Note: This article was written by our colleagues over at z5 inventory.
We’re publishing this article about how to ensure hospitals’ inventory initiatives in collaboration with our friends at VUEMED, who have encountered the same obstacles we have when trying to implement a new program at a healthcare facility. No matter what you’re trying to improve in the healthcare supply chain – whether it’s visibility into storage areas, expiration avoidance, or supplier relations – you’re going to need more than supply chain or medical expertise. You’re going to need the asset most dreaded among science-minded professionals: interpersonal “soft” skills.
Luckily we’ve drawn heavily on the knowledge of two professionals who know healthcare’s supply chain inside and out: Z5 Inventory’s CEO, Carl Natenstedt, and VUEMED’s COO, Lana Makhanik. Between the two of them, they’ve encountered every problem you want to solve.
No supply chain problem is just a problem for the supply chain department. So no solution can be implemented by supply chain alone.
As solution providers, Z5 and VUEMED are dedicated to giving you exactly what you need to improve, so we’ll keep this as science-minded as possible. Follow the process we’ve outlined below. Measure your success with KPIs. Share the advice we’re sharing with you with your colleagues to align everybody on the plan.
Everyone will need to be able to use the same language during this project, so we’re going to be defining a few terms throughout this blog that you probably already understand. It’s not because we think that you don’t know anything! You’re an expert! We’re doing it so that you can share this with that one colleague you always complain doesn’t know anything. And if one of your colleagues shared this article with you, you’re definitely not the one they were talking about. You’re an expert, too!
See? Those reassuring interpersonal skills are making everybody feel better already…
Step 1: Identify The Problem
“I need to reduce my supply spend by $100,000 this year.” That’s not a problem. That’s a goal. It’s achievable only if you identify a more specific problem that you can solve.
“Supply chain inefficiency” is a problem, but it’s too vague to solve. The same goes for “high supply chain spending.” If you want to address an issue, you need to go as specific and narrow as you possibly can. Even “we have over 1000 backorders” is a little too broad to address without further qualification.
“We always end up throwing away Troubadour-brand catheters during a physical inventory because they’re past their expiration date.” Now that’s a good problem, because it’s solvable. It’s specific. But you can’t get to that starting point if you haven’t shown up to the race with reliable data.
You can’t identify your problem unless you have good data.
Can you confidently say that you have a high degree of visibility into when and where every supply is coming off the shelf to be used on a patient? Based on Z5’s and VUEMED’s experience, we would guess no.
“Healthcare supply chain pros are incredibly knowledgeable and efficient,” Carl points out, “but often they’re not the ones overseeing the storage areas.”
Put another way: the supply chain management department isn’t the department managing the supplies.
Before you can tackle any more complicated problem, you might have to address the central problem of inventory visibility: “I don’t know supplies on my shelves, so I can’t decide what to do with them.”
A technological solution can get you part of the way there, but only if your colleagues use them. If the supply chain pro is guesstimating quantities during a physical inventory count, or if a clinician isn’t regularly engaging with the point-of-use system when they pull product, those systems are worthless.
You can’t gather good data unless you have good collaborators.
Maybe no one is able to help you out. Maybe even you don’t have the resources necessary to start a big project. “I don’t know where my inefficiencies are, but I know we could improve” is a totally valid problem to identify. Once you’ve named the issue, you can determine how to solve it.
Step 2: Identify The Solution
Does this step seem out of order? Does this seem too early in the process to be jumping to the answer? It shouldn’t. You don’t need an extensive data-gathering process, because 1) you can’t afford the distraction or the delay, and 2) you already have the data.
If you report a full inventory valuation at least once annually (and we assume you do, because every healthcare facility is required to), you have the data. Whether you count it all by hand or use an automated system to gather inventory data, you have the data. Where you might need help is turning that data into something useful.
It’s okay to ask for help (and you won’t get it if you don’t ask).
Outside resources like Z5 Inventory and VUEMED can help with analyzing the supply data that we’ve already helped you capture, then provide means of tackling the problem that you’ve noticed. Internal resources like your peers from other departments, other facilities, and even other providers can be another great way for you to get other eyes (and hands and shipping containers) on the problem.
