Caldwell Memorial Hospital’s supply chain was struggling, as many hospital operations do, with multiple stock locations, excess and often incorrect inventory, and low accountability for what was on the shelves.
So the hospital’s leaders took action, and their successful initiative provides several steps that other providers may want to consider, too.
#1 Use Lean thinking
Caldwell leaders looked to their prior experience with Lean management tools to guide their efforts in the supply chain. A value stream assessment helped them pinpoint specific challenges, while data collection and analysis helped them develop a strategic plan for tackling them. This critical prep work revealed several key areas of focus: inventory visibility, demand flow optimization and management of physician preference items.
#2 Get visual
First up: inventory visibility and demand flow optimization. By introducing a new, Lean-based visual replenishment system, Caldwell gained the transparency needed to consolidate supplies, eliminate excess inventory and lower distribution costs. Plus, clinicians no longer had to spend valuable time managing supplies when they should be with patients. The combined annual savings from these initial activities totaled more than $3 million.
#3 Reign in requests
Next on the list: physician preference items. From supplies to lab resources to room and board, no two Caldwell physicians seemed to utilize assets in quite the same way. And these variations were adding up.
Digging into and analyzing resource usage data allowed Caldwell to break down the costs by clinician, case and location. This revealed just how much the inconsistency was costing the hospital — more than $4 million — and what Caldwell needed to do to convert those costs into cost-saving opportunities.
If you’d like more information on how this hospital achieved its remarkable result, please reach out to us.You can also read the full case study here.