In the 1980s, facing intense competition from Japan, U.S. automotive manufacturers began to adopt many of the manufacturing philosophies that made companies like Toyota and Honda such fierce rivals. These principles—generally referred to as “lean manufacturing”—are focused on improving quality and lowering costs by eliminating wasted time, labor and materials during production. These practices have since become standard in all industries, from manufacturing to retail and services, even health care.
Hospitals use a staggering amount of supplies to effectively deliver patient care, from low-cost items like bandages to expensive heart catheters, so it’s no surprise that they are beginning to adopt many of these Japanese manufacturing principles to improve efficiency. A clever lean application can be found in the 59 supply rooms at the University of Chicago Medicine’s new hospital, the Center for Care and Discovery. All are equipped with a high-tech system for tracking inventory that adapts these ideas to turn the mundane work of restocking gauze and saline solution into a science.
These smart supply rooms are part of an ongoing initiative to incorporate lean processes into all aspects of care at the University of Chicago Medicine. Jon Stegner, vice president of supply chain and logistics, is leading a team with experience from automotive and industrial manufacturing to bring best practices from supply chains outside of healthcare to the day-to-day business of running a hospital smoothly.
“We have a group of people here now who think process transformation, morning, noon and night, and sometimes in the middle of the night,” he said.
The heart of this supply chain transformation is a process called “kanban,” a method for stocking supplies based on demand. The idea is to store just the amount needed for a few days, and reorder fresh supplies more often. This is especially important for medical supplies, which can expire if they sit on the shelf too long. The process reduces costs by lowering the amount of inventory on hand and eliminating waste from expired supplies that have to be thrown out.
The kanban system also organizes supplies to make it easy for nurses and staff to find things they need quickly. Before Stegner and his team began implementing the kanban system, supplies were arranged haphazardly. People found items based on what he called “tribal knowledge” passed on from person to person but with very little organization in the actual supply rooms.
Using kanban, items are placed into simple plastic bins that are clearly labeled and organized in the room by product categories defined by nursing staff who use them every day. Stuff that gets used a lot is stored on middle shelves where they’re easy to reach. Items used less often are in the higher and lower bins, and so on.
Each bin is divided into two sections that hold enough supplies for two days (i.e., four days total in one bin). When one side runs out, the worker removes a colored kanban card from a slot on the front of the bin that is printed with information about how many items to reorder. If both sides are completely empty, they pull a black card to indicate a “stockout.” The worker then drops the card into a box to indicate that it needs to be refilled.
The cards and bins alone would be enough to run a simple kanban process, but the system at the Center for Care and Discovery has a high-tech feature that makes it even more efficient. Each kanban card is embedded with a radio-frequency identification (RFID) tag. When someone drops the card into the box, a scanner reads it and places the order automatically. This eliminates the need for physically checking order status in each of the 59 rooms and entering data into the computer, saving time and potential errors.Each stock room has a board mounted on the wall with the RFID scanner, boxes for the kanban cards and a tablet computer that displays statistics and messages from the supply chain system. The system is plugged into the hospital’s supply chain management software called Helios, which is being developed specifically for the University of Chicago. The software analyzes inventory levels throughout the hospital and allows supply chain staff to adjust amounts according to demand. If a particular item is running out of stock too often in a given location, it can adjust the refill amount to keep this from happening. Orders for supplies that are running low are refilled within 24 hours; items that are completely out of stock are replaced in two hours. Eventually, the tablet also will show the four closest supply rooms that have an item in stock in case of an emergency.
Mike Hopkins, director of operations and logistics, said the custom design of the system is a better fit than purchasing a full solution from a vendor. “It gives us the flexibility to do whatever fits our workflow; whereas, with other solutions out there, you have to design your workflow around the technology,” he said.
Having detailed data on hand allows the supply chain team to analyze patterns and develop what Stegner called the “the plan for every part.”
Jake Gafner, a process transformation specialist who is helping design the kanban system and software, said, “Having this kind of data, we know more than just hearing someone say ‘I want more of this.’ Now we know right away if they stock out of this every day and we should be giving them more.”
The RFID-enabled kanban system is already in use for low-cost items in the emergency department at Mitchell Hospital. When the Center for Care and Discovery opens Feb. 23, it will be live in all 59 supply rooms. The system will then be rolled out to the remaining 106 rooms in Mitchell, Comer Children’s Hospital and the Duchossois Center for Advanced Medicine.
Eventually, the system will include additional tracking for individual high-value items that shouldn’t be reordered automatically, either because they’re expensive or have specialized uses. These items will be given individual RFID tags and placed on racks that have their own scanners that send an alert when the item is removed. Then someone from the supply chain team can follow up to decide if it needs to be reordered, or if someone just removed it from the rack and needs to put it back.
In the initial analysis in Mitchell Hospital to begin building the kanban system, Stegner said his team identified more than $600,000 worth of expired supplies. Multiply that over several years, the incentive is clear for applying the same kind of rigorous, data-driven analysis used in laboratories throughout campus to managing medical supplies.
Supply rooms aren’t the most exciting part of a hospital, but they can still benefit from a little scientific thinking.