Northwestern Memorial Hospital's Operations Management

NORTHWESTERN MEMORIAL HOSPITAL OPERATIONS MANAGEMENT CASE STUDY ESSAY
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Northwestern Memorial Hospital (NMH) faces a significant problem concerning inventory accumulation. Due to low processing time, the hospital has a vast receiving area, which has developed into a sort of warehouse with items of approximately million dollars waiting for clearance and delivery to their rightful places. The new supply chain and operations manager, Paul Suett, is welcomed with this challenge. The supply chain must be revised and simplified, slowing results and resource flow in the complex receiving area. The hospital orders are processed through Enterprise Resource Planning (ERP) and recorded through Electronic Database Interchange (EDI). Despite these explicit innovations, the process remains lengthy and highly tedious, forcing the staff to order compound services and worsening the problem. This paper aims to facilitate solutions by identifying the internal flow bottlenecks and proposing measures to reduce lead time.
Problem Statement
The major problem in the case study relates to the lack of effective controls in the healthcare organization’s receiving area. The healthcare organization’s supply chain processes constitute a significant bottleneck resulting in stock piling up, which depicts old-fashioned work processes. Lengthened lead times are expected to accumulate packages as well as excessive supply inventories that would be held for a long time. There is also the potential for misplacing and losing items due to poor ordering processes. The congestion within the receiving area resulted in handling errors and sluggish access to the healthcare organization’s materials. In addition, uncertainty concerning the delivery dates and the extended lead times triggered inefficient processes as the staffs were inclined to over-order commodities and hold huge buffer stocks that cost the organization millions of dollars. Therefore, it is crucial to establish processes NMH can implement to enhance the material flow process in their receiving area to minimize the lead time spent on receiving and ensure that materials get to the appropriate departments on time (McNicholas et al., 2019, p. 1).
Bottlenecks in the Receiving Area and their Effects on Internal Flow
The NMH receiving area is a vital bottleneck in the hospitals' internal flow process. A bottleneck is a sect in a system where the flow of materials and resources is slow or restricted, reducing overall process efficiency due to delays. The receiving area is where critical materials like medical equipment and supplies are received, scrutinized, and distributed to other departments in the hospital. This section will explain a series of scenarios that validate that the NMH receiving area was a bottleneck to the internal flow process.
First, the NMH receiving area needed to be improved due to manual processes in receiving and inspecting hospital materials. The place was crowded and needed more space to advance innovations. For example, material flow started from the manufacturers to distributors while progressing to the hospital's central store and par locations. The par rooms were supply rooms where the stock was piled. Information flow had to originate from order requestors through the central store and the hospital's ERP and EDI. This long and tedious process could be speeded up using relevant technologies. According to Suett, this process was prone to errors as teams had to account for all the receipts manually (McNicholas et al., 2019, p. 3). Accordingly, the process demanded large space and materials, further worsening the receiving area's operational efficiency.
Second, due to a lack of coordination among various departments within the hospital, the receiving area has been deemed a bottleneck to the internal flow. Hospitals have numerous departments which require access to varied materials and supplies. However, each department sought to rush and pile materials due to delays in the waiting area. In this context, they needed proper communication and ordered materials separately, leading to excess inventories and duplication of materials (McNicholas et al., 2019, p. 3). Such activity only increased congestion and workload in the receiving area. It tied up vital resources that could be helpful in the facