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We can sub-optimize the supply chain by using processes creating consistent defects, pushing defects downstream or introducing unnecessary variation causing random defects.

Defects occur any time we fail to meet the mission of "right product, right place, right time, right price." The rework correcting these defects is waste, and more effort is required to fix a defect downstream than correcting it at the point of production. The following examples detail how out-of-sequence task assignments in the supply chain process created defects and how correcting these defects produced dramatic improvements in supply chain performance and customer service.

A medical center had a large, off-site warehouse located several miles away. The warehouse supervisor noticed during the warehouse’s peak receiving times the receiving staff failed to keep up with the volume of inbound shipments. His solution involved having the receivers enter the shipment in the materials management information system (MMIS) without verifying the shipment against the packing slip. The receivers would print the receiving document from the MMIS and pass it downstream with the shipment. If the product was an inventory item, the shelvers verified the count and type of item against what was received in the MMIS before putting the boxes away. If it was a non-stock item, the shipment would be cross-docked to a truck taking the product to the clinicians in the medical center.

The supervisor received calls from clinicians complaining products were ordered in incorrect quantities, were unavailable when needed and were the wrong products. He also received calls from Purchasing since clinicians were also complaining to them about the lack of supplies.

Since the receivers did not verify the actual boxes against the packing slip, defects occurred, such as wrong products or incorrect quantities. These defects were then pushed down the line, prompting clinicians to reach out to Purchasing to resolve the defects, and often days passed before errors were identified and corrected.

To correct these defects, the receivers needed to verify the shipment against the packing slip at the time of receipt. Additionally, shelvers could have been assigned to assist during peak receiving times to increase throughput. This solution improves supply chain performance by immediately correcting errors from the vendor, thus ensuring computer systems were more accurate and reliable, while minimizing the effort spent on rework. Customer service was improved for the clinicians by reducing the amount of time that they needed to spend acquiring correct supplies.

An inpatient surgery department used a computerized OR system to manage preference lists (PLs), perpetual inventory, patient journaling and implant logs. The post-procedure flow passed the PL and patient chart to Scheduling to enter the case information and implant log entries. The PL passed to OR Materials for exceptions to be issued from or credited back to the inventory. OR Materials had frequent stockouts and escalating freight costs due to excessive overnight shipments. The last physical inventory count indicated that the accuracy was less than 60 percent and the phone steadily rang with complaints that clinicians did not have their supplies.

A process assessment revealed that Scheduling received the PL before OR Materials for the purpose of keying in the charges onto the patient bill within 72 hours of surgery; however, this was no longer necessary. A computer interface was previously installed that passed charges from PL issues to the patient’s bill, and the steps in this process were never revisited. Scheduling held the PL as it entered the data, and two days lapsed before the MMIS was updated with supplies used in the case. Consequently, this dilated the inventory cycle to over three days. Since the MMIS did not have accurate information of quantities on hand, the staff placed orders with faulty information and their cycle counts adjusted the inventory levels before the issues and credits occurred.

To solve this problem the workflow was rearranged ensuring OR Materials issued items before Scheduling entered their data. This improved supply chain performance by ensuring the MMIS was updated within the day of surgery, thus reducing the inventory cycle time down to one day. Orders were based upon accurate information and cycle counts adjusted inventory levels appropriately. Inventory accuracy increased from 58 percent to 91 percent in the span of 12 weeks, and clinician satisfaction improved because supplies were available for surgery.

Identifying places where events are out of sequence is sometimes a difficult process, especially since identifying them requires us to put ourselves in the clinicians’ shoes. Additionally, it is better to solve a problem than to allow it to flow downstream and create more complicated problems. In this way, we can ensure that we optimize the clinical supply chain.