Key Takeaways
- Supply chain departments are earning a seat at the executive table — strategic visibility and demonstrable cost control have elevated supply chain from an operations cost center to a boardroom-level priority.
- Seven high-impact strategies: expand supply chain visibility, develop in-house experts, evaluate supplier relationships, standardize inventory, eliminate data silos, implement automation tools, and use data to improve reliability and service.
- UCHealth moved from the 60th to 90th+ percentile in item utilization after supply chain optimization — a measurable leap driven by strategic management changes, not just technology deployment.
- Investing in 2-bin Kanban and BlueQ Analytics has proven to save clinician time, significantly cut costs, and improve patient experience across BlueBin’s client portfolio.
Improve Supply Chain Efficiency by Focusing on Crucial Areas of Improvement
Supply chains worldwide have been pushed to the limits since the beginning of 2020, and the healthcare supply chain has not been exempt from the strain. In addition to product shortages due to high demand, limits on elective procedures equated to an excess of non-essential products clogging supply rooms. Healthcare organizations with solid supply chain strategies in place likely weathered these events more smoothly than others. But growing organizations across the country that have not focused on supply chain management should take this experience to elevate it as a more important part of their business strategy.
Forward-thinking organizations have already recognized that improvements in supply chain management are among the most efficient ways to enhance services while cutting costs. But where did they start and how did they do it? Much of the answer can come from...data. But not only can data-focused efforts to reduce inefficiencies, in concert with data distillation, create new and improved supply chain strategies that will benefit any organization indefinitely.
While the supply chain continues to establish a place at the table, it's important to note that it will play a significant role in the future of healthcare. Those who ignore the inefficiencies as costs continue to balloon, let alone act on them, will likely incur significant losses for their organizations and their patients. With that being said, here are some suggestions to maximize the hospital supply chain.
How to Maximize Hospital Supply Chain
Regardless of whether you’ve already begun improving the supply chain of your healthcare organization, there are always areas for improvement. Like many other processes or programs, monitoring and evaluating your system should be performed regularly. Communication with those involved and identifying weak areas to focus on can have a profound impact on continuous improvement, keeping your department functioning like a well-oiled machine.
1. Expand Supply Chain Visibility
Supply Chain Managers aren’t the only members of a healthcare organization affected by the supply chain - administrators, operations, and accounting teams can all benefit from added visibility as you begin to track and manage inventory, stockouts, backorders, and costs. This can be implemented through manual processes or inventory intelligence software.
2. Develop In-house Supply Chain Experts
The organization’s supply chain is only as efficient as the people who manage it. Warehouse associates, order fillers, and logistics managers can also be trained in standard operating procedures to ensure consistency, efficiency, and accuracy across your entire supply chain.
For example, at BlueBin, we offer an advanced Kanban build and management certification program called the BlueBelt. Team members who become BlueBelt certified can build and manage the Kanban program in accordance with BlueBin standards.
3. Evaluate & Develop Supplier Relationships
A functional supply chain begins with the suppliers. Maintain these relationships to avoid shortages and delays as early as possible.
- Communication – Communication is key. Start by analyzing the effectiveness of your communication with your suppliers. Do they answer your emails in an appropriate amount of time? Are you able to understand each other easily? Do you waste time repeating yourself?
- Speed - How fast are your suppliers able to complete orders? Do they sometimes take weeks to complete an order? Inconsistent suppliers can be a bottleneck from the very beginning. Be selective and weed out suppliers who consistently cause delays.
- Reliability - Suppliers absolutely must be reliable. If your supplier regularly shorts you on purchase orders, ships orders late, or otherwise fails to follow through on their promises, it’s going to negatively affect your supply chain. In that case, a quick way to improve your supply chain would be to cut ties with suppliers who have proven themselves to be liabilities. Try checking out supplier listings on sites like Alibaba to find an alternative manufacturer that can meet your needs.
Finding flexible and responsible suppliers is important from the beginning, but you’ll need to continually maintain those relationships through clear, open communication and address any unforeseen issues.
4. Inventory Standardization
In standardizing inventory for the healthcare supply chain, the most cost-effective and efficient processes are often the simplest.
Since the best examples of working through problems usually come from the trenches, we’ll let one of our clients, Matt Putman, Director of Supply Chain Operations for UCHealth, take it from here:
“We engaged in a structured approach to finding ways to remove a lot of the slow, stale, never-scanned, deadstock, and optimize the par levels. There was variation in the products. Why was there variation when it's the same staff and the same rotation of folks, all over the place? It made no sense!”
Data Collection and Analysis
As with most other industries, leveraging technology's strengths has powerful effects on healthcare. Why not let the software do the heavy lifting? Supply chain management software (SCMS) can take many forms and helps maximize the efficiency of business activities. For hospitals, that can include
- Patient-requirement processing
- Purchase-order processing
- Sales and distribution
- Inventory management
- Goods receipt and warehouse management
- Supplier management/sourcing
Employing a fitting solution equips users with the tools that empower healthcare institutions with sourcing, production, and logistics. This balance between supply and demand and improving business processes with consumption analysis facilitates better planning for future needs.
“We were able to utilize a lot of our BlueQ information and train some end-users to help us with data analysis pieces to pull some of the data, look specifically at some of the slow, stale, never scanned, and make some clinical decisions around why we have it, do we need it, was it a change in practice, things like that. By the end, we had removed a lot of stock. Several of our ED locations went from an item utilization around the 60-something percentile, according to upwards of 80 to 90 percent now. This is a significant increase in utilization. Plus, it sets us up on the road to success! Now we have the foundation in place where we're able to go back and review this on a semi-annual basis.”
Meet Your New Best Friend, Data
As the saying goes, “knowledge is power.” Many institutions have hordes of data at their disposal. Applying insights gleaned from this data leads to better-informed business decisions. Data is shaping up to be the most efficient tool that healthcare institutions have to eradicate waste that inflates costs and diminishes patient care. Surprisingly, many organizations fail to leverage the intelligence in their supply chain data.
5. Eliminate Data Silos
Don’t let data be an afterthought; make it a key part of the improvement strategy.
Data silos can be as simple as a single user or group with access to information that could be useful across the broader organization. Or, the data is available to all who need it but is segregated across multiple platforms or databases, making it difficult to gain useful insights, which could, in turn, lead to a more efficient operation. Any organization trying to run a lean supply chain can quickly see why this could be a problem. Team members with reduced or no access to the same data can lead to costly errors and misunderstandings.
Adopting the best-fitting SCMS for an organization provides increased visibility across your entire business, minimizing mistakes and miscommunication. This means a smoother running process, plus cost and time savings for the hospital.
6. Implement Tools to Improve Efficiency & Automate Processes
Rising costs can result from human error in:
- Data collection
- Ordering
- Cycle Counting
- Receiving and Delivery
- Par Management
- Labor and Route Management
- Expiration Management
Failure to procure proper equipment on time could not only harm patients but could also put their lives at risk. Avoid potentially hazardous errors associated with manual ordering of medical supplies and devices by using product-scanning devices and electronic ordering. Humans are inherently flawed and mistakes are sure to be made, such as characters transposed or illegible handwriting. Scan a barcode or QR code and have your packages on the way to being delivered to the right place, the right time, every time.
Automating these processes, reduces the potential for error and incurring extra expenses. SCMs accurately capture data and monitor it throughout the supply process. It should aggregate vendors, products, pricing, and availability into one platform along with automatic updating of contracted pricing when ordering. Not only does this save the organization money, but also the most valuable resource...time. Time better utilized on revenue-generating activities.
7. Use Data to Improve Both Reliability and Service
Healthcare organizations capitalizing on their data through dashboards and daily huddle boards can better predict and respond to issues within their supply chain. Don’t just focus on capturing the data but also know how to utilize it to better predict and respond to the products and supplies that are required.
Turning insights into action enables healthcare organizations to reduce the burden on clinicians, optimize inventory control, trim expenses, reduce stockouts/stat calls, improve their ER, and most importantly, improve patient care.
Bringing it all Together
You don’t need to be dissatisfied with your current supply chain operations. Instead, focus on growing in-house talent, increasing visibility across the organization, creating or maintaining reliable supplier relationships, and facilitating the flow of data and insights to make your healthcare institution’s supply chain run as smoothly as possible. But remember, it's a continuous process of improvement and making it better every day.
Investing in supply chain efficiency improvements, such as 2-Bin Kanban and BlueQ Analytics, and SmartScan, supercharges our clients’ ability to save clinicians’ time, significantly cut costs, and provide a better patient experience, leading to an ideal outcome for all involved. You can learn more about healthcare supply chain transformation on our website, or give us a call at (855) 896-2467.
