This blog post is built on the article “Factory Efficiency
Comes to Hospital Now” and it discusses about another established lean supply
chain practices leader in the Health Care industry - Cardinal Health. Cardinal
Health is primarily a services company that designs products and services that enhances
the supply chain or inventory performance thereby enabling the hospital staff
to focus primarily on patient care. The implication is that a nursing staff
shall no longer worry about the availability, expiry or misplacing of medical equipment.
This restores 50% of a nursing staff’s time back to patient care.
The following are some of the innovative products &
services that have changed the medical landscape in many hospitals:
CIM – Cardinal Inventory Management[1] is the system helps
manage the inventory - most valuable asset next to staff. It strives to
maintain high service levels for the patient besides maintaining a lean
inventory. The system auto generates replenishment orders in line with the
operational decisions dynamically. When the demand levels and the reorder
points are set, the system operates with minimum human intervention. In case of
an unforeseen change in demand, the system allows the hospital staff to change
the values for individual items, packages dynamically. It also monitors the
expiry of goods and prioritizes orders accordingly.
Distribution of Pharmaceuticals: These costly items easily
go waste when the storage temperatures go beyond certain warm levels. Hence transporting
these materials usually involved high cost storage conditions. The alternative –
frozen gel packs were unreliable low cost solutions. Cardinal in this case
understood the needs right and developed a reusable, non-toxic, environment
friendly USDA that maintains a narrow temperature range irrespective of the
changes in environment. This innovation is managing pharmaceutical items close
to 17bn a year[2]. Since this material is reusable, Cardinal has virtually
eliminated all the waste in transporting pharmaceutical items.
It all started with the Cardinal Health’s aim of achieving zero
lost revenue, zero errors and zero wastage. We saw a couple of their products
that eliminated errors and wastage respectively. They have managed to achieve a
99% fill rate thereby achieving close to zero lost revenue. Error rates were
reduces by 30% in just a 3 year period after the deployment of lean practices[3].
The supply chain design is very adaptive and the inputs are predictive models
designed incorporating historical seasonal variations and current transactional
inputs from the customers (similar to POS system by Wal-Mart). This helps CH to
understand the fluctuations and process the order rates at exceptionally
accurate response rates.
How were they able to see opportunities to improve the
health care industry which in other vendor eyes had actually reached optimal
levels of service? Keller – VP of Inventory Management team explains the idea
behind this transformation in the form of three simple questions. It is time
that we see imperfections as opportunities and ask ourselves what CH asked
itself - “What do we really need?”, “What
is a ‘nice-to-have’ option?” and “What is a sufficient alternative?”
References:
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