better communication across departments.”

Further, he noted, “Over the last decade, health systems have continued to invest in point of use inventory management solutions to reduce the burden of manually managing inventory across hundreds of locations. The cost to serve the ever-increasing number of clinical locations has forced supply chain leaders to think differently about how to leverage the right amount of technology and systems. The industry has continued to explore solutions that can passively support their operations versus creating additional workload for their teams to manage their inventories.”

Regarding COVID specifically, Redding added, “COVID reminded all of us about the importance of inventory visibility across the health system and including suppliers. It created an opportunity for health systems to leverage data automation to actively monitor demand patterns and further enhance their ability to identify shortages before they become critical for the health system. The pandemic not only drove short-term solutions but also fostered a shift toward more automated, data-driven, and agile supply chains for the future.”

Vizient’s Selles added his thoughts as well. He said, “COVID contributed to organizational understanding that the supply chain needs continual investment, including in automation. The great resignation that followed the pandemic and subsequent wage inflation has put increased pressure on health system executives and supply chain leaders to drive automation to reduce dependence on scarcer and costlier labor.”

Digital transformation

When asked about the digital transformation of supply chains, GHX’s Luoma stated, “Digital transformation in healthcare supply chains was already underway before COVID-19, but the pandemic certainly accelerated it. One example is the widespread adoption of cloud ERP systems. About 60% of our customers are moving in this direction, with roughly 30% already transitioned and another 30% in progress. This shift isn’t just about moving systems to the cloud; it’s about changing how businesses operate, driving more automation, and enabling data-driven decisions.”

Indeed, he said, “Every time you automate a process, you generate data. When you rely on paper, you miss out on that opportunity. Another important driver of this transformation is workforce efficiency and satisfaction. While it may not make headlines like clinical challenges, these issues are top of mind for our customers, and automation is a key part of addressing workforce challenges, including burnout.”

Artificial intelligence

And of course, what would an article in 2025 be without mentioning AI? GHX’s Luoma said, "AI is a broad term these days, and it can mean a variety of things. When we talk about generative AI like ChatGPT, there is certainly potential for applications in areas like reporting and email drafting. But the larger scope of AI, including machine learning and predictive analytics, is already being implemented today.”

He added, “Supply chain leaders are increasingly facing a threefold challenge: tighter margins, more complex supply chains, and greater cost transparency. Meeting these demands requires automation, data-driven decision-making, and AI capabilities. However, it’s important to note that AI isn’t a magic bullet. It requires a strong data foundation, trust in systems, and widespread adoption—sometimes even a re-imagining of business processes. If a process is inefficient or not data-driven, AI can actually make things worse by speeding up bad outcomes.”

And as for automation and AI, GHX’s Luoma explained that AI and automation are closely intertwined in healthcare supply chains. AI is driving much of the automation, helping teams focus on the most critical tasks—delivering the right supplies to the right patient at the right time and place. It’s about freeing up clinical teams to practice at the top of their licenses, with AI and automation streamlining the supply chain to support their work.

Selles also shared his insights. He said, “AI has tremendous potential to advance automation, and in some areas, it is already doing so; however, its use is certainly sub-scale compared to the impact it will have over the next 5-10 years. Much of the AI investment happening in organizations is concentrated in revenue-related areas such as physician productivity (i.e., clinical documentation) or on larger workforces within the health system (revenue cycle). That said, supply chain’s day for AI investment is quickly approaching, and even the early efforts to use AI to optimize inventory, interact with end users through large language models, or optimize order patterns are all proving useful, despite not being broadly adopted.”

And St. Onge Company’s Redding largely agreed with both., He commented, “AI has significant potential to improve how service is delivered using chatbots and virtual assistants to streamline customer service requests, to the use of real-time tracking of inventories and predicting potential shortages. We are only scratching the service when it comes to the potential benefit of AI on the use of automation.”

Looking forward

As for the impact and the future of this space, Vizient’s Selles noted, “Leading health system supply chain leaders operate with an automation mandate: to help relieve continued margin compression, and each year supply chain leaders are being asked to do more. They are piloting new techniques, measuring impact, and scaling, while also keeping a close eye on the horizon for what others are doing that may be applicable. This type of pressure necessitates automation and new ways of working.”

“The next 5-10 years in supply chain automation will be fascinating,” he added. “Physical automation, through the deployment of drone delivery technology, will continue to remove repetitive physical tasks from the workforce. Additionally, digital automation via agentic AI—the ability of AI to work independently—will have a transformative effect on how the supply chain works. End users will have the type of curated experiences in their working world that they will have in their home life, as people command the same ease in ordering goods and completing tasks in their business lives as they do in their consumer lives.”

GHX’s Luoma asserted, "Today, the focus isn’t just on automation for its own sake. The goal is to eliminate manual processes, but also to support broader objectives like analytics and AI-driven decision-making. Automation is a tool for achieving these goals, allowing supply chain teams to operate in a near real-time, data-driven environment.

"Automation in supply chain processes goes beyond just efficiency; it’s about enabling collaboration between supply chain, clinical, and financial teams. By automating procurement and other processes, we can provide the data needed to make informed decisions about the right supplies for optimal patient outcomes. This is where the industry is investing—moving into areas like implantable supply chains and logistics, where automation helps ensure the right supplies are delivered at the right time, in the right place, with greater resilience.

"As the industry evolves, we’re moving toward a ‘living ecosystem’ of supply chains, where automation acts as the glue that keeps everything connected and running efficiently. This dynamic ecosystem will be key to solving for both cost efficiency and resilience in supply chains, adapting to the changing needs of healthcare delivery."

Finally, St. Onge Company’s Redding concluded by saying that “I believe health systems will invest heavily in automated supply chain systems to enhance their ability to respond to emergencies by providing real-time inventory tracking, supplier status updates, and alternative sourcing options. This approach is critical in maintaining operations during natural disasters, pandemics, or supply chain disruptions. Additionally, health systems will invest in solutions to become more service-focused, which may include personalization of customer service, real-time monitoring and automated corrective action of potential issues, and autonomous decision-making on inventory management, to name a few. We anticipate a higher use of autonomous technologies for internal and external transport of materials."