Build a Lean Six Sigma Process for Inventory Management in Hospitals

Welcome to the Webinar

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Build a Lean Six Sigma Process for Inventory

Management to Drive Nursing Satisfaction and

Supply Cost Reduction

Presenter: • Matt Brennan, healthcare supply chain expert;

• Senior Healthcare Supply Chain Consultant to Jump Technologies, Inc.

Questions?• Q & A will take place at the end of the presentation

• To submit questions at any point during the webinar, please use the “question” function

CPEs1.0 AHRMM - accredited Continuing Professional Education contact hour

Learning Objectives

• Identify benefits that can be achieved by implementing a Lean Six Sigma

approach to continuous improvement with nursing staff

• Understand inventory management approaches and determine how to

select an approach that meets the specific needs of a department or area

of your hospital

• Evaluate less expensive methods of replenishment for less expensive /

commodity products

Emergency Department Background Information

• Level 1 Trauma Center

• 52 Beds

• 12 Observation Beds

• Suburban MSA

• Academic Center

• ~ 200 Visits / Day

• 72,000 Visits / Year

The Problem

• Became the primary Level I Trauma Center within 75 mile radius

• Space / Clutter

• 52 Pyxis cabinets

• 42 supply carts

• Supply boxes in patient rooms

• Poor Pyxis compliance

• Hoarding of supplies

• Little confidence in Supply Chain support

• Highest RN turnover rate in the Medical Center

The Cost

• Average of 2hrs 14mins spent by nursing (per 12 hour

shift) stocking rooms and carts

• Approx. $353,000/year paying nurses and ED techs to

stock

• 52 Pyxis machines in the ED

• $300,000 / year equipment leases

• $70,000 / year line charges

What We Did

Lean Six Sigma Kaizen Event:

December 2012

Design & Evaluate Methodology:

January 2013

Conduct Pilot:

February thru April 2013

Team Included:Nursing

Supply & Distribution

Administration

Black Belt Consultant

What is a Kaizen Event?

Kaizen, also known as continuous improvement, is a long-term approach to

work that systematically seeks to achieve small, incremental changes in

processes in order to improve efficiency and quality.

In a typical Kaizen event:

• Team members meet 5 straight days to overhaul a core work process

• The week begins with just-in-time training in Kaizen methodology

• They map out the current state of the process, analyzing every step to find

all forms of waste: over-processing, delays, loopbacks, handoffs, excessive

inventory, work arounds

• They use their findings to develop a new process that is simpler, faster,

better and more cost-effective

• Action plans address all aspects of implementation, including training and

communication

How Do We Make it Better?

“If you can’t measure it,

you can’t improve it.”

Peter Drucker

RN Satisfaction Survey

Agree, 92.54%

Neutral, 5.97%

Disagree, 1.49%

The current stocking process NEGATIVELY impacts patient care

Agree

Neutral

Disagree

Supply Tech Satisfaction Survey

Agree, 9.00%

Disagree, 91.00%

I am content with the current format of stocking the Pyxis machines in the ED

Flow Chart of Current State

Supply & Distribution

Emergency Department

Operational Adjustments

• Chargeable supplies redefined

< $25 = Non-Chargeable (Kanban) 85%

> $25 = Chargeable (Closed Pyxis) 15%

• Non-chargeable supply amount was built into the visit acuity charge

• Pyxis lease was renegotiated

Kanban Choices Evaluated by Team

• Kanban cards

• Divided baskets

• Left to right

• Front to back

• ‘Flipper’ dividers in metal baskets

• Two colored reversible bins (blue/orange, black/red)

• 3 Bin (One in front of the other) empty bin returned to supplier

• 2 Bin (One in front of the other – neither ever leave the location) *

• Watermarks (accommodates items too large to fit in bins) *

* indicates methodologies chosen

KISS - Keep It Simple Solution

• Pilot Study (Busiest of 7 care areas)

• 60 days, starting in February, 2013

• Remove 11 of 13 Pyxis cabinets in the pilot area

• Replace with closed 2 Bin cabinets

• Scan empty bins by 11 AM, replenish by 10 PM

• Successful interventions will move to entire ED

2 Bin Flexibility

Kanban Types

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Watermark 2 Bin

Bin Refill of the Kanban System

Used the last item in a Bin? Place empty bin on TOP shelf

Pull second bin

from the back

to the front of

shelf

Empty Bin?

