It is no secret that healthcare supply chain costs continue to rise while hospital profits fall. Materials costs are poised to eclipse labor next year. Supply Chain and Materials Management departments must find a way to reduce costs while still maintaining PAR levels for exceptional patient care. Let’s examine a few PAR inventory management best practices.
Setting Up Your PAR Inventory
The first step in getting a handle on material costs is knowing how much inventory you have on hand and where it is located. Disorganization of PAR locations, PAR items and the storeroom can lead to lost revenue and productivity. A few strategies to approach this:
Set up specific PAR Locations
PAR locations, which typically have a high turnover rate and need to be regularly replenished, should be defined anywhere your inventory is stored. This can be a rack of bins in a room on specific floor or individual nurse carts. The more specific you get, the better you can keep track of your inventory and expenses.
Do you have the space to set up a two-bin system? With this system, two bins are filled to their optimal PAR level and placed together on the shelf. When a staff member takes the last item out of the front bin, they put the empty bin in a location to be replenished and move the back bin to the front. Counting Staff scan the empty bin and a purchase order (PO) or transfer order (TO) is generated to replenish the bin and expense the inventory from the Storeroom. The empty bin is restocked and put behind the remaining bin for proper stock rotation.
Use Your Storeroom as a Warehouse
You can also reduce logistics costs by setting up storerooms that serve as a warehouse or distribution center. By storing items in-house, you can buy in bulk quantities, which often leads to better pricing. Items are only released once a department has submitted a material request (TO) and then the cost of those items is billed to the correct department using the items. This makes specific items easier to find, gives insight into which departments are heavy users of certain items, can reduce the frequency of misplaced items, and paints a picture of what is available.
Examine Usage of PAR Locations
Once you’ve defined where and how your inventory is stored, the next step is determining if you are keeping enough inventory on-hand. A common fear is that staff won’t have what they need, when they need it. This can lead to a culture of excess safety stock levels. Are you are paying extra on rush fees or throwing away expired inventory? A few strategies to understand your usage:
Schedule Counts of Your Inventory
Start by counting your storeroom once per month, making note of expiration dates. Utilizing the FEFO method (first expiration, first out) will help to ensure items are being used before they expire.
You should also evaluate your PAR locations at least once per year. How often are items being used? Are your bins overflowing with sutures, gauze and other items that are just collecting dust? Reduce the PAR levels on those items if they aren’t moving. If you can’t keep an item in stock, are you aware of every location these items are being stored? Is Nurse Susie emptying the PAR location onto her cart and not leaving enough for the rest of the staff, or are you running out? If you truly don’t have enough in stock, consider increasing the PAR quantity.
Many providers don't have the insight into which PAR locations have and haven't been counted for a given shift. With a PAR dashboard (like the one below from RF-SMART), managers can view this information in real-time, to ensure all scheduled PAR activity is completed. End users can see the Groups of PARs to be counted on their shift when they login to the mobile device.
Utilize Technology to Collect Data & Improve Efficiency
You can’t take control of your supply chain if you don’t have visibility into it. Here are a few ways technology can improve your PAR Management processes:
It is becoming standard for hospitals to use barcodes on their materials. You'll also want tobarcode the bins where you'll be stocking materials. Better than a description, your picker is now looking for the barcode number that matches his pick slip. Scanning barcoded inventory as it is received and replenished gives you complete visibility and improved data accuracy.
Reduce Manual Processes
Integrating barcodes with technology like RF-SMART's inventory management system can increase productivity of your Materials Workers and further improve the data accuracy of storeroom and PAR Locations. If a nurse alerts Supply Chain that a PAR location is low, an Inventory Inquiry can quickly show the quantity available in the storeroom and they can request the materials for that department right then, improving the speed of storeroom replenishment.
Using an inventory solution to manage their 52 PAR locations, St. Luke’s Hospital began scanning barcodes with handheld devices to eliminate all paper processes. Issuing items from the storeroom to a PAR location is done with a quick scan. This ensures sufficient PAR inventory levels, as well as maintaining proper tracking for the accounting department.
“Without RF-SMART, we would have double or triple the amount of workers to fill carts and place orders. Not to mention the time and errors saved by eliminating paper processes and manual data entry,” said Scott Cooper, Manager of Supply Chain for St. Luke’s Hospital.
St. Luke’s can also create a pick ticket, complete an order and expense items to the proper PAR in one seamless process. When it comes to counting, offline mobile PAR counts can be conducted even if a worker is going through a dead WIFI zone.
“My materials workers log in, RF-SMART prompts the download of all our PAR locations, and they can see the specific list of items in each PAR - including the desired quantities and method of replenishment. They can immediately start with their PAR activities, by scanning the location or scanning from a list,” said Cooper.
"The cloud" is slowly infiltrating the healthcare industry. One study noted 88% of healthcare CFOs were looking to replace their ERP system preferred a cloud-based solution.
This is recognized by major Cloud ERP providers, like Oracle. “Healthcare organizations operate in a dynamic, highly-competitive environment with constantly changing regulations, best practices, and technologies. Oracle Cloud Applications allow our customers to quickly respond to changing market conditions and patient needs to deliver the highest quality care,” said Steve Miranda, EVP, applications product development at Oracle.
Whether you plan on implementing all of these tips, or just a few, generating measurable improvements in the reduction of costs by moving to a cloud-based ERP, like Oracle Cloud, is going to take buy-in from multiple departments.
Read more about creating a cloud supply chain strategy.
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