BEST PRACTICES IN MATERIALS MANAGEMENT

Transcription

1 BEST PRACTICES IN MATERIALS MANAGEMENT

2 DEFINITION What is a Best Practice???

3 IMPLEMENT A SUPPLY CHAIN MENTALITY Current Practice: Manage Materials Best Practice: Manage the full continuum Materials, expenses and resources Rationale: Establish strategic direction Build effective overall controls

4 SUPPLY CHAIN INCLUDES Internal process from need to disposal External process from manufacture to payment Includes product selection and use Includes services as well as products Includes labor to effect the whole process

5 BECOMING MORE STRATEGIC SUPPLY CHAIN PERSPECTIVE n n n n n n Manage Expenses (Dollars) Work with Supply Chain Partners Make Total Cost Decisions Create Internal Alliances Integrate Policies and Procedures Focus on Interdepartmental Team & Process Focus

6 TRACKING HOSPITAL INDICATORS Current Practice: No one tracks supply costs Best Practice: Materials tracks and reports organization-wide Rationale: Who better than materials? Will show trends that can be addressed

7 KEY HOSPITAL INDICATORS 4 Primary Supply Cost/Net Rev Supply Cost/Total Cost Supply Cost per Adj Adm Supply Cost per APD Some Others OR SC per case Cath Lab SC per case Maternity SC per Del Lab SC per test ER SC per visit ICU SC per Pat Day Linen Lbs per Pat Day

8 TRACKING PERFORMANCE Current Practice: Materials Operates in a vacuum Best Practice: Materials tracks operational performance measures and savings Rationale: The department often feels it is operating effectively but can not demonstrate it

9 SOME COMMON MEASURES n Inventory turnover n Savings generated n Inventory accuracy n Must be real n n Invoice discrepancies Fill rates n Must be documented n Everyone collects n Case cart accuracy

10 FORMAL QUARTERLY REPORT Current Practice: DMM verbally reports to boss Best Practice: Formal report to administrative team Rationale: Too easy to forget or undervalue accomplishments Enhances credibility

11 FORMAL QUARTERLY REPORT 1. Goals & Objectives 2. Supply Cost Benchmarks 3. Operational Measures 5. Savings 6. Budget Variances 7. Accomplishments 8. Open Issues 4. Productivity

12 SAVINGS DOCUMENTATION Common Practice: Savings generated but not reported Best Practice: Properly documented and reported Rationale: Regular reporting shows value Documentation validates Powerful demonstration of ROI m

13 ELIMINATING SACRED COWS Common Practice: Many untouchable products and practices Best Practice: Use open communication and data sharing to break down barriers Rationale: Improved outcomes Reduced cost

14 ELIMINATING SACRED COWS Prime Cut Examples: Hospital Laundered Scrubs Red Bag Waste Cover Gowns Physician Specific Kits Supplies in Patient Rooms Scrubs for Visitors Cardboard

15 ELIMINATING SACRED COWS Where are your Sacred Cows?

16 ROUTINE REVIEW OF CUSTOM PACKS Common Practice: Custom packs OK when purchased Little review as changed/augmented Best Practice: Routinely review packs for usage, alternatives, and cost against true cost Rationale: Costs creep and usage changes Mark-up and labor may be excessive

17 ROUTINE REVIEW OF CUSTOM PACKS Do Custom Packs save money? Yes IF 100%/100% rule Cost of goods reasonable Cannot discount time-saving aspect Labor is expensive May allow for more cases

18 ROUTINE REVIEW OF CUSTOM PACKS SOME THINGS TO WATCH FOR Is there a standard kit Are all the components actually used? Cost of component in versus out Cost of containers Markup (labor and profit) Physician specific packs NO AUTO RUN W/OUT SIGN-OFF

19 TEAM NEGOTIATIONS Common Practice: Many uncoordinated negotiations Best Practice: Team approach for high dollar items Rationale: United front to suppliers Trust and understanding within team Better outcomes Better future interactions N

20 USE OF PROCUREMENT CARDS Common Practice: Many low dollar transactions on PO Best Practice: Use Smart Technology Rationale: Little Purchasing value added High transaction costs Departmental responsibility Good control

21 USE OF PROCUREMENT CARDS Good Places to Start: Engineering Books & Subscriptions Catering Many common check request items

22 OPTIMIZING INVENTORY TURNOVER Common Practice: Inventory reduction primary goal Best Practice: Optimize inventory levels based on strategy and costs Rationale: More turns not necessarily better LUM program costs must be offset Departmental responsibility

23 OPTIMIZING INVENTORY TURNOVER ECONOMIC ORDER QUANTITY (EOQ) 2 U C P I U = annual Usage C = Cost of issuing a purchase order (order cost) P = Price (unit cost) of the item being purchased I = Inventory carrying cost

24 OPTIMIZING INVENTORY TURNOVER BALANCE ORDER AND INVENTORY COSTS Higher Cost Turns Order Cost Lower Inventory Cost Less Order Frequency More

25 REDUCE/ELIMINATE OUTDATES Current Practice: Outdate management spotty (at best) Best Practice: System that identifies upcoming outdates early Rationale: Items used before outdating Minimal labor Patient safety K

26 REDUCE/ELIMINATE OUTDATES Low use items in outdate order Quarterly check of all items Label items outdating in next quarter Move to higher use department

27 EFFECTIVE CONTRACT MANAGEMENT Common Practice: Many hands and many locations Best Practice: Centralized contract formation Manage outcomes and renewals Rationale: Significant cost savings Better protection for facility No unexpected renewals

28 CUSTOMER SATISFACTION SURVEYS Common Practice: Materials assumes they are satisfying customer needs Best Practice: Frequent customer satisfaction surveys performed and acted on Rationale: Most unhappy customers don t complain Customer feedback improves operations

29 BEST PRACTICES What Others?

30 BEST PRACTICES IN MATERIALS MANAGEMENT