WMS: Rx for the health care industry
August 23, 2011 - MMH Editorial
Two years ago, I had a chance to visit the Cleveland Clinic. I wasn’t there as a patient. Rather, I was there to see their materials handling system.
With pick-to-light, horizontal carousels, 80 RFID-enabled AGVs and a possible 14,000 delivery locations, it would have been an impressive warehouse even if it hadn’t been delivering materials to a hospital. What really struck me, however, was the way in which materials handling technology was being applied to business problems that aren’t typically associated with our industry.
Last week, I talked to Peter Brereton, CEO of Tecsys, a provider of warehouse management and supply chain solutions. The reason for the call was the announcement of a new WMS product designed specifically for hospital and clinical settings similar to what they’re doing in Cleveland. Tecsys is a leader in the emerging WMS space for hospital networks – a space I didn’t realize existed.
Besides tweaking traditional WMS for the requirements associated with replenishing nursing stations and patients’ rooms, the application had to be intuitive and easy to use by nurses who don’t have time to scan bar codes or learn new processes. Instead of bar code scanning, the system uses touch screens and voice confirmation to facilitate picking.
More importantly, Tecsys is applying supply chain technologies and inventory management processes to solve problems that aren’t obviously supply chain problems. “We’re going into hospitals that have never thought of themselves as supply chain organizations and helping them set up true warehousing and distribution processes,” Brereton says.
Some larger health care facilities, he adds, are hiring talent from the automotive, consumer packaged goods and parcel delivery industries to head up their supply chain initiatives. What’s driving it is a realization that there are millions of dollars of supplies floating around your typical hospital that have never been managed in the past.
He describes a hospital’s distribution processes as the white space between the receiving dock and the bedside. It is a complex distribution problem, not unlike an Internet fulfillment company that may stock 40,000 SKUs that are picked in small quantities and shipped to individual consumers. “You’re delivering thousands of products to the patients’ bedsides and to supply closets,” Brereton says. Meanwhile, each of those supply cupboards is a mini-warehouse where the value of inventory can quickly add up if it’s not tracked.
“More than half the value of the inventory held in a hospital network is in those supply closets,” he says. “Part of it is intentional because you have to fill the closets in every wing. And part of it is unintentional because there’s a lot of secret stashing that goes on because nurses will build up their own stash of supplies so they don’t run out.”
And, like warehouse workers searching for products in a paper-based facility, a majority of nurses spend about 20% of their shift just looking for supplies because no one knows exactly what they have or where it’s located. “It’s a frightful waste of resources,” Brereton says.
By pushing supply chain management techniques out to the cupboards, a hospital now has visibility into what it has and where it’s located beyond the central storage area, something most hospitals have never had in the past. Done right, it cuts down on those hidden stashes of valuable supplies and reduces the amount of time wasted on the hunt for supplies.
Brereton says hospitals are just one example of organizations that are now looking to our industries to organize and manage their operations. So are state and local municipalities, mental health facilities and even correctional institutions. “We’re working with one large US city that has several warehouses and 170 supply depots around the city,” Brereton says. “Last year, they ordered 400 new desks. As it turned out, they had 7,000 desks they were unaware of in inventory.”
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