10 ideas to improve your hospital’s inventory management
DESCRIPTION
Inventory Management in hospitals is plagued by inefficient processes, high-cost systems that don't support key business needs, and hard-to-change relationships between supply chain leaders and nursing. This presentation suggests 10 ideas to help supply chain business leaders improve inventory management within their hospital.TRANSCRIPT
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10 Ideas to Improve Your Hospital’s
Inventory Management
www.jumptech.com
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#1: Identify what level of supplies are needed to sustain clinical operations
• Know replenishment frequencies for each supply area set for best labor productivity
• Hint: Are supplies are replenished more frequently than necessary? Consider reducing the frequency while resetting the stock levels accordingly
• Some hospitals have realized a 40- 60 percent gain in labor productivity
• Create an accurate understanding of demand across the entire organization
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#2: Understand the business and clinical processes in each area –
inventory systems are not “one-size-fits-all”
• Use lean concepts to redesign processes, eliminating redundant steps and minimizing "touches“
• Be sure you have the right inventory levels in the right places at the right times
• Hint: An example of an area with unique requirements is the ED. With immediate access needed to supplies, consider systems that specifically support a “grab-and-go” approach, while eliminating stock-outs and providing visibility
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#3: Which products will be charged directly to the patient? Which won’t?
• Have the conversation among finance, nursing and supply chain leaders to determine how your organization will handle product charges
• Identify which products must be captured and charged directly to the patient, versus items that may be included as part of a procedure charge, or very low-cost items that may simply be covered by the room charge for an in-patient stay?
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#4: Improve partnerships between supply chain and nursing
• Strengthen your culture and form strong
partnerships between supply chain and
nursing
• Create a leader in each major area; a super
user who knows the system and processes
• Identify a clinical champion for each area;
nurses are powerful partners in the design,
implementation and adoption of lean
processes
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#5: Implement processes and technology that give supply chain visibility to
every area of the hospital
• Reducing inventory costs requires accurate, real-time item velocity, across the entire organization
• Identify technology needed to create an effective data infrastructure behind your processes; consider best-of-breed inventory management solutions to enhance your ERP capabilities
• Hint: ERPs can manage item masters, generate POs, manage contracts, support finance … but your inventory management processes may be better-supported with specifically-designed applications
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#6: Remove expired inventory from supply areas
• Start with a clean slate. Actually remove expired inventory from your supply areas and work with finance to manage the write-off of these goods
• Return shelf space to productive supplies that your clinical team needs to care for patients
• Hint: Expired items aren’t “used” –instead, they should be “wasted” so they aren’t factored into supply velocity reporting
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#7: Create an environment of continual performance monitoring, with
measureable, realistic goals
• Take time to set specific, measurable goals.
State your goals in dollars and language your
CFO and CEO will appreciate
• Start by measuring cost of inventory on-hand,
then compare cost of supplies after 6- and 12-
months of process improvement to validate
improvements
• Assign a leader on the supply chain team with
responsibility for measuring success. Build
KPIs to create a continuous improvement
environment
• Hint: You’ll need good velocity reporting and
visibility to your entire system of supplies
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#8: Inventory Management is continual, closed-loop process
• Inventory management is not a
one-time activity
• Monitor supply usage continually
• You’ll need reporting tools that
constantly measure velocity for
every item your organization
uses, allowing you to adjust your
levels or reordering processes
based on actual demand
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#9: Work your way through excess inventories
• Once you’ve got good visibility to what’s needed, work through your excess inventories; they’re the best opportunity for inventory reduction
• Reducing excess inventories reduces inventory dollars on the balance sheet and improves financial ratios
• Hint: Unlike scrapping obsolete items, there is no negative financial impact from inventory write-offs. Cash flow is improved, obsolete products are reduced, as are future write-offs
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#10: Close the loop on your internal communication processes
• Communication, like inventory management, is continuous:
• Earn trust from your clinical staff to reduce problem areas, such as supply hoarding
• Involve the clinical team in planning
• Discuss how new processes will help them
• Change management is needed, including continuous review/revising of policies and processes
• Proactively communicate results, successes and lessons learned
• Hint: Teams across the organization need to know what’s working well and what needs improvement to help lead change
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“10 Ideas to Improve Your Hospital’s
Inventory Management”
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