Richard Bays MBA, RN, CPHQ
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Richard Bays MBA, RN, CPHQ
Ambulatory Surgical Centers
ASC’s operate in a different
environment than traditional
hospitals. There is less physical
space for stock and cases can be
scheduled with short notice.
Financial constraints prevent a large
buffer stock from existing.
ASC
Operate
Orders
Optimize
Change
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).
5
Information Coordination: The Bullwhip Effect
Consumer Sales at Retailer
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Retailer's Orders to Wholesaler
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Manufacturer's Orders with Supplier
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Ma
nu
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Behavioral Causes
Misuse of base-stock policies
Misperceptions of feedback and time delays
Panic ordering after
unmet demand * Perceived risk of other
players rationality
Operational Causes
Dependent Demand Processing Forecast Errors Adjustment of parameters with
each demand observation
Lead Time Variability (forecast error during replenishment lead time)
Lot-sizing/order synchronization Consolidation of demands Transaction motive Quantity discount
Trade promotion and forward buying
Anticipation of shortages Allocation rule of suppliers
Shortage gaming
Lean and JIT style management of inventories and a chase production strategy
Sources of Performance-Cycle Variation
Order Transmission
Time Range - Days 1/2 3 1
Customer Delivery
Time Range - Days 1/2 3 1
Order Transportation
Time Range - Days 2 10 4
Order Selection
Time Range - Days 1 20 2
Order Processing
Time Range - Days
1 4 2
Total Performance Cycle
Time Range - Days
5 40 10
Supply Chain Quiz
A box of cereal spends ? days in the supply chain.
Total inventory in the pharmaceutical supply chain exceeds ? days and ? $ in savings to be realized.
Poor coordination in the food industry supply chain wasted ? dollars.
Boeing wrote-off ? dollars in 1997 due to supply chain inefficiencies.
It costs, on average, ? dollars to process each purchase order.
A box of cereal spends 104 days in the supply chain.
Distorted information causes total inventory in the pharmaceutical supply chain to exceed 100 days with $11 billion in savings to be realized.
Poor coordination wasted $ 30 billion annually in the food industry.
$ 2.6 billion is how much Boeing wrote-off in 1997 due to supply chain inefficiencies
$80 was paid, on average, to process each purchase order.
Time is Money….
ASC’s attempt to eliminate all work and time not bringing value.
ASC’s look for suppliers who:
• Integrate Customer Service
• Respond to Production
• Supplier Integration - Limits
Supply Chain Performance Outcomes
Safety
Sustainability
Customer
Satisfaction
Revenue
Reliability
Responsive
ness
Assets
Cost
Outcomes
Purchased at
another supplier
31%
Substituted another brand
19%
Substituted same brand (different size)
18%
Other
8% Did not buy product
10%
Delayed purchase
14%
Consumer behavior when confronted with an option
Urgent Need to Address Customer Needs On average, suppliers lose the sale 41% of the time
Results of Poor ASC Supply Chains
Since ASC’s work on a streamlined
system without the traditional
buffers of hospital networks, the
consequences are felt more directly
by the facility.
Patient safety can be compromised
due to poor planning.
Cancellation of Surgery
Physician / Patient Dissatisfaction
Increased cost for services
Loss of future Business
Questions??
Richard Bays MBA, RN, CPHQ
832.316.2701
Thank You
Your
for
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