We’ve said it already once in this article, but it bears repeating: a supply chain problem isn’t just a problem for supply chain to solve. A huge benefit of all the insanity that the last few years have piled on us is that people outside of supply chain finally understand that.
When it seemed like every link of the supply chain was melting, healthcare leadership almost uniformly said, “What do you need?” and handed it over as quickly as possible. If that didn’t happen at your facilities, um… uh oh. You’re probably dealing with the fallout of that up to this point, which is probably why you’re here reading this.
Assess what resources you need to accomplish your goal.
Going back to that “I don’t know what the problem is, but I know there’s a problem” example, you probably need to partner with a solution provider. They can offer the technology that you don’t have the time to build and often the labor that you don’t have the time to assemble.
Z5 and VUEMED can help you identify what’s on your shelves and offer ways to make your ordering, storage, and disposal more efficient. But that’s just the start of the process.
Step 3: Implement The Solution
Okay, wait. Before you start solving, there is one mini-step you need to take first. We know, we know – so annoying. But it’s important!
Decide how to measure your success.
If you think that cleaning your product data is the goal you should achieve, and you think that using the inventory information available from Z5 and VUEMED is the best way to do it, we’d certainly agree with you. But have you decided how you’ll report that you’re successful.
Define your KPIs (Key Performance Indicators) before you begin your project. Is it enough to update the information on 10,000 SKUs? Or all the SKUs found in your ORs? Or is the data cleaning project successful when you never have to write a sticky note about a product you found in a random shelf?
Whatever metrics you decide to use, you’ll need to communicate those goals to everyone who will be affected by this project. Gathering consensus is the single most important step in ensuring your supply chain improvement initiative’s success.
Assert your expertise to get what you need.
Between clinician preference, the constraints of your suppliers, and a thousand other factors, streamlining your inventory to improve efficiency and resiliency will not be easy.
But you’re the expert. Remind everyone of that when they forget.
If someone at your organization thinks that supply chain resiliency is so 2020, remind them that supply chain is the largest expenditure at any healthcare facility behind personnel.
If someone tells you that it’s their job to provide care and your job to make that happen no matter the cost, remind them of the maxim “The margin is the mission.” It’s a truly dystopian phrase, but it does a good job of illustrating the industry as it is, so we ignore it at our peril.
If the clinicians aren’t going to help you find savings opportunities, they shouldn’t be the ones in charge of what medical, surgical, and pharmaceutical supplies get ordered. Just like you let clinicians be concerned about the welfare of the patient, they should let you be concerned about which products are the best to stock and how they should be stored.
You have the data that shows that you throw away Troubadour-brand catheters every year. They want you to over-order again. You
“Every specialty tends to be myopic,” Lana likes to say. “It’s a symptom of the larger silo problem in healthcare.”
What solution do you really need?
Think about that vague “visibility” problem. Getting more specific, what you probably need is more robust data on the inventory on your shelves.
If the people counting the product aren’t giving you enough information – they’re not including the expiration date with the product quantity – you can’t fix the problem with the people you have. If the manufacturer or supplier isn’t giving you enough information – they didn’t put the product description in a readable format – you can’t fix the problem with the information you have.
Don’t be surprised to find that the root problem is something more along the lines of: “I don’t have the help I need.”
Because we’ve run into this problem so many times, Z5 Inventory and VUEMED have built industrywide databases of supply data. And because new data becomes available all the time, we’re constantly improving those databases.
Don’t be surprised, either, if your solution takes more steps than you anticipated.
In the case of narrowing a vague goal – “I need supply chain savings.” – to a specific problem – “I’m paying for the privilege of throwing away catheters.” – you may find that you require a multi-step solution. “I’m going to right-size my catheter stock levels” is a completely conquerable problem, but it requires more time, more resources, and (you guessed it) more data.
