The building blocks of supply chain excellence

Health systems who can fully optimize their supply chains typically see improved year-over-year financial performance, which includes inventory turns, operating margin, and return on investment capital.¹

While the outcome of supply chain optimization is clear, the process of achieving it can often be vague. However, it is possible to attain supply chain optimization by following a relatively simple stepwise process. By following these five key building blocks, health systems can transform their supply chain and achieve supply chain excellence:

1. Define your supply chain strategy. To build a strong foundation for your supply chain, it is critical to clearly identify your strategy. This strategy should be aligned to the overall goals of your health system in order to achieve significant results. Some things to consider as you build your strategy include a min and max philosophy, replenishment schedule, nursing communication schedule, and a supply chain inventory management system. 
2. Establish stocking location philosophy. Once a strategy is developed, begin mapping out the floor of your stock room. You should choose bins that are built to both hold proper stock levels and be easily accessible by staff. Collaborate with your nursing staff to establish the best PARs for your facility. Finally, consider color coded bins for different product groups. 
3. Implement (semi)automated replenishment system. An important part of an optimized supply chain is an automated replenishment system. Implement a point of use or another signaling system with a 2 day min/max logical unit of measure program. Lastly, incorporate barcode scannable bins with the use of handholds to track inventory levels in your stockroom. 
4. Utilize PAR optimization/ongoing adjustment. Constantly adjust and readjust PARs to keep up with the needs of your facility. There are many reports and optimization tools available that can help you stay on top of automatic replenishment and set accurate PAR levels. Use these to your advantage. 
5. Achieve supply chain excellence. Continuously optimize your supply chain and make improvements to touch points along the way. Supply chain excellence is an ongoing state of health; it is essential to continue maintaining your program and do routine analysis in order to reach peak optimization. 

For more detailed metrics on these key building blocks, visit our supply chain center.

¹https://www.supplychainquarterly.com/articles/946-how-do-you-define-supply-chain-excellence

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