Operational Excellence In Healthcare


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St. Bernards Healthcare won the VHA 2006 Leadership Award for Supply Chain Management Improvement for the transformation of their supply chain information systems.

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Operational Excellence In Healthcare

  1. 1. Operational Excellence with your Materials Management Information Systems Tim Salaver, CSSMBB, CSSCA, CProjMgr Sharon Harper, Materials Specialist St. Bernards Healthcare Jonesboro, AR
  2. 2. Scope <ul><li>Streamline and improve materials management policies, procedures, and processes </li></ul><ul><li>Implement Materials Management best practices </li></ul><ul><li>Save money by reducing inventory and reviewing supply usage </li></ul><ul><li>Improve customer service through streamlined internal operations </li></ul><ul><li>Introduce Lean and Reduce waste </li></ul><ul><li>Improve materials management information system and increase system utilization </li></ul>
  3. 3. Improvement Principles Applied <ul><li>Lean </li></ul><ul><ul><li>Standardization </li></ul></ul><ul><ul><li>Visual Controls </li></ul></ul><ul><ul><li>Speed, Cycle Time </li></ul></ul><ul><ul><li>Inventory Performance </li></ul></ul><ul><ul><li>Logistics Cost Reduction </li></ul></ul><ul><ul><li>Variation Reduction </li></ul></ul><ul><li>5S lite – Visual Workplace </li></ul><ul><ul><li>Organized </li></ul></ul><ul><ul><li>Place Items Where They Belong </li></ul></ul><ul><li>Six Sigma for Services </li></ul><ul><ul><li>DMAIC Process </li></ul></ul><ul><ul><li>Process Mapping </li></ul></ul><ul><ul><li>Service Defect Prevention </li></ul></ul><ul><li>Kaizen </li></ul><ul><ul><li>Quick Hits </li></ul></ul><ul><ul><li>Cause and Effect </li></ul></ul><ul><ul><li>Plug Holes in Dikes </li></ul></ul><ul><ul><li>Cost Containment </li></ul></ul>
  4. 4. Improve and streamline Inventory Control Processes <ul><li>Use Lawson Item Master and Item Location fields to increase defaulting and filtering capabilities </li></ul><ul><li>Ensure Vendor Master file maintenance conforms with Item Master file </li></ul><ul><li>Create Vendor Agreements </li></ul><ul><li>Reconfigure store areas according to Best Practice Materials Management and WH130 Pick Process </li></ul><ul><li>Define and Improve Physical Inventory Process </li></ul><ul><ul><li>Periodic Counting </li></ul></ul><ul><ul><li>Cycle Counting </li></ul></ul>
  5. 5. Define Inventory Controls <ul><li>ABC Analysis </li></ul><ul><ul><li>Ideal order quantity </li></ul></ul><ul><ul><li>Classify inventory items into groups by annual dollar value of usage </li></ul></ul><ul><ul><li>All inventory items are then listed in descending order, from the highest annual dollar usage to the lowest </li></ul></ul><ul><li>Identify and re-calculate Lead-time and Safety Stock </li></ul><ul><li>Aggregate Inventory </li></ul>
  6. 7. Identify Types of Inventory <ul><li>Official Inventory </li></ul><ul><li>Un-official Inventory </li></ul><ul><li>Consignment Inventory </li></ul><ul><li>Super-Secret Inventory </li></ul>
  7. 8. Official Inventory as managed by Lawson <ul><li>These are products that are assets on a facility’s balance sheets and expensed to the requesting department. </li></ul><ul><li>Most often found in a facility’s storeroom. </li></ul><ul><li>Inventory found in a storeroom is considered official inventory. </li></ul>
  8. 9. Unofficial Inventory as managed by local staff <ul><li>These are products that are expensed upon receipt at the facility prior to their use. </li></ul><ul><li>They are normally stored at the point of use. </li></ul><ul><li>These items are also known as stockless (non-stock) or just in time items, delivered directly to the user area and not stocked in a storeroom. </li></ul><ul><li>Supplies in the operating room are considered unofficial inventory. </li></ul>
  9. 10. Consignment Inventory <ul><li>These are products that are housed in the facility but purchased only when used. </li></ul><ul><li>Costly items </li></ul><ul><li>Maintained counts by facility </li></ul>
  10. 11. Super-Secret Inventory <ul><li>If I tell y’all… </li></ul><ul><li>I’m a gonna have to kill all y’all! </li></ul>