First, you’ll need to partner with Z5 or VUEMED to conduct an expiration sweep to clear the junk off your shelves. Then you’ll need analysis to identify what product in what quantities should be filling the empty spaces.
(Sorry if you thought that you had enough data and could be done by now. Sorry if you thought any inventory management exercise could ever just be 100% done.)
Step 4: Review Your Results
Results without data is the tree falling in the forest without anyone to hear it.
The anecdotal is an okay start. After you’ve partnered with Z5 or VUEMED (or both!) to conduct an expiration sweep, your shelves will look nicer. Your storage and clinical areas will look cleaner. There’s an immediate improvement in the mood of everyone who regularly pulls from a bin if it’s organized.
But it’s hard to outline next year’s budget based on aesthetics and mood. Even Van Gogh had to put together enough money to buy paint, or his suppliers would’ve given him an earful. (Okay, okay. Maybe that analogy is in bad taste, but at least you’ll remember it now.)
No, really. You already have the data.
How many times do we have to say it before you believe us? Let’s try one example and see if the idea finally sticks.
You decided the problem was that the process of counting your supplies was too disruptive and lengthy because it distracted clinicians from patient care. Great. You decided that the solution was to use a counting method that was quicker. Also great. You implemented the solution of gathering inventory data using VUEMED’s RFID technology or the barcode scanning in Z5 Inventory’s mobile app. Really, really great (if we do say so ourselves). You’re reviewing after the final tally is struck how long it took to reach a valuation. It looks good, but how does it compare to previous physical inventories?
If you have your files from last year (and we sure hope you do), you can look back at where the process started and ended. There’s some hard data for you.
If any current employees were around when you counted the old-fashioned way, you can survey them to see how well pleased they were with their results this time. That may be soft data, but it’s something. If you see that over ninety percent of the people using the software thought it was faster than paper count sheets, you should probably believe them.
If your coworkers tell you that the solution didn’t solve anything at all, you should probably believe that, too.
Who put the hurdles on your track to success?
If you’ve decided that the solution to all those expiring Troubadour-brand catheters is to remove everything Troubadour-branded from your shelves, is everyone going to go along with it?
Based on Z5’s and VUEMED’s experience, once again, we’d say no.
“There’s going to be some nurse who was yelled at by some surgeon one time because they didn’t have the exact brand of product that the surgeon preferred. They’re going to hang onto that brand forever just in case,” Carl explains.
“The key to overcoming these obstacles,” Lana adds, “is communicating expectations and policy ahead of time.”
We’re giving you this example of personnel who weren’t involved in the decision-making process objecting to a solution because we’ve seen it time and again. No one is specially to blame here, because everyone is acting in what they believe is the best interest of the patient and the provider, but having this conversation earlier – before it’s time to put in a new POU system or pull product off the shelf – is going to lessen the likelihood of this problem occurring in the first place.
Something will go wrong, because something always does, but you can avoid having to jump over this particular hurdle by removing it before the race starts.
Step 5: Repeat What Worked
Ugh. Why is the last step of any process “repeat?” Why can’t “ongoing optimization” just be “well, we did it; we optimized, and now everything is optimal forever?”
We tend to approach supply chain in cycles. Beyond the obvious cycle count, there are cycles of ordering, disposal, and reordering. And of course the fiscal year end looms as the most intimidating cycle of all.
All the more reason to avoid a problem – an inefficiency, a miscalculated UOM, whatever – to remain a thorn in your side every time you repeat the cycle.
On the one hand, the fact that supply chain management is a never-ending job is a bummer because that makes it hard to feel a sense of completion and accomplishment. On the other hand, at least you have some job security.
But you don’t have to do it alone! Between the two of us, Z5 Inventory and VUEMED are here to help with pretty much any inventory management problem that you’d like to solve. While we would love to think that we can help the healthcare industry optimize to the point of our obsolescence, that doesn’t look like it’s going to happen anytime soon. For every improvement that we make to supply chain resiliency, five new issues emerge.
We’ll continue the cycle of identifying those problems, solving them, and reviewing how well we did so we can do better next time.