Creating efficiency by cutting down on time and material waste
Patti and her team adopted a version of Toyota's Production System, which creates efficiency by cutting down on time and material waste. The key part of this system is the implementation of a two-bin Kanban process.
How the new system works
Two-bin Kanban keeps two bins of each item in the storeroom at all times. Each bin holds three days of inventory, and clinical staff pull supplies from one bin until it is empty. The empty bin is then replaced by the other and sent to be refilled. Two-bin Kanban keeps supply stock lean, which allows for a cleaner, more accessible storeroom.
While Kanban was originally designed for manufacturing, Patti and her team have adapted it for use with medical supplies. The two-bin Kanban system improves on the former par cart system, a more reactionary process in which staff made daily counts of supplies and on-hand inventory. The system then calculated the amount of supplies needed to restore inventory to the appropriate level. In practice, staff often estimated inventory counts, and proper inventory was rare. The lack of proper inventory counts led to excess items being ordered, which resulted in waste and expired items. In addition, items were charged to cost centers when purchased rather than when consumed. As a result, the true dollar value of hospital inventory was unknown. The new system cuts down on this waste and allows for a more efficient, organized use of supplies.
Testing and implementation
Prior to the implementation of Kanban, nurses were unhappy with the amount of time they spent looking for supplies in unorganized storerooms. Replacement supplies were often ordered based on what "looked low," rather than through accurate inventory.
This disorganization meant clinical staff spent too much time performing supply chain work rather than working with patients. Nursing leadership, who were previously managing Supply Chain coordinators, organized mock go-live events that tested the system before it was implemented. These tests allowed for real-time feedback from staff nurses as they worked.
The two-bin Kanban project delivered results within the first three months. An average of $40,000 of excess inventory was pulled from each location upon conversion to the new system. Now, lean supply rooms make supplies easy to find, and stock-outs are rare. As the first year comes to a close, locations that have gone live demonstrate a consistent reduction of nearly 8 percent in medical supply costs per patient per day.
Letting nurses be nurses
With the inventory management changes in process, Supply Chain has been able to better manage supplies and return clinical staff to patient care for upwards of 63 hours per week. Instead of one Supply Chain coordinator assigned to each supply location, one coordinator can now service four locations without impacting customer service.
"One of the greatest successes of the project is the impact Supply Chain has been able to make on customer service and employee satisfaction," says Hal Mueller, chief Supply Chain Officer.
Following the success of the project, groups from several peer medical centers have visited and toured our logistics areas to learn from our experience.