mastering the best practices in lab supply management to ... in recruiting or hiring ... value 7...

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April 30, 2013

Mastering the best practices in lab supply

management to boost your margins

Chris Dillinger

Director of Services – Cardinal Health Supply Solutions

Lean Six Sigma Master Black Belt



2

Learning objectives

• Understand the importance of managing laboratory

supply chain on financial performance, labor utilization

and patient care

• Recognize waste within the laboratory supply chain

• Identify lean countermeasures to common laboratory

supply chain pain points



3

What is the mission of your laboratory?

Serve physicians

Serve clients

Cost-effective healthcare

Serve patients

Research

Innovation

High-quality results



Labor Statistics

43 Percentage of laboratories experiencing

difficulties in recruiting or hiring personnel (1)

50 Average age of laboratory personnel (1)

81,000 Number of medical technologists and technicians

needed by 2014 to replace the retiring staff (2)

10,000 Number of new clinical laboratory scientists and

technicians needed each of the next 10 years (2)

5,000 Number graduating from lab science programs

annually (2)

(1) ASCP Wage and Vacancy Survey of U.S. Medical Laboratories, March 2008

& G2 Lab Industry Analysis 2010

(2) Bureau of Labor Statisics & G2 Lab Industry Analysis 2010



5

Lab supply expense

10%

25%

15%

50%



6

Supply chain improvement opportunity

3–7% average aggregate product savings

20–30% average inventory reduction

99.5% product availability at point of use

100% price and invoice accuracy

18.5% reduction in purchase orders

15–20% average freight spend savings



Value

7

Lean thinking

• Understand value and focus key processes



8

Lean thinking

• Maximize customer value while minimizing waste

• Understand value and focus key processes

Value



9

Lean principles1

• Focus on the customer

• Identify and understand how the work gets done

• Manage, improve and smooth the process flow

• Remove NVA steps and waste

• Manage by fact and reduce variation

• Involve and equip the people in the process

• Undertake improvement activity in a systematic way

1 Lean Six Sigma principles as articulated by General Electric



10

Waste identification

Moving supplies from location to location – dock, lab, store, pou Transportation

Techs managing supplies, not engaging ee’s in problem resolution Resources

Supplies, reagents, forms, email, hoarding Inventory

Looking for supplies, physical layout, ergonomics Motion

Waiting for supply delivery, reagent reconstitution Waiting

Expired reagents, outdated forms, bulk buys Over Production

Standing order changes, expediting, freight mode, QC Over Processing

Stock out, non-catalog items, back order, climate control, rework Defects



11

High level Value Stream Map

Hospital

Delivery

EDI

clearinghouse

Intouch Laboratories

High Level Process Map

April 30, 2013

Supplier

Dist 2

Direct from

Manufacturer

Dist 1

MMIS

Weekly

Inventory

3-5x/wk

Daily

5 million tests per year 4 hospital labs + 1 core lab $30 million supply spend $600K physical inventory

Order 1x per week

Cutoff noon for next day

3x/wk

Daily

Hospital

Receipt

Lab Receipt

Lab Delivery

Stocking

2-3x/wk

Pull to POU

Consume

Stocking

Stocking

Pull to

POU

Pull to

POU

Consume

Consume

Core Lab

Stocking

Deliver to

client

Consume

Pull

supplies

Stocking

Supply

Requisition



12

High level Value Stream Map

Hospital

Delivery

EDI

clearinghouse

Intouch Laboratories

High Level Process Map

April 30, 2013

Supplier

Dist 2

Direct from

Manufacturer

Dist 1

MMIS

Weekly

Inventory

3-5x/wk

Daily

5 million tests per year 4 hospital labs + 1 core lab $30 million supply spend $600K physical inventory

Order 1x per week

Cutoff noon for next day

3x/wk

Daily

Hospital

Receipt

Lab Receipt

Lab Delivery

Stocking

2-3x/wk

Pull to POU

Consume

Stocking

Stocking

Pull to

POU

Pull to

POU

Consume

Consume

Core Lab

Stocking

Deliver to

client

Consume

Pull

supplies

Stocking

Supply

Requisition

Space

design

Space

design

Space

design

Space

design

Storage

design

Storage

design

Storage

design

Storage

design

Add-on

Add-on

Clutter

Clutter Clutter

Clutter

Clutter

E/O

E/O

E/O

Climate

control

Climate

control

Climate

control

Missed

cutoff

Missed

cutoff

Missed

cutoff

Expedite

Expedite

Expedite

Clinical

staff Clinical

staff

Clinical

staff

Clinical

staff

Clinical

staff

Manual

Manual

Manual

Freight

Mgmt

Freight

Mgmt

Standard

Standard Backorder

Poor

verification

Poor

verification

Poor

verification

System

integration

Purch

Svcs

Outreach/

POC

Purch vs

Use

Stock outs Stock outs

Visibility to

spend Unintentional

redundancy Excess

inventory

Excess

inventory



13

Best demonstrated practices

• DEFINE

– High level business review of supply chain activity and spend

– Physical inventory

• MEASURE

– Process mapping

– Spaghetti diagram

– Storage location mapping



14


• ANALYZE

– Usage data versus purchase history

– Review Standing Orders

– Contract compliance

– Freight management

– Labor utilization

– Product utilization

– Expiration/Obsolescence

– Outreach supply distribution



15


• IMPROVE

– PAR levels

– Kanban

– Lean - 5S, visual management, space design

– Value analysis team

– Standardization team

– Maximize technology capabilities

– Minimize clinical staff performing supply chain activity

• CONTROL

– Balanced scorecard

– Be noticed, noticing

– Make it easy



16

Action items

• Go to Gemba

• Ask questions – seek to understand

• Grant immunity

• Empower employees

• USA

• Recognize it, call it, have courage

mastering the best practices in lab supply management to ... in recruiting or hiring ... value 7...

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