For Improved Efficiency, look at the supply
Chain and Outsourcing Management
SESSION 6 : ALTERNATIVE FOR APPROPRIATE HEALTHCARE MANAGEMENT
Maurice Rizkallah
Certified Supply Chain Professional – APICS On the 25thof November 2014
Supply Chain Management
Definition
According to the Joint Commission International
“The steps in moving a finished product from its
Supplier Warehouse Medical Floor
Supply Chain Management
Definition
THEORETICALLY
Supply Chain Management
Definition
The Supply Chain Management is the
science of having RIGHT
Product
RIGHT Time
RIGHT Place
RIGHT QTY
RIGHT Cost
How much does it really cost?
Total Supply Chain Cost
COST of Return COST of
Handling
COST of Sourcing
Supply Chain Management
Cost Definition
Supply Chain Management
Cost Definition
Receiving Orders from Supplier Order delivery warehouse to medical service Handling Cost Reviewing backorders Searching for alternative supplier Evaluating products of new suppliers Issuing Purchase Orders Sourcing Cost Return inappropriate product to warehouse Return inappropriate product to supplier Return CostSupply Chain Management
Facts & Numbers
$1,000,000
$20,000
$-$200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000
Processing Cost
USD Spent Cost / $
For every 1$ we spend on medical supplies, we spend 2 cents on administrative processes
Supply Chain Management
Facts & Numbers
51% 46%
3% Orders Delivered
Complete Orders Back Orders Rework
Cost of controlling backorders : 5USD/Order Cost of Orders rework: 30USD/Order
Supply Chain Management
Facts & Numbers
3500 200 $17,500 $6,000 0 2000 4000 6000 8000 10000 12000 14000 16000 18000 20000
Backorders Rework
# Orders Cost
Supply Chain Management
Facts & Numbers
16000
$64,000
0 10000 20000 30000 40000 50000 60000 70000
Diaily Replenishement
Total Count/Year Total Cost/Year
Supply Chain Management
What is required?
Reduce Cost
Right Supplier
Right Process
Supply Chain Management
The RIGHT Supplier
Implementing Strategic Sourcing Strategy
• To reduce procurement and excess inventory costs
• Support a patient-focused service for quality
Supply Chain Management
The RIGHT Supplier
Traditional Purchasing Strategic Sourcing
Focus Purchase Price True Cost (ABC costing) Transactional Collaborative
Business Boundaries Never Crosses Opportunities for realigned and collaborative process, data flow and workflow Visibility Internal Entire Supply Chain
Supply Chain Management
The RIGHT Supplier
Supplier Purchasing End User
SILOS
Supplier End User
Collaboration
Near Future Strategies
Vendor-Managed Inventory (VMI)
“in this model, vendors, through mutual
agreement, have access to customers inventory
and transactions. Vendors are responsible for
maintaining the inventory level required by the
customer.
Supply Chain Management
The RIGHT Supplier
Outsourcing Inventory
VMI
Success
Reduced inventory
Reduced TSCC
Reduced Out of
Stock Shorter
Lead Time Increased
Velocity
Supply Chain Management
The RIGHT Supplier
Continuous Improvement to eliminate waste
•
Waste “ Any Activity that doesn’t add value to
the good or service in the eye of the patient”
•
Special management tools to eliminate waste:
• Just-in-Time (JIT)
• Lean management
Supply Chain Management
The RIGHT Process
Supply Chain Management
The RIGHT Process
Just-in-Time (JIT)
The primary elements include having only the
required inventory when needed; to improve
quality to zero defects, to reduce lead times and
rework
Supply Chain Management
The RIGHT Process
JIT principles
•
Eliminate waste
•
Eliminate variability
•
Pull instead of Push
strategy (Kan Ban)
JIT Benefits
•
Cycle time reduction
•
Inventory reduction
•
Labor Cost reduction
Supply Chain Management
The RIGHT Process
Kanban System
It is a pull system. It means “display card” in Japanese - It is a replenishment system that synchronizes the
customer’s requirement through the plant and to the suppliers
- Order preparation should start only when a Kanban card has been issued
- The movement of Kanban cards depends on the number of containers for each component and the timing of when to deliver the card to the upstream facility
Lean Supply Chain thinking
Lean principles
• Eliminate activities that don’t add value
• Employ multiskilled
employees in teams
• Develop Lean suppliers
Supply Chain Management
The RIGHT Process
Lean Techniques
• Value Stream mapping
• Map 1: All Steps
• Map 2: Value-added steps only
•
Kaizen event (blitz)
• Rapid improvement of limited process area
• Beginnings of TQM initiatives
• Beware of conflicting between waste elimination and low quality services
• Beware of conflicting between JIT techniques and
very low inventory levels especially for critical medical supplies, the result can be fatal
Supply Chain Management
Limitation
• Choosing and collaborating with the right supplier can make the difference
• Controlling purchasing processes and eliminating
waste can reduce low quality services
• The Supply Chain can be easily management once the
chain master gain visibility over the entire process
