Healthcare Supply Chain

Mapping the Current State - Healthcare Supply Chain

Waiting for hours in an emergency room or doctors office only scratches the surface of the challenges we find in Healthcare. There are people that spend their days calling providers, tracking down payments, seeking information, and inquiring about deliveries of their durable medical equipment (DME) and prescriptions. The masses, however, do not realize that the problem does not rest with the poor sweet customer service agent fielding the call, it resides in the complex supply chain. When approaching healthcare supply chain problems, there’s only one place to start – a current state map. Below we address a few simple steps that walk you through mapping your healthcare supply chain.

Where to Start – SKU Selection

Where should the mapping team start and what part or products should they follow in order to map the fulfillment stream? Given the complexity and sku proliferation in the healthcare supply chain itHeathcare Supply Chain would be impossible to draw a current state, fulfillment-stream map for every part. Fortunately, problems in a fulfillment stream can be exposed by examining the path of a single part as it moves along the stream and is incorporated into a single finished product. Please note, for discussion in this article, “part” will refer to the inbound supply of the material (pre manufacturing and/or re-pack) and “product” will refer to the finished good that will be delivered to the final customer. In the event there is no transformational activity in your chain of events, the principles are still the same. The details of each part and product path will differ, but they are governed by a common logic within each company about batch sizes, transport patterns, and information management systems. Therefore the findings from mapping the flow of one part and product will be applicable to all parts and products flowing though the fulfillment stream.

To understand the current state it is necessary to:

  • Choose one part and product to study, in order to learn about typical fulfillment-stream problems and potential improvements.
  • See and agree what is happening as the chosen part flows through fulfillment stream.

But which product should the mapping team select? For the health care supply chain, the best approach is to map a stable, high-volume, finished product that ships to a customer, as well as a stable, high volume part that is received from a supplier for assembly into that SKU. The mapping team needs to understand that improving the flow of the items would yield valuable lessons for improving the flow of healthcare supply chain.

Health Care Supply Chain – Mapping the Current State

The mapping team needs to go the gemba (place where value is created) to witness the fulfillment stream in action. To help people prepare for their visits, send out the data requirements prior to going out to the gemba. The team should observe as much of the entire stream as possible and practical. The team should visit:

  • Loading docks
  • Trailer Yards
  • Warehouses
  • Distribution centers

After completing the gemba visits, the mapping team needs to schedule a meeting to map and understand the current state of their fulfillment stream, calculate the total cost fulfillment, brainstorm future-state improvements, and develop implementation plans for future state ideas.

Mapping Great Distances in the Healthcare Supply Chain

A special challenge in mapping fulfillment streams is that in today’s world, the distance between suppliers, factories, and customers might be thousands of miles. If it’s not possible to visit every place and step along the way, the mapping team should capture what is happening with data, interviews, photographs, videos, etc.

Soft vs. Hard Costs

Some people intuitively understand the value of improving the lean fulfillment stream, but others will need to be convinced by measurements and data. Their perception is that fulfillment is filled with short-term and long-term costs – often called “soft” and “hard” costs. For example, if transportation costs are reduced through productivity improvements, this is a hard cost because the savings would immediately fall to the company’s bottom line.

However if space requirements were reduced at a distribution center, the company still pays for that space until it can sold or rented. This would be considered a soft cost because it can’t immediately be removed from the balance sheet. But defining savings by hard of soft costs goes against the goal of lean, which is to create long-term sustainability through continuous improvement, waste elimination, and the reduction of all costs – soft or hard, now or later.

Now What? – Healthcare Supply Chain Analysis

Once you have drawn a map of the current state of your healthcare supply chain, it’s time to document the problems. Identify and record where excessive inventory is stored, identify long-lead-times and misalignment in lot-sizes, and record any place where quality is below acceptable levels. When looking at the healthcare supply chain, it’s important to remember the end-user, the patient at the end of the stream receiving the cumulative effect of all of our wastes and rework.

Posted by LeanCor Supply Chain Group

LeanCor Supply Chain Group is a trusted supply chain partner that specializes in lean principles to deliver operational improvement. LeanCor’s three integrated divisions – LeanCor Training and Education, LeanCor Consulting, and LeanCor Logistics – help organizations eliminate waste, drive down costs, and build a culture of continuous improvement.

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