Standing At The Crossroad Of Lean Manufacturing And Healthcare

The scope of manufacturing goes beyond the attributes of the product, or simply the cost to produce. Helping hospitals improve safety, quality of care and cost requires a holistic approach to the value chain, including the delivery of product at the right time in the right place–and at the right cost.

- Willie Sosa

Defining the point of use or the patient’s bedside as the final destination of product, instead of an internal or external warehouse, can help guarantee the right product, at the right time, at the right place. Visibility to consumption in real time helps dramatically reduce waste in the supply chain–imagine having this insight at the manufacturing site to see when the product is used–by reducing forecasting errors and unnecessary inventories at several points of the supply chain.

Today, to ensure enough inventory is available when product is needed, a forecast is developed and transformed into production schedules at the plants. The manufacturer needs to produce enough product to maintain the levels of inventory at the distribution center and may also have some safety stock on their warehouses or sites. The signal to trigger the process is the Purchasing Order (P.O.) issued by the customer; this signal accumulates the consumption anticipated for some days, weeks or even months and will take into account inventories at the site. When the distribution center reacts to the order, it will replenish from their inventory based on the distributor frequency of shipment. Extra inventory is held at the distributor for fluctuation on the purchasing pattern of the facility. At the end, the process is batch-oriented and inefficient. Waste and extra inventory exist over the different supply chains–in part due to the uncertainty on the demand signal, which also leads to product obsolescence.