There’s No One-Size-Fits-All

A large health system was struggling with their inventory management.

The system was spread out over more than a dozen hospitals and a variety of other facilities—many of them opened or acquired across the years. That meant there were habits and practices established at different locations at different times, so if you went from one facility to the next, how they handled their inventory could change drastically.

“They would have a room that had a two-bin setup in one hospital, and another that had a single bin louvered on the wall,” says Alex Semonite, Medline’s senior director of sales logistics. “So, if you were a materials management tech and you’re covering at another hospital, it’s a different process, a different look and a different system that you’re interacting with.”

That system would go on to standardize their inventory management practices with Medline’s help, but the problem is neither new nor unique: Whether it’s a 16-hospital IDN, a community medical center, or a physician office managing supplies between appointments, it can be challenging to determine the best method for managing inventory, and the best technology to get you there.

Start with the supply room

There is no shortage of ways to store a facility’s inventory. Like in the example above, one location may have a two-bin kanban system, a single-bin system or open-shelf or louvered wall systems. And there are just as many ways to track that inventory, whether it’s through electronic shelf labels, weighted bins, etc.

But there’s no single, one-size-fits-all solution. So how does a supply chain leader start tackling process improvement?

“It all starts in that PAR location or that inventory location,” says Semonite. “That’s where the demand signal is created on the customer side that feeds the distributor, feeds the manufacturer—it feeds all the way back to the entire supply chain.”

Getting it right matters, because getting it wrong creates inefficiencies that compound over time.

Get to the root of the issue

When supply chain leaders start asking about inventory management systems, something is usually not working. Fill rates may be inconsistent. Staff may be spending too much time managing substitutes, backorders, etc. A hospital built 60 years ago may have supply closets that haven’t been meaningfully reconsidered since the building opened.

But Semonite cautions against jumping straight to a technology solution. In his view, the source of friction is often not a technology gap at all. It’s a process gap.

“There is no magic technology on the market today that will solve inconsistent inventory management practices,” he says. “If you layer a technology on top of bad manual processes, you’re going to have a technology that is not accurate and is not giving you the data that you’re looking for.”

His prescription: get the human processes as clean and standardized as possible first, then build on that foundation with technology.

“Fundamentally, you want to ensure that the manual human inventory management practices are as clean and as standardized as possible,” he says, “and then you build upon that foundation with a technology that can help make you more efficient.”

Prioritize data visibility

If process is the foundation, data is the building material.

“Step one is ensuring you’re capturing as much data as possible when it comes to what goes into that inventory location and what’s leaving that inventory location on a day-to-day basis,” he says.

That sounds straightforward, but it can be a challenge in the fast pace of a healthcare setting. There are many facilities where staff still count items by hand and manually craft orders based on what they observe on the shelf, a process that creates significant blind spots. Without reliable consumption data, PAR levels get set based on intuition and habit rather than evidence. Overstocked items waste space. Understocked items lead to scrambles.

“If you don’t have good visibility to your demand, in your data around the utilization of the supplies, it’s very difficult to optimize the upstream channels,” says Semonite, “because you’re starting from a place of low visibility.”

Once an organization achieves consistent data visibility, the path forward becomes clearer. PAR levels that are too high or too low become identifiable. Substitution patterns that are creating downstream complexity become visible. And slow-moving SKUs that are consuming shelf space without moving rise to the surface.

Phasing in best practices

Once the data is clear, health systems can start maturing their Inventory management practices. Semonite says the first step in that may just be looking at how you manage inventory without any technology.

“The next thing is getting the most out of your ERP, ensuring all of your sites are able to utilize your ERP platforms, says Semonite. “Then you can implement barcode scanning and get that right, and then look at high-value items and consider something like RFID.”

Sometimes it’s easier to tackle these process changes at one location, rather than throughout a whole system.

“If you look at a system with multiple locations, you can say ‘let’s take one of these locations and really create it as the example to carry through the rest of the system,” says Semonite. “So, let’s do everything in that one facility: have strong inventory management practices, utilize whatever technologies make the most sense, and then set that as the example that can be replicated.”

Begin the conversation

For healthcare organizations wondering where to begin, Semonite’s answer is consistent: start with an honest assessment of what you actually know about what’s moving through your PAR locations — and where your data falls short.

From there, the path forward becomes clearer, whether that’s addressing process gaps first, investing in a technology upgrade, or working with a distribution partner to analyze the data and identify where the biggest opportunities lie. “We go to a lot of hospitals,” Semonite says. “We’ve seen the different ways you can do this — and we’re going to help highlight those best practices and transparently identify opportunities for improvement.”

The goal, ultimately, isn’t the most sophisticated or newest system. It’s the right one.