Ambulatory Surgical CentersASC’s operate in a differentenvironment than traditional Operatehospitals. There is less physicalspace for stock and cases can bescheduled with short notice.Financial constraints prevent a largebuffer stock from existing. Change ASC Orders Optimize
Whip It ! The Bullwhip Effect (or Whiplash Effect) is an observed phenomenon in forecast-driven distribution channels. Since the oscillating demand magnification upstream a supply chain reminds someone of a cracking whip it became famous as the Bullwhip Effect.
Because customer demand is rarely perfectly stable, businesses must forecast demand to properly position inventory and other resources. Forecasts are based on statistics, and they are rarely perfectly accurate. Because forecast errors are a given, companies often carry an inventory buffer called “safety stock”. Moving up the supply chain from end-consumer to raw materials supplier, each supply chain participant has greater observed variation in demand and thus greater need for safety stock. In periods of rising demand, down-stream participants increase orders. In periods of falling demand, orders fall or stop to reduce inventory. The effect is that variations are amplified as one moves upstream in the supply chain (further from the customer).
Behavioral Causes Misuse of base-stock Panic ordering after policies unmet demand * Misperceptions of Perceived risk of other feedback and time players rationality delays
Operational Causes Dependent Demand Processing Trade promotion and Forecast Errors forward buying Adjustment of parameters with each demand observation Anticipation of shortages Lead Time Variability (forecast Allocation rule of suppliers error during replenishment lead Shortage gaming time) Lean and JIT style management Lot-sizing/order synchronization of inventories and a chase Consolidation of demands production strategy Transaction motive Quantity discount
Sources of Performance-Cycle Variation Total Performance Cycle 5 10 40 Customer Delivery Time Range - Days Order Transmission1/2 1 3 Time Range - Days 1/2 1 3 Time Range - Days Order Transportation Order Processing 2 4 10 Time Range - Days Order Selection 1 2 4 Time Range - Days 1 2 20 Time Range - Days
Supply Chain Quiz A box of cereal spends ? A box of cereal spends 104 days in the supply chain. days in the supply chain. Total inventory in the Distorted information causes pharmaceutical supply total inventory in the pharmaceutical supply chain to chain exceeds ? days and ? exceed 100 days with $11 $ in savings to be realized. billion in savings to be Poor coordination in the realized. food industry supply chain Poor coordination wasted $ wasted ? dollars. 30 billion annually in the food industry. Boeing wrote-off ? dollars in 1997 due to supply chain $ 2.6 billion is how much Boeing wrote-off in 1997 due inefficiencies. to supply chain inefficiencies It costs, on average, ? $80 was paid, on average, to dollars to process each process each purchase order. purchase order.
Time is Money….ASC’s attempt to eliminate allwork and time not bringingvalue.ASC’s look for suppliers who:• Integrate Customer Service• Respond to Production• Supplier Integration - Limits
Urgent Need to Address Customer NeedsOn average, suppliers lose the sale 41% of the time Consumer behavior when confronted with an option Delayed Other purchase 8% Did not buy product 14% Substituted another brand 10% 19% Purchased at Substituted same brand another supplier (different size) 31% 18%
Results of Poor ASC Supply ChainsSince ASC’s work on a streamlinedsystem without the traditionalbuffers of hospital networks, theconsequences are felt more directly Cancellation of Surgeryby the facility. Physician / Patient DissatisfactionPatient safety can be compromised Increased cost for servicesdue to poor planning. Loss of future Business