European and Mediterranean Conference on Information Systems 2009 (EMCIS2009) July 13-14 2009, Crowne Plaza Hotel, Izmir SULTAN N. TURHAN et al. 1 Vendor Managed Inventory via SOA in Healthcare Supply Chain Management Modeling of VMI implementation via SOA in a HEALTHCARE SUPPLY CHAIN Sultan N. Turhan, Department of Computer Engineering, Galatasaray University, Çırağan cad. No:36 34357, Ortaköy İstanbul / Türkiye. sturhan@gsu.edu.tr Özalp Vayvay, Department of Industrial Engineering, Marmara University Göztepe Campus, Kadıköy-İstanbul. ovayvay@eng.marmara.edu.tr Abstract: Many companies have tried to get the competitive advantage through the effective supply chain management. Healthcare differs from the other sectors in terms of key elements. In healthcare sector, companies and hospitals must not only think to be competitive, but also to do highly accurate job because in this sector, cost of an error may be someone’s life. The first objective of this supply chain is never only to lower procurement cost and improve cash flow, but also to assure the appropriate drug, medical materials, or special surgical materials at the right time, in the right place “Right product must be in the right place at the right time” is a must. Also, the management of such supply chain is very difficult because of the uncertainty of material’s amount which will be used, and the bullwhip effect. On the other hand the role of consumer (patients) and the role of customer (hospital) differ from each other and the payments are not provided by only consumer or customers. There are also social security institutions and private assurance companies which will be contribute to payment’s operation. When supply chain sophistication and integration demands are increasing as in this case, vendor managed inventory (VMI) can be a good solution of doing business that can give pioneers a competitive edge. In this research, we are studying a new approach to vendor-managed inventory via service oriented architecture instead of using traditional VMI technique, in order to provide an effective management in healthcare supply chain management. Keywords: Healthcare Supply Chain Management, VMI, SOA, Web Services Modelling 1. INTRODUCTION A supply chain is a system consisting of material suppliers, production facilities, distribution centers, and customers who are all linked together via the downstream feed-forward flow of materials (deliveries) and the upstream feedback flow of information. Nowadays, the field of supply chain management has gone through drastic changes. The remarkable development in information technology makes it possible for members of the supply chain to share their information and cooperate to improve the efficiency of their supply chain. Effective coordination between units in a supply chain has come to play a key role in focusing on the innovation, flexibility, and speed that serve as the sources of competitive advantage necessary for survival in global competition [1]. Healthcare supply chain management differs from other applications in terms of key elements. The healthcare supply chain is plagued by misalignment, high costs for healthcare providers and heavy dependence on third parties, distributors and manufacturers. At the same time, some of the supply chain components of the health sector have a different position comparing to the other materials that are taken place in the other supply chains. Especially the specific consumables used in the surgical