Lean thinking in the supply chain: surgical inventory management example

In a previous post, I described how problems in the management of surgical inventory at a large, multi-site hospital were addressed.  In this post, I will try to make explicit the connection between some of the activities carried out on that project and Lean thinking.

To recap, the surgical inventory improvement project involved:

  1. decluttering the physical site of obsolete inventory
  2. establishing criteria by which to prioritize control of certain inventory items in preference to others, thus reducing staff effort and errors
  3. implementing the prioritization scheme
  4. modifying existing processes as needed (ex. making greater and better use of the IT system) to support implementation


The types of waste according to Lean thinking

The 8 recognized types of waste according to Lean thinking are:

  1. Over-production – doing too much of something or before it is needed
  2. Defects – doing things wrong, spending time fixing them
  3. Transportation – moving materials about unnecessarily
  4. Waiting – idle time spent doing nothing constructive
  5. Inventory – carrying and spoilage costs incurred by storing stuff that is not needed or expired
  6. Motion – excessive moving about by staff
  7. Over-processing – doing something way beyond what is required
  8. Human  waste – ignoring ideas, misusing or under-utilizing staff skills

I should point out that there is no pre-established meaning to the relative ordering of the above list of Lean wastes, which could have been numbered and listed in any order.

Examining the work done and the types of waste, we can see that:

  1. Inventory (Lean waste #5) was immediately addressed by decluttering the premises. This involved simply deciding to identify, list, keep separate, and eventually pack and ship offsite all of the surgical supplies that were obsolete. In the majority of cases, this obsolescence was due to them having been ordered in the past by a surgeon who was no longer affiliated with the organization.
  2. Decluttering had additional benefits: per Lean waste #7 – Overprocessing, too much inventory was being ‘managed’ by staff in charge of surgical supplies. Why spend even one minute counting items that will  never be used by anyone?  Per Lean waste #2 – Defects, many errors were incurred due to the sheer number of items. This number, was significantly reduced by decluttering, and less fatigue led to fewer counting errors. There was also a degree of unnecessary moving about of materials (Lean waste #3 – Transportation) simply because the materials themselves were obsolete, and because they had to be moved about periodically to make room for newer supplies.  Because staff felt overwhelmed most of the time by the sheer magnitude of the menial counting and tracking tasks, they had little or no time to think about ways to improve their situation.  In this sense, decluttering was a first step towards addressing Lean waste #8 – Underutilizing existing human skills. Note also that this can be explained as part of 5S, an approach to keeping the workplace tidy, organized, with all needed tools and supplies at hand, and maintaining this new standard over time.
  3. Actually establishing the criteria for ranking items and placing them in ‘value bands’ according to both cost and usage — by the ABC method — so they could be managed differently, that is to say, with varying degrees of effort, led to similar benefits to the decluttering phase, but to a much greater degree. Whereas decluttering had reduced onsite inventory and the effort in managing it by about 10%, focusing the staff’s efforts on bands A and B actually reduced effort, fatigue, and related errors by close to 80%, while maintaining tighter control of almost 95% of the inventory value. Therefore, the same Lean wastes as before — Inventory, Overprocessing, Defects — were impacted positively, as was the under-utilization of human skills (Lean waste #8).
  4. By making greater use of the computer to monitor a reduced set of items, the staff also moved about less, and did fewer unnecessary checks.  Many of these physical checks, done to verify whether physical stock matches the information in the computer, were being done out of sheer distrust in the IT system and a poor collective and strategic understanding of the task at hand. With the new focus on fewer items due to the ABC strategy, staff were able to spend more time understanding aspects of the IT system, which also reduced their perceived need to roam about (Lean waste #6  – Motion.)

What this shows is that many of the benefits of a Lean approach can be gained without a thorough understanding of statistics, simply by being a careful observer, by involving all stakeholders throughout, by showing them clear, practical, benefits, and by coaching them as needed.

Most problems can be viewed from a variety of angles.  In a future post, I will address aspects of this problem and its solution from the viewpoint of the Theory of Constraints (ToC.)





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