Data Collection

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Key Fob Scanner

• 1 Scan / Second

• Micro USB

• Communication

• Charging (Lithium Ion Battery)

• $96 / each

• No keyboard (no data entry errors)

• Single button scan

• Audible and visible ‘good scan’ verification

Mistake Proofing

The 6 Most Common Errors Solved by 2 Bin Kanban:

1) Decision making (eyeballing)

2) Counting

3) Transcription

4) Data entry

5) Math errors

6) Stock rotation

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New Key Performance Indicators (KPIs)

ARV vs. PRV

• When Actual Replenishment Velocity (ARV) is added to KPIs, and compared to historical

or Projected Replenishment Velocity (PRV), supply staff can focus on the 10-15% of the

stock moving more quickly than expected (greatest chance of stocking out)

• The other end of the spectrum, the 10-15% of stock moving more slowly than expected

• This is the stock that sits idle, with greater chance of expiring

• When managed, it can provide space to increase the quantities of the rapidly moving

stock

• Remaining 70-75% of stock being consumed at the projected rate only needs a simple

barcode scan to trigger an error free order

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Simplifying the Data

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Supply Categorization

Visual Item Management

Shelf Labels Examples

Visual Item Management

Visual Cart Management

Cart Signage

Visual Cart Management

Visual Bin Management

Visual

indicator

linking bins

with Item

categories.

Visual Bin Management / Labeling (Kanban)

Efficiencies Gained

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- Fixed quantity replenishment

- Fewer SKUs ordered on a daily basis (40% fewer)

- Reduced touches by staff

- Eliminated cycle counts within PAR areas

- Eliminated data entry errors

- Reduced nursing time

- Reduced restocking time for supply staff

- Fewer stock-outs (1.5%)

- Improved Pyxis compliance (74% to 97%)

- Improved nursing engagement

Bin Capacity Plan

• 2 days / bin X 2 bins = 4 day supply

• Typical Med/Surgical nursing unit

• 3 days / bin x 2 bins = 6 day supply

• Critical Care nursing units

• 1.5 days / bin x 2 bins = 3 day supply

• Monday – Friday, 8 hour clinic locations

Nursing Engagement

Communication Plan for 2-Bin Kanban Implementation Unit: Leadership Contact Name:

Timing Dates

AssignedTasks/Events Supply & Logistics Ownership Nursing Ownership

Date Completed

Completed By

Week 1

Meeting - Introduction to Kanban and Assign Ownerships A.R. required required required

Appoint Key Nursing Contacts for Item Layout Assistance P.B. required required required

Week 2

Meeting - Kickoff Meeting with Nursing Team J.H. & S&L Install Team required required required

Meeting - Obtain Approval for GO-LIVE Date (layouts reviewed)

M.B. required required required

Communication - Post signage of GO-LIVE Date M.B. required required

Communication- Email staff of up coming install M.B.

Communication - PowerPoint is pushed to Nursing Staff M.B. required required

Week 3

GO-LIVE J.H. & S&L Install Team required required required

Communication - Post signage for NEW PROCESSES M.B. required required

Meeting - Post GO-LIVE J.H. & S&L Install Team required required required

Week 4 Data - Reviewing/Updating PAR's P.B. required required required

Nursing Approval for GO-LIVE: Date:

S&D Approval For GO-LIVE: Date:

Before and After

Measurement Before

(PAR Cabinet)

After

(2 Bin)

Customer Satisfaction - 93% +91%

Compliance 74% 97%

Stock Out % 4.7% 1.6%

Lines (SKU’s) ordered / day (avg.) 167 101

Lines (SKU’s) put away / hour (avg.) 68 125

Time to collect replenishment data 14 minutes / location 5 minutes / location

Results

• Decreased number of Pyxis machines

• Decreased line charges

• Decrease clutter in rooms

• Eliminated overstocking

• Improved efficiency of stocking process

• Increased nursing and tech satisfaction

• Improved patient care

Lessons Learned

• Strong executive sponsorship

• Pilot was too successful

•Initial concern that there are “An awful lot of empty bins”

• Orientation for new nursing hires

• Top shelf for empty bins only

• Supply staff scanning partially empty bins – “Just to be safe”

Frequently Asked Questions

• Why don’t you like Point of Use cabinets?

• Why didn’t you just use RFID throughout?

• What impact does 2 Bin have on supply consumption?

• Does your Days On-Hand inventory change?

• Do you have 7 Days/Week deliveries?

• Why do you visit each supply location twice/day, is that lean?

Q & A

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Thank You

Learn More About JumpStock™ Inventory

Management

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