Dan DeLay
Senior Vice President, Supply Chain Analytics, VHA Inc.
Every week, my grocery list seems to expand. Not only do we have to replace the staples; milk, bread, eggs, but because of the adventurous nature of my family’s appetite, we often seek out new menu items. I know that we can broaden our meal options because our local grocery stores purchases products from all over the world--green grapes from Chile, eggs from local farms, lobsters from Maine and ground beef from the Midwest, not to mention the special ethnic food selections available in most megachains.
That is easier said than done. Someone in the organization has developed a process to match inventory with demand so that goods will move quickly and food won’t spoil. Deliveries are made every day, and somehow, they are able to do all of this, keep prices low and make a profit. Having an efficient supply chain provides less waste and keeps produce from rotting on trucks.
In health care, it’s not uncommon for hospitals to have shelves overstuffed with inventory that goes to waste. For example, one hospital department carried $1.2 million in inventory, of which $200,000 worth was outdated or set to expire in less than 30 days. Another $500,000 worth of inventory had been sitting on the shelves for three to six months. The bad news is that this not an uncommon scenario.
The health care industry has always said that one of the reasons for inventory problems is that the industry is federally-regulated, deals with perishable items and people can die if items do not meet quality standards or are not where they should be. Grocery stores, in many ways, face similar changes.
To help hospitals improve inventory management, most of them have developed a process called “Supply Formularies.” According to the Leapfrog Group, standardizing processes, including the supplies that are used, increases the quality of care by decreasing chances of error. Standardizing supplies saves money through contract pricing and through operational efficiencies.
Grocery stores are "milking" every last dollar from their inventories...hospitals can too.
