Supply chain management costs consistently rank as a top expense for hospitals and health systems — prompting leaders to be on the lookout for new ways to save money.
During a Nov. 13 webinar sponsored by Dublin, Ohio-based Cardinal Health and hosted by Becker's Hospital Review, two supply chain experts discussed how organizations can be more efficient by focusing on delivery mode and explored how Chicago-based Northwestern Medicine Health System used this strategy to cut waste, maximize storage and save money.
The panelists were:
- Mike Hopkins, Vice President of Supply Chain Distribution and Logistics at Northwestern Medicine Health System
- Matt Bruggeman, Director of Solutions Development for the Presource Products and Services business at Cardinal Health
Why optimizing supply delivery mode is key
The supply chain affects the entire hospital or health system, including the critical clinical care setting, Mr. Hopkins explained.
"Ensuring we have the right products in their right places and the right data and insight-driven solutions to optimize how and which products we're receiving, means our physicians don’t have to worry. When they go into a procedure, they’ll have what they need," Mr. Hopkins said.
Despite this, the process of receiving and storing products in a hospital often contains inefficiencies, said Mr. Bruggeman.
Supply chain staff are tasked with handling the product when it arrives, scheduling shipments and ordering the supplies, among other responsibilities. But when these steps are not standardized or optimized it leads to multiple touchpoints for staff, wasted supplies and space inefficiencies, Mr. Bruggeman said.
"If you look at folks traveling back and forth to pick and move products, if you look at nonoptimal storage — that's all waste," Mr. Hopkins said.
But by analyzing supply delivery mode and identifying opportunities to improve, such as revamping custom procedural packs, using logical unit of measure distribution and standardizing products across departments, supply chain leaders can begin to cut waste, save money and ensure clinical staff have the products they need, Mr. Bruggeman said.
Steps to improve delivery mode
There are three main steps to ensure delivery mode can be optimized and solutions can be scaled throughout the organization, the panelists said.
1. Provide proof of concept. The first step is establishing a proof of concept to demonstrate the viability of a new solution. This allows for a solution to be piloted and refined with a distributor before it is rolled out to the entire health system.
"This [step] lets people get their feet wet and get comfortable with change. A successful proof of concept will let you prove out to everybody, hey, here are the benefits that will come when we do this more broadly," Mr. Hopkins said.
2. Establish a standardized process. The next step is building out a clear and easily adaptable process that is standard across all departments. Even when there is high variability within facilities, if the right tools and systems are in place, the process can be repeated, and the potential for human error will be minimized, Mr. Hopkins said.
3. Generate stakeholder buy-in. To drive change and begin to optimize supply delivery mode, all parties involved need to be aligned on goals and priorities from the start, Mr. Bruggeman said. One of the keys to generating stakeholder buy-in includes building trust in the data and simplifying the story the data is revealing, he added.
"With a proof of concept and a standardized process laid out, you can really begin to gain stakeholder buy-in and scale your solution," Mr. Bruggeman said.
Northwestern Medicine's success story
Northwestern Medicine, a top-ranked health system with hundreds of Illinois locations and more than 4,400 physicians, undertook several projects to improve its supply delivery mode.
It worked with Cardinal Health on a de-casing program that eliminated the need for employees to unbox products or deal with corrugate.
"That doesn’t just save us time and resources in the actual moving of product, but it increases employee satisfaction, which in the long run drives our system costs down," Mr. Hopkins said.
To reduce waste, control costs and improve workflows, Northwestern also worked to right-size and optimize its procedural packs with Cardinal Health.
"Our procedural supply area at our largest facility in downtown Chicago is actually quite compact, but procedure packs have enabled us to make the best use of storage space and actual OR shelf space," Mr. Hopkins said. "And as far as labor efficiencies go, when products are consolidated into packs, it’s much faster for staff to pick products for a case cart."
Northwestern also implemented a wave picking system, which combines multiple orders into a batch to reduce the number of trips staff make while picking supplies, and worked with Cardinal Health's ValueLink to better align par levels with demand and drive inventory right-sizing efforts.
As a result of these programs, Northwestern has reduced inventory costs by nearly $2 million and significantly reduced costly overnight shipments.
The system also is disposing of far less expired inventory, Mr. Hopkins said.
"Supply chain is what everything flows through. If we're doing our job right, we are effectively and efficiently getting supplies to their right location in the hospital while reducing costs, waste and other inefficiencies," Mr. Hopkins said.
Overall, optimizing the way products are received and stored is a key strategy hospitals can use to contain distribution costs, eliminate waste, free up storage and reduce touches by staff throughout the supply chain.
Learn more about Cardinal Health's distribution services here and Presource kitting solutions here.