  11. 12. Super-Secret Inventory <ul><li>Just Kidding </li></ul><ul><li>These need to go away </li></ul>
  12. 13. Interfaces <ul><li>Pyxis to Lawson </li></ul><ul><ul><li>Eliminated Pyxis report, manual counting, intersystem reconciliations, and reduced data entry </li></ul></ul><ul><ul><ul><li>Pyxis Snapshot for Pt Charge </li></ul></ul></ul><ul><ul><ul><li>Pyxis Snapshot for Non Charge Items </li></ul></ul></ul><ul><ul><ul><li>2 files then FTP to Lawson </li></ul></ul></ul><ul><ul><ul><li>Trigger </li></ul></ul></ul><ul><ul><ul><li>Run RQ500NC </li></ul></ul></ul><ul><ul><ul><li>Run RQ500CH </li></ul></ul></ul><ul><ul><ul><li>Wh130 for pick lists </li></ul></ul></ul><ul><ul><li>Same-day delivery </li></ul></ul>
  13. 14. Interfaces <ul><li>Able to fill every floor twice each day and have consolidated the runs so they are more efficient. </li></ul><ul><li>The reports are set up in 5 separate runs during the week and 7 separate runs on the weekends which send the replenishment technician to the areas that are in close proximity to one another. </li></ul><ul><li>Through the week all machines are filled twice before 1:30 in the afternoon. </li></ul><ul><li>On the weekend, all machines are filled twice by 1:00pm. </li></ul><ul><li>This allows more time for store are cleaning, crash and procedure carts maintenance, and cross dock deliveries </li></ul>
  14. 16. EDI (ED501 – Outbound) <ul><li>From 3 to 7 Vendors (future ~20) </li></ul><ul><li>SBHC to Neoforma to GHX </li></ul><ul><li>Effective 3/2/2006, GHX acquired Neoforma thus SBHC to GHX </li></ul><ul><li>Accurate to 99% (1% reflects errors post SUP changes) </li></ul><ul><li>Confirmation response within 2 hours </li></ul>
  15. 17. Process Improvements <ul><li>Reduction in number of Purchase Orders and Invoices due to reduction in inventory </li></ul><ul><li>Modify Matching Set-up </li></ul><ul><ul><li>Changed matching tolerances which reduced matching errors </li></ul></ul><ul><ul><ul><li>(Big Thanks to St. John Health System, Tulsa, OK) </li></ul></ul></ul><ul><li>Eliminated Data Entry of Pyxis Item Adjustments into Lawson </li></ul>11/04 – 1/05 11/05 – 1/06 % chg FTE’s AP Invoices 7,813 7,182 8% decrease 4 AP clerks AP Invoice Lines 21,284 22,001 3.4% increase 4 AP clerks PO’s 6,269 6,045 3.5% decrease 2 buyers PO lines 19,711 20,404 3.5% increase
  16. 18. Process Improvements <ul><li>Deliveries to ancillary departments are much more accurate and there has been a tremendous boost in customer service </li></ul><ul><ul><li>Before the use of the Fill/Kill option departments were simply told the item was not available and the department was then expected to reorder </li></ul></ul><ul><ul><li>Now they can enter it once and know that when stock becomes available it will be delivered </li></ul></ul><ul><ul><li>Minimized or Eliminated Super-secret inventory </li></ul></ul>
  17. 19. Training <ul><li>Added Lawson RSS for new employees </li></ul><ul><li>Refresher courses offered to current users (250 users) </li></ul><ul><li>All materials management personnel (16) trained in Fundamentals of Inventory Control from APICS The Association for Operations Management Body of Knowledge </li></ul>
  18. 20. Communications Plan <ul><li>Created hospital-wide communications plan </li></ul><ul><ul><li>Infused Change Management into Hospital </li></ul></ul><ul><ul><li>Advanced notice of changes in stores </li></ul></ul><ul><ul><li>Created rules of engagement for team members </li></ul></ul>
  19. 21. Resources <ul><li>24 SBHC Employees </li></ul><ul><li>Six Departments </li></ul><ul><li>Two consultants </li></ul><ul><li>Eight Arkansas State University interns (Marketing, MIS, Management) </li></ul>
  20. 22. Interns are good <ul><li>Performed Administrative Tasks </li></ul><ul><li>Trained in Lawson IC Set-up </li></ul><ul><li>Trained in MS Add-ins </li></ul><ul><li>Low hourly rate (minimum wage/training wage) </li></ul><ul><li>Executed Systems Test </li></ul><ul><li>Performed Data Validation </li></ul><ul><li>Assisted in Store Areas re-design and re-configuration </li></ul>
  21. 23. Operational Improvements <ul><li>Designed according to WH130 pick list </li></ul><ul><li>Needed to streamline put-away and picking </li></ul><ul><li>High usage items picked first </li></ul><ul><ul><li>Minimized daily travel (from 6 miles to 2 miles) </li></ul></ul><ul><li>FIFO Dated items rotated frequently through rear put-away </li></ul><ul><li>Pallet-size orders reduced handling </li></ul><ul><li>Reduction of inventory with 1 day lead times </li></ul><ul><li>Reduced forms and documentation inventory </li></ul><ul><li>Reduced Shrinkage (Elimination of Inventory with Legs) </li></ul><ul><li>Very lean in stockroom </li></ul><ul><ul><li>Immediately after our stockroom reconfiguration in July 2005 , the stockroom had a temporary loss of personnel for 6 months with as few as 5.5 FTE’s from a normal 8.5 FTE with no disruption in service. </li></ul></ul>
  22. 28. Receiving Office too Small
  23. 29. Use Space to Minimize Access
  24. 30. A Good Day in the Old Days
  25. 31. … A Bad Day
  26. 32. Nirvana and Space
  27. 33. A Lot of Handling and Movement
  28. 34. Do Not Use Movable Shelves
  29. 35. Rebuilding Configuration
  30. 36. LIFO/FIFO <ul><li>Easy to Put-away and Pick </li></ul><ul><li>Picklist in Bin Order (Item level) </li></ul><ul><li>Stationary Shelving increased cube utilization </li></ul>
  31. 37. Do Not Store Solutions on Racks <ul><li>Solutions are heavy </li></ul><ul><li>Require a lot of handling </li></ul><ul><li>Frequent turnover </li></ul><ul><li>Greater wear and tear on shelving units </li></ul>
  32. 38. Order by Pallet <ul><li>Pallet-size </li></ul><ul><li>Easy to ship </li></ul><ul><li>Easy to store </li></ul><ul><li>Reduced handling </li></ul>
  33. 40. Common Items Procedure Items Stock Items Procedure Items Common Items
  34. 41. OR Inventory in the Old Days
  35. 42. Lots of Travel in a Small Space
  36. 43. Need for Consolidation
  37. 44. Notice Former Shelf Location
  38. 45. Create Smaller Picking Area Utilized lighting in room to create better viewing of picking area
  39. 46. Minimize travel (2 miles to .5 miles)
  40. 47. Interfaces <ul><li>Lawson-iPath </li></ul><ul><ul><li>IC527 </li></ul></ul><ul><ul><li>Cloverleaf for mapping </li></ul></ul><ul><ul><li>Update Resource Catalog </li></ul></ul><ul><li>iPath-Lawson (Consumption Interface) </li></ul><ul><ul><li>Consumption Screen </li></ul></ul><ul><ul><li>Cloverleaf for mapping </li></ul></ul><ul><ul><li>IC500 </li></ul></ul><ul><li>Eliminated double data item and vendor entry into iPath and Lawson </li></ul>
  41. 49. Data Quality <ul><li>Update Price Data </li></ul><ul><li>Update Cost Data (confirmations in PO20) </li></ul><ul><li>Update re-processing (new item number) </li></ul><ul><li>Reduced number of supply items from 40,000 to 14,000 thru Item Master Clean Up and Validation </li></ul><ul><li>Increased Surgery Inventory and Vendor Record accuracy between Lawson, Pyxis, and iPath (8,000 items) </li></ul>
  42. 50. Benchmarks <ul><li>Project Budget $315,000 </li></ul><ul><li>Scheduled project end March 2006 </li></ul><ul><li>Actual Project Cost $325,000 </li></ul><ul><li>Actual end March 13, 2006 </li></ul>
  43. 53. Future <ul><li>Add more interfaces to other clinical applications </li></ul><ul><li>Add Cath Lab, Anesthesia users </li></ul><ul><li>Convert from current ASP model to hosted in-house </li></ul><ul><li>Replace Pyxis monthly rentals of cabinets </li></ul>
  44. 54. Additional Documentation <ul><li>Various documents are available as follows: </li></ul><ul><ul><li>http://support.lawson.com </li></ul></ul><ul><ul><li>APICS The Association for Operations Management ( www.apics.org ) </li></ul></ul><ul><ul><li>Association for Healthcare Resource and Materials Management ( www.ahrmm.org ) </li></ul></ul>
  45. 55. CUE 2006 Feedback <ul><li>Please complete the session survey located in your on-site catalog. </li></ul>
  46. 56. Questions? <ul><li>Tim Salaver, CSSMBB, CProjMgr, President </li></ul><ul><li>Cornerstone Systems Solutions, Inc. </li></ul><ul><li>Project Manager </li></ul><ul><li>(702) 286-7464 </li></ul><ul><li>Sharon Harper </li></ul><ul><li>St. Bernards Healthcare </li></ul><ul><li>Materials Specialist </li></ul><ul><li>(870) 336-4925 </li></ul>
  47. 57. Thank You <ul><li>For more information on this subject, please call us or attend other related sessions! </li></ul>