1
2
Does your Hospital Supply Chain Stack Up?
with Rob O’Byrne
Owner & Group MD
Logistics Bureau
www.LogisticsBureau.com
31,200 + Consulting Projects, 23 Countries, over 17 Years
Logistics Bureau Group
Consulting
Social Enterprise
Education
Wa...
4
Logistics Bureau experience … sample
5
6
Perspective
7
7
Habit 1: Be Proactive
Habit 2: Begin with the end in mind = STRATEGY
Habit 3: Put first things first
Habit 4: Think ‘w...
8
8
“Begin with the end in mind”
9
9
Strategy and Performance
Strategy is Step 1, so what is Step 2?
What about performance?
“You can have a well construct...
10
Mission Statement:
To demonstrably provide a
Best-In-Class Supply Chain
(Best-In-Class Service & Best-In-Class Cost)
Su...
11
You can’t improve what you don’t measure!
Supply Chain Mantra
12
‘You can’t improve what you don’t measure’
3:59.4
13
Usain Bolt
‘You can’t improve what you don’t measure’
14
Johnny
Weissmuller
‘You can’t improve what you don’t measure’
15
Cost v Service Targets
WHY BENCHMARK?
% of
Gross Sales
<3%
<6%
<5%
<6% <6%7%
10%
11%
12%
10%
12%
<7%
0
2
4
6
8
10
12
Be...
16
Please explain
1. Get it right the first time, every time
a) “we don’t make many mistakes so there is less rework,
less...
17
Service
19% of
supply
chains
achieve
>97%
stock
availability
Only 8%
of supply
chains
match that
with on-time
delivery
...
18
Service and Cost – Level 1 Metrics
Pharmaceutical Sector
The Bottom 20% !
19
Cost & Service Trade Off Chart
20
78% 71% 66% 64%69%Perfect Order Probability
98% 80% 90% 95% 98%98%
‘'Parity'’ Perfect Order Probability 68%
‘'Advantage...
21
Functional Targets to achieve the Perfect Order
Actual Target
Order Entry 98% 99.0%
Inventory Avail 80% 95.0%
DC DIFOT ...
22
Potential Cost Savings
“Size of the Prize” – impact on total Supply Chain
cost if service is improved by 2 deciles
Befo...
23
Which Processes will You Focus On?
24
Example breakdown of cost at activity level.
Ethical Drugs
$ 380m 100%
Line of Business
Distributors OthersHospitals
$ ...
25
What to Focus on ?
26
Minimise
Waste
Zero Patient
Impact
Minimise $/PD
1. Space & Order
2. Improved Processes
1. Availability
2. Reliable Sup...
27
Some things to look for …
1. Inventory Management & Reporting
2. Reusable items (rotables) … tracking
3. Consignment st...
28
IMPACTonGoals
High
Low
EASE of Doing it (Resources/Time)
EasyDifficult
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
17
18
19 20
...
29
Thank You …
30
31
www.LogisticsBureau.com/HP - Your Free Guides to Download
32
Does your Hospital Supply Chain Stack Up?
with Rob O’Byrne
Owner & Group MD
Logistics Bureau
www.LogisticsBureau.com
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Rob O'Byrne - Logistics Bureau - Does your Hospital Supply Chain stack up?

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Rob O'Byrne delivered the presentation at the 2014 National Hospital Procurement Conference.

The 2014 National Hospital Procurement Conference explored a number of cost-saving measures in the hospital procurement ecosystem. Highlights included sessions on improving efficiency, savings and patient safety within Australian Hospitals.

For more information about the event, please visit: http://bit.ly/hosprocurement14

Published in: Leadership & Management
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Rob O'Byrne - Logistics Bureau - Does your Hospital Supply Chain stack up?

  1. 1. 1
  2. 2. 2 Does your Hospital Supply Chain Stack Up? with Rob O’Byrne Owner & Group MD Logistics Bureau www.LogisticsBureau.com
  3. 3. 31,200 + Consulting Projects, 23 Countries, over 17 Years Logistics Bureau Group Consulting Social Enterprise Education Watch this space! Author
  4. 4. 4 Logistics Bureau experience … sample
  5. 5. 5
  6. 6. 6 Perspective
  7. 7. 7 7 Habit 1: Be Proactive Habit 2: Begin with the end in mind = STRATEGY Habit 3: Put first things first Habit 4: Think ‘win-win’ Habit 5: Seek first to understand and then to be understood Habit 6: Synergise Habit 7: Sharpen the saw “Begin with the end in mind”
  8. 8. 8 8 “Begin with the end in mind”
  9. 9. 9 9 Strategy and Performance Strategy is Step 1, so what is Step 2? What about performance? “You can have a well constructed strategy, but execution is where the rubber hits the road.” Case study: – Main DC in Sydney (52,000 sqm) – Satellite DCs in Melb and Perth – 9,000 active customers Australia wide – 14,500 SKUs – 7,000 orders processed per day – 15,000 cartons despatched per day – 200 new products per week
  10. 10. 10 Mission Statement: To demonstrably provide a Best-In-Class Supply Chain (Best-In-Class Service & Best-In-Class Cost) Supply Chain Vision
  11. 11. 11 You can’t improve what you don’t measure! Supply Chain Mantra
  12. 12. 12 ‘You can’t improve what you don’t measure’ 3:59.4
  13. 13. 13 Usain Bolt ‘You can’t improve what you don’t measure’
  14. 14. 14 Johnny Weissmuller ‘You can’t improve what you don’t measure’
  15. 15. 15 Cost v Service Targets WHY BENCHMARK? % of Gross Sales <3% <6% <5% <6% <6%7% 10% 11% 12% 10% 12% <7% 0 2 4 6 8 10 12 Best-in-Class Average Supply Chains that provide a Best In Class service operate at half the Total Supply Chain Cost of their peers Source: Benchmarking Success, 2014 Half the cost!!!
  16. 16. 16 Please explain 1. Get it right the first time, every time a) “we don’t make many mistakes so there is less rework, less returns, less expediting etc.” 2. Focus on the detail a) “costs become readily apparent when you have a passion for service excellence. You can’t look at one without unavoidably looking at the other”. 3. Price/service relationship a) “because our service is consistently superior and our customers know it and rely on it, we both increased our market share, and also could afford to charge more than our competitors.”
  17. 17. 17 Service 19% of supply chains achieve >97% stock availability Only 8% of supply chains match that with on-time delivery of >97% Only 4% base that on the customer’s 1st request Cost -Only half of these organisations do it at optimal cost! Only 2% of Supply Chains achieve world class DIFOT & optimal cost World Class Supply Chains
  18. 18. 18 Service and Cost – Level 1 Metrics Pharmaceutical Sector The Bottom 20% !
  19. 19. 19 Cost & Service Trade Off Chart
  20. 20. 20 78% 71% 66% 64%69%Perfect Order Probability 98% 80% 90% 95% 98%98% ‘'Parity'’ Perfect Order Probability 68% ‘'Advantage'’ Perfect Order Probability 93% Co. X 20 The Perfect (Error Free) Order Ultimate Customer Service Measure
  21. 21. 21 Functional Targets to achieve the Perfect Order Actual Target Order Entry 98% 99.0% Inventory Avail 80% 95.0% DC DIFOT 90% 99.0% Carrier DIFOT 98% 99.0% Losses 95% 99.5% Invoice Errors 98% 99.0% Perfect Order 64% 91.0% BIC 93.0%
  22. 22. 22 Potential Cost Savings “Size of the Prize” – impact on total Supply Chain cost if service is improved by 2 deciles Before After Change Total SC cost $12.8M $9.4M $3.4M SC Cost as % Sales 11.4% 8.4% 3.0% Savings: Warehousing $1.5M Transport $0.5M Cust Service $0.3M FG Inventory $0.6M Other $0.5M
  23. 23. 23 Which Processes will You Focus On?
  24. 24. 24 Example breakdown of cost at activity level. Ethical Drugs $ 380m 100% Line of Business Distributors OthersHospitals $ 135m 36% $ 25m 6%$ 220m 58% Industry Sector CancerPain Mgt Others $ 54m 40% $ 13.5m 10%$ 67.5m 50% Product Group ABC XYZ $ 45.9. 60%$ 21.6m 40% Product Delivery Inv MgtWarehousing Customer Service $ 6.48m 30%$ 2.16m 10%$ 4.32m 20%$ 8.64m 40% Process Storage Picking Packing Dispatch $ 3.456m 40%$ 1.73m 20% $ 1.73 20%$ 1.73m 20% Activity
  25. 25. 25 What to Focus on ?
  26. 26. 26 Minimise Waste Zero Patient Impact Minimise $/PD 1. Space & Order 2. Improved Processes 1. Availability 2. Reliable Supply 1. Effective Procurement 2. Minimise Handling 3. Minimise Stock Strategic Imperatives Key Enablers Activity Focus KPIs?
  27. 27. 27 Some things to look for … 1. Inventory Management & Reporting 2. Reusable items (rotables) … tracking 3. Consignment stock usage & tracking 4. Demand forecasting … 5. PO Authorisation … 6. Supplier and product base too broad? 7. Performance Measurement … is it sufficient? 8. Centralised purchasing?
  28. 28. 28 IMPACTonGoals High Low EASE of Doing it (Resources/Time) EasyDifficult 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 17 18 19 20 22 23 24 25 26 27 28 29 30 31
  29. 29. 29 Thank You …
  30. 30. 30
  31. 31. 31 www.LogisticsBureau.com/HP - Your Free Guides to Download
  32. 32. 32 Does your Hospital Supply Chain Stack Up? with Rob O’Byrne Owner & Group MD Logistics Bureau www.LogisticsBureau.com
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