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Improving the Supply Storage and Replenishment System

For: Hospital Nursing Unit

Situational Challenge

Increases in supply costs had raised awareness of how hospital supplies are distributed, inventoried, and replenished. A key area in which supply management has been cumbersome is on the nursing units, where large volumes of supplies are used and stored. Although the cost per supply is lower than other departments, the sheer volume of supplies drew attention to these units. Each nursing unit had several oversized storage cabinets that made it difficult for the staff to attain supplies in a timely manner for their patients. In addition to the difficulty of retrieving supplies, the storage cabinets were rented at a high monthly cost.

Project Activities

To ensure the pilot nursing unit was ready for their supply replenishment process to be analyzed and improved, a preliminary project was set up to clean and reorganize the work area. This introduced the staff to the 5S and Visual Workplace methodologies and prepared them and their work area for revamping the supply replenishment process. During the preliminary project, unneeded items were removed, and the remaining items reorganized to improve space utilization.

Once the department reached a level of workplace organization that made communication second nature, the current stock of supplies was assessed. The improvement team created a spreadsheet identifying the key attributes of all supplies in the area, including reorder quantity, lead time, and physical specifications. Supplies were grouped into like categories (e.g., admission supplies, IV supplies, and so on). The group decided to store supplies in a bin-type inventory system with larger items on wire racks.

A unique location was designated for each item. With the help of a Productivity Healthcare consultant, the supply chain and nursing unit teams built a remote mockup of the new nursing unit supply room with supplies inventoried in categories/bins for easy rotation and replenishment. In addition, a new “kanban” (or card) replenishment system was devised. With a kanban system, a “reorder” card is attached in front of each supply bin location. The bins are divided in half, and items are pulled from the right-hand side until that side is empty. The reorder card is then placed on a “to be ordered” hook on the replenishment board located on the supply room wall. The staff continues to pull supplies from the left side of the bin until a replenishment order arrives.

The supply management team periodically scans all cards on the “to be ordered” hook and moves them to an “on order” hook. When new supplies are received, they are married with the correct cards and placed into the appropriate bins. Any supplies remaining on the left side of each bin are moved to the right side and the replenishment stock is stored on the left side. In this way, stock is rotated to prevent supplies from reaching their expiration date.

To ensure sustainment, key metrics were tracked including number of stock-outs and number of replenishment cards not pulled properly. Each time a metric was not met, the problem was investigated, the root cause determined, and a solution was identified and implemented.

After resolving all issues in the test site, the team converted the existing supply room to the new system.

Improvements, Benefits, and Key Outcomes

The outcome of this project resulted in numerous cost savings for the hospital, along with reduced frustration for the staff in gathering supplies for their patients. In addition, supplies ordered from the department were transferred into the new process, eliminating staff time spent ordering supplies.

Other Key Improvements and Outcomes:

  • the ongoing reduction of inventory cost >$50,000
  • reduced stock-outs by 90%
  • elimination of expired product on nursing unit
  • improved staff efficiency and morale
  • improved patient satisfaction.

Project Duration

  • 3 months

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