Unlocking the Healthcare Supply Chain Opportunities

1,072 views
956 views

Published on

by Marc Baker and Ian Taylor of Lean Enterprise Academy shown at the Lean Summit 2010 - New Horizons for Lean Thinking on 2/3 November 2010

Published in: Education, Business, Technology
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
1,072
On SlideShare
0
From Embeds
0
Number of Embeds
288
Actions
Shares
0
Downloads
35
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Unlocking the Healthcare Supply Chain Opportunities

  1. 1. Copyright Lean Enterprise Academy Lean Enterprise Academy Unlocking the Healthcare Supply Chain Opportunities Value Stream Thinking: All activities from Raw material to Finished goods in hands of final customer & order to delivery to cash receipt
  2. 2. Copyright Lean Enterprise Academy Lean Enterprise Academy Price  v  Cost  Structure   Price TotalCost Profit Indirect Cost Value Add Wastes DirectCost • In the UK alone the NHS must save £20 billion over next 4 years • The NHS spend on stock is £14 -18 billion per year!
  3. 3. Copyright Lean Enterprise Academy Lean Enterprise Academy High Level View of Stock Ordering & Supply into Healthcare Regional Distribution Centre(s) I End User(s) ManufactureSuppliers III II End User Ordering Production Control Production Control Sales & Operations Planning TAXI
  4. 4. Copyright Lean Enterprise Academy Lean Enterprise Academy High Level View of Stock Ordering & Supply into Healthcare Regional Distribution Centre(s) I End User(s) ManufactureSuppliers III II End User Ordering Production Control Production Control Sales & Operations Planning End User Loop TAXI Out of control, over-ordering
  5. 5. Copyright Lean Enterprise Academy Lean Enterprise Academy High Level View of Stock Ordering & Supply into Healthcare Regional Distribution Centre(s) I End User(s) ManufactureSuppliers III II End User Ordering Production Control Production Control Sales & Operations Planning Supply Loop TAXI Forecasting & Demand Amplification
  6. 6. Copyright Lean Enterprise Academy Lean Enterprise Academy High Level View of Stock Ordering & Supply into Healthcare Regional Distribution Centre(s) I End User(s) ManufactureSuppliers III II End User Ordering Production Control Production Control Sales & Operations Planning Manufacturing Loop TAXI Overproduction
  7. 7. Copyright Lean Enterprise Academy Lean Enterprise Academy Introducing  Ian  Ellio5
  8. 8. Copyright Lean Enterprise Academy Lean Enterprise Academy Exercise What’s  in  it  for  me? Suppliers  V’s  Customers
  9. 9. Copyright Lean Enterprise Academy Lean Enterprise Academy Exercise Do  they  fit?
  10. 10. Copyright Lean Enterprise Academy Lean Enterprise Academy Example  -­‐  The  Glove
  11. 11. Copyright Lean Enterprise Academy Lean Enterprise Academy Current State Summary : Gloves Distance Travelled = 314.55 km Time Taken (TT) = 6 days 2hrs 40 min Cycle Time (CT) = 323 mins Value added Time = 7 mins Number of people = 24 -26 Change in form = 5 types Different Transport= 9 types Ratio of Value added time to non-value added time: = 7 mins 323 mins = 2.2%
  12. 12. Copyright Lean Enterprise Academy Lean Enterprise Academy
  13. 13. Copyright Lean Enterprise Academy Lean Enterprise Academy
  14. 14. Copyright Lean Enterprise Academy Lean Enterprise Academy The  New  Terrain
  15. 15. Copyright Lean Enterprise Academy Lean Enterprise Academy There  can  easily  be  up  to  2  years  worth  of  inventory  in  the  pipeline. Why? Because  suppliers  have  over  produced Why? Because  suppliers  made  to  stock  based  on  forecast  and  because  it  made  their  produc=vity  metrics  look   good.  All  of  which  resulted  in  lengthening  of  the  supply  chain. Why? Because  they  knew  that  there  was  always  demand  for  their  products  (sellers  market)  PLUS  their  metrics   drove  the  wrong  behaviour. Why? Because  it  was  a  successful  model Why? Because  the  customer  tolerated  this.
  16. 16. Copyright Lean Enterprise Academy Lean Enterprise Academy Now  the  customer  has  a  lot  less  money  to  spend  &  will  no  longer  tolerate  all  this As  a  result  the  suppliers  model  will  cease  to  be  successful  because  there  is  no  longer  a guaranteed  demand  (buyers  market) As  a  result  metrics  now  need  to  drive  the  right  behaviour. Suppliers  will  need  to  make  to  order  based  on  real  demand  as  opposed  to  forecast. They  will  need  to  reduce  their  costs  to  make  their  producNvity  look  good.  Which  will   result  in  shortening  the  supply  chain. Ques.on  -­‐  What’s  stopping  suppliers  only  making  product  when  they’ve  been  paid   for  it  up  front????
  17. 17. Copyright Lean Enterprise Academy Lean Enterprise Academy In  the  good  old  days  suppliers  took  their  costs  added  their  margin  and sold  at  the  price  they  commanded.   Now  they  will  need  to  sell  at  the  price  that  the  customer  demands (which  will  be  less)  which  means  that They  must  either  keep  their  costs  the  same  and  reduce  their  margin  or reduce  their  costs  in  an  a5empt  to  maintain  their  margin.   Who  knows  if  they  do  the  la5er  they  may  even  increase  their  market share  at  the  expense  of  their  compeNNon. So  where  do  these  costs  reside?
  18. 18. Lean Enterprise Academy I I I I I I I Triangles amount to 176 days of sales tied up in inventory
  19. 19. Copyright Lean Enterprise Academy Lean Enterprise Academy Typical Cost Reduction Approach – Squeeze the Boxes Why - Because they can’t see the Triangles Necessary but non value adding 35% Value adding 5% Non value adding 60% Why not start here instead
  20. 20. Copyright Lean Enterprise Academy Lean Enterprise Academy Call  to  Ac.on A  small  group  comprising  of  End  Users,   Supply  Chain  organisaNons  and   Manufacturers  to  work  with  us  on  this

×