Most organizations now use a par level process – a process that often evolved from a cart exchange program. The original concept was to put enough supplies for one day on the cart and exchange them every 24 hours. This was done for two primary reasons: To keep inventory to a minimum and to avoid overloading the limited space available on the carts. Par leveling proved to me more effective than cart exchange for many reasons. It tied up less capital, freed up space in the storeroom and significantly decreased the inventory investment. Switching from carts to shelves also provided more usable space in the departmental area. However, concerns over the cost of inventory – and a "that’s the way we do it" thought pattern kept the replenishment frequency at daily.

Nurse at Jewish Hospital,
photo courtesy of PAR Excellence

The par level process, both the counting and the replacing of used stock, is a labor intensive practice. What if you could provide the same level of service with less staff and little extra cost? In most cases this is possible. The best practice that we now see is reduced frequency of replenishment, usually two or three times a week.

There is an almost universal reaction from materials folks when this suggestion is presented. "No way! We just don’t have the space to put all the extra stock that will be needed." This is an understandable reaction if you have not studied the normal usage patterns in a par level area. Conceptually, if you go from daily to three times a week, you would need three times the supplies, right? But this reasoning is incorrect. In fact, much of the stock in a typical par level area is actually safety stock, not operating stock. When you analyze actual usage you normally find that only 15-20 percent of the line items need to be substantially increased, and many of these will fit in the same cubic space that was being used before. That is right; more than 80 percent of the supplies are already at levels that will last three days.

Further, that same usage analysis often reveals that other items can be reduced or even eliminated. So only a relatively modest space increase, if any, may be needed to accommodate the extra supplies. Reconfiguring the layout will often create space. Varying shelf heights, adding drawer units, changing bin sizes and just reorganizing can make a big difference.

If space is still a constraining factor, there are some creative adaptations that can get most of the value from this best practice. The easiest is to identify those few items that can not be stocked at the higher level and continue to par these items on a daily basis while converting all the others to the lower frequency. Some organizations stock up a cart with these few items and take it with them when they inventory. This way the areas can be restocked at the same time.

Besides space, the other objection is the increase in inventory value. However, the same dynamic is in play here. Since you are only increasing a small number of items, the dollar value of the inventory will be modest. Besides, the carrying cost of most nursing unit inventory is very small. Interest rates are still low, so the opportunity cost is minimal. There is virtually no space or utilities cost. And as long as pilferage is not a problem obsolescence should be minimal. Even if you put carrying cost at 10 percent, the cost to increase the stock on a nursing unit should be less than $100 per year.

Of course, the primary benefit of reducing par level frequency is the significant labor savings that is experienced. If you are moving from a daily schedule each par area will take a little longer to inventory and restock, but the number of time goes way down. If you are currently servicing 30 locations seven days a week then you are performing 210 inventory/restocks. Based on normal circumstances you would be able to convert 10 of the locations into twice weekly and the other 20 into three times weekly. This reduces the number of inventory/restocks to 80. Your labor needs should be cut at least in half. This can translate into the ability to reduce by several FTEs. And even if you are very small and can not reduce a person, you will have more time to increase other services like expanding the par level program into other departments. All this come with equal or even better service to the departments.

I must make a couple of comments about automated supply cabinets and similar systems that are supposed to eliminate the need to count inventory. Used correctly these systems can be a productivity boost as well. However, using them should not stop you from pursuing reduced frequency of restock. While the time savings is not as great as with a traditional system, there is still good time savings. And if you are on a low unit of measure program with your distributor, your lines delivered daily will be reduced substantially.