Upload
lean-enterprise-academy
View
150
Download
2
Tags:
Embed Size (px)
DESCRIPTION
workshop chaired by Daniel T Jones of Lean Enterprise Academy shown at the 1st Global Healthcare Summit on 25th June 2007
Citation preview
1
Creating a Lean Supply Chain at Cardinal Health
June 26, 2007
William OwadSVP, Operational ExcellenceCardinal Health
2
Healthcare Supply Chain Services
Operations
Demand PlanningDemand Planning Order ManagementOrder Management
Inventory PlanningInventory PlanningSupply
Execution (distribution)
Supply Execution
(distribution)
PLANNING
PROCESS
EXECUTION
PROCESS
CustomerCustomer
Manufacturer / SupplierManufacturer / Supplier
3
Cardinal Health
Supply chain factsCosts Managed ~ $780mInventory $6bHeadcount 9,000
Warehouses 75; 13m sq. ftTransportation 550 tractors; 680 trailers
SKUs > 400,000Customers > 50,000Daily deliveries 43,000
2 national customer service centers that handle 650,000 calls/month1 pharmaceutical re-packaging facility
4
Supply Chain Operation’s vision
To achieve our goal, we must align our ‘go- to-market’ and supply-side strategies
HSCSOperations
Strategic Vision
Provide category-leading
customer service
Achieve Cost
Leadership
Enhance Organization
Capability
Processes and Systems
5
Strategic alignmentWhat requirements and potential uncertainties must we be prepared for over the next 3-5 years?
Can our existing strategy be used/pushed further to fully meet these requirements, and, if not, where are there gaps?
Beyond our existing strategy, what can be done to better meet these requirements?
How can the existing strategy and new strategic elements be best melded together into a recalibrated operations strategy?
What should Supply Chain operations’ 3-5 year strategy and associated transition path be?
What role does operations need to play in order for the business units to win in the marketplace?
When/where are we willing to trade-off cost for service/ flexibility?
What is the transition path and immediate next steps?
6
Representative customers
7
Source: Cardinal Health surveys – Medical product customer survey, October 2006; Pharmaceutical distribution customer survey, October 2005
41
22
14
Medical products
52
21
19
13
Pharmaceuticals
1. Availability of preferred products
2. Competitiveness of pricing
Voice of the customer consistently points to basic execution as primary supply chain driver of customer satisfaction
Customer expectations
5. Accuracy of shipments
36 28
124. Ease of placing orders
3. Timeliness of deliveries
8
Hospital Supply ChainHealthcare value chain is complex
SupplyInformation Management
MMIS
Healthcare Provider
Item Master
Charge Master
ORIS
HIS
B-D
MedTronic
Pfizer
BristolMyers
BostonScientific
Manufacturers
J&J
Cordis
Tyco
-Parcel-Commercial -3PLs
TransportTransport
GHXGPOs
McKessonO&MABCOthers
Cardinal Health
Transport
Distributors
Transport
Other
Inventory
Pharmacy
ER
ICU
OR
Nursing FloorInventory
Inventory
Inventory
Inventory
Inventory
Special ProceduresInventory
Receiving
Fulfillment
Payables Mgmt.
Disposal
Order Management
Inventory
9
Hospital base (MPS/Rx), surgery centers, and lab
Hospital supplies
Scientific products
Self-manu-facturing/Presource Baxter Sutures Drugs OTC H&B GM
Mostly LUM*24-hour lead timeMostly parcel shipping
Ambulatory care –physician office
Mostly LUM*
12-16-hour lead time
Courier network for Retail Greater variety of SKUs
Less stringent lead time
Alt care Rx, retail chains (non-WH), and retail independents
Mostly case12-14-hour lead timeCourier network
Mail order, retail bulk, and brokerage
Consumer products
99% service levelsMostly LUM*6-hour lead time
ValueLink
Mostly case 15-24-hour lead timeNext day delivery
SlowFast
®
Eight supply chains within the Cardinal Health network
* Low Unit of MeasureSource: Internal CAH interviews; team analysis
10
Overall LSS DC Diagnostic Planning
• DC 1
• DC 5 and 6
• Summary
• DC 4
• DC 3
• DC 2
• Analysis
Main site selection criteria:– Ensure we could view as many of the different processes
(automation, conveyors, etc.)– No labor issues or other disruptions– Good operating practices
11
Summary of key opportunities from DC diagnostic
Productivity• Significant variability in productivity
by day and by employee
Observations
• Share best practices among employees and implement clearer, visual performance management
Opportunity
• Ergonomic differences when picking in the air
• Minimizing in air picks will decrease riskSafety
• Double handling and motion in receiving
• Remove staging step for full pallets and sort by aisle for handstack receiving
Capacity
Quality / Damage• Damage from in air replenishment • Decrease in air picking with proper
profiling
• Annex drives significant additional labor and waiting time at the site (and main site has enough space to take additional volume)
• Move all active inventory out of annex (if necessary move forward buys or excess stock to available annex space)
Inventory
12
Lean receiving will improve service levels and costBlueprint Concepts:• Single-Step Unload, Receipt & Putaway for High Volume Vendors
– Eliminate sorting, staging and excess travel by unloading & receiving directly into case putaway location. (Requires fixed areas in case aisle for high volume vendors)
– Partner with internal suppliers improving both upstream & downstream
• Receivers Receive 100%
– Redesign receiving layout to reduce sorting, walking, bending, and other NVA.
– Successful designs have been implemented in several RX locations.
• Safe, Ergonomic & Undamaged
– Work with internal suppliers to develop high quality inbound loads
13
Receiving example
14
Receivers Receive 100%
• Pallets unloaded directly onto conveyor queue for receiver
• Products scanned and inducted onto conveyors to putaway area
Condensed Sorting
• Increases put-away density when multiple products are sorted onto single pallets that are taken for put-away, reducing the travel time of the case stockers
Receiving example
15
Creating the rollout strategy
Step 1: Establish the facts
Step 2: Build the core story
Step 3: Edit to purpose
Step 4: Road test
• Where are we going?
• Where are we now?
• How did we get here?
• How do we reach our destination?
• What is the overall storyline?
• What are the essential themes?
• How can I use a metaphor or imagery to bring it to life?
• Who are the key readers of the story?
• How do I create a story that works for different audiences?
• Is the content right?
• Is it well written?
• How can we ensure that people own the story?
• What works well?
• What needs changing?
Tell and cascade story
16
Supporting our healthcare customers• Our business operates 24/7 to support healthcare• Cardinal Health employees:
– Distribute life-sustaining medications to healthcare customers
– Manufacture and deliver vital medical supplies
Having the right people in the right place at the right time is critical to our work, our customers’ work, and ultimately, patient care