In an environment of ever-tightening margins, healthcare providers cannot afford to overlook the chance to improve efficiency and reduce costs. Key metrics and data can empower clinicians to provide the best care and improve outcomes for patients while preserving margins. Here's a few ways we're seeing Hospital Providers leverage supply chain analytics in their operations.
Healthcare organizations have access to robust data spanning clinical to business systems, resulting largely from the modernization of Electronic Medical Records (EMR) systems and Enterprise Resource Planning (ERP) software in recent years. This has created billions of data points that can be harvested to discover opportunities to reduce costs, improve patient care, and create greater efficiency.
In the healthcare supply chain space, unleashing the power of healthcare supply chain analytics holds the promise of identifying opportunities to better manage expenses, eliminate excess inventory, and improve the resilience of the supply chain.
Turning Data into Action
A great example of the power of data is using healthcare supply chain analytics to drive PAR demand (replenishment). This planning requires a current record of PAR locations, items used/replenished over a period of time (recommend at least 6 months), and existing PAR level, as well as safety stock and target days stock on hand. As with most raw resources, this data is ineffective until refined.
By leveraging industry standard calculations, key metrics such as average daily usage (ADU) and maximum daily usage can be derived to determine an optimized PAR stocking level. These PAR level adjustments can provide better availability of supplies for clinicians and eliminate excess and obsolete stock—a challenge for most healthcare organizations. Making this an easily repeatable process that can be used for continuous improvement is a pathway to achieving an optimized supply chain.
Oracle Cloud can automatically process PAR replenishment data and produce a demand planning report with recommended adjustments to current PAR levels. These recommendations are driven from usage often over a period of 3, 6, or 9 months. One of the benefits of this method is that the recommendations are based off the latest patterns in supply utilization and replenishment lead times.
Capitalizing on Opportunity
New PAR level recommendations can serve as an agent of change. PAR closets can be optimized, saving space by reducing stock of low usage/short lead time material and reducing stock-outs by increasing on-hand quantities of high usage/long lead time items. Once the most effective quantities have been established, PAR locations may be candidates for additional changes, such as:
TWO-BIN: If there is more physical space after adjustments, it may be a good opportunity to implement two-bin replenishment, creating significant time savings in PAR counting.
STOCKLESS: If a significant amount of material in the PAR closet has short lead times and can be sourced from your prime distributor, a stockless or Just-in-Time (JIT) replenishment method may enable a further reduction of on-hand quantity saving the organization the time and money required to hold stock.
Analytics in Action: The CentraCare Example
CentraCare is one of the largest healthcare systems in Minnesota and serves its community with the latest advancements in care, technology and treatment. With a complex supply chain that touches all hospital processes, CentraCare leadership looked to integrate their systems to enable accurate supply chain mechanisms and a consistent reporting structure throughout their health care system.
CentraCare selected Oracle Cloud and RF-SMART, which are seamlessly integrated. This integration ensures there is zero disparity between data, and allows Oracle to remain your source of truth for supply chain analytics. Having a single source of truth for supply chain data provides the best opportunity to develop robust supply chain analytics. This eliminates the otherwise arduous effort of having to merge different data sets and resolve any inconsistencies.
What have they found? RF-SMART is improving efficiency at CentraCare. Before using RF-SMART, managing bulk quantities was very manual and expensive. By automating and implementing Kanban, a two-bin system, CentraCare is stocking less inventory. Employees scan items and additional supplies are ordered daily to keep bins replenished. By eliminating manual processes and leveraging reporting features and workflows within RF-SMART and Oracle, CentraCare is able to make proactive decisions about their inventory needs.
Want to learn more? Read the full CentraCare Case Study.
About the Authors:
Bill Brewer currently serves as Healthcare Product Manager at RF-SMART in Jacksonville, Florida. In this role, Bill is responsible for overseeing RF-SMART’s healthcare supply chain strategy and roadmap. Prior to his appointment at RF-SMART, Bill served as Regional Director, Materials Management at USPI/Tenet Healthcare. He has also served in supply chain leadership roles at Wake Forest Baptist Medical Center, UFHealth, and University of Missouri Healthcare. Brewer holds a Master of Health Administration and a Master of Science in Health Informatics.
Joseph LaRoche currently serves as the Healthcare Product Owner at RF-SMART in Jacksonville, Florida. In his role, Joey coordinates with our developers to oversee the execution of RF-SMART's Healthcare roadmap. Prior to joining RF-SMART, Joey consulted on and implemented Oracle ERP SCM modules at hospitals while working at Cerner Corporation. Joey is a Certified Materials & Resource Professional as recognized by ARHMM (The Association for Health Care Resource & Materials Management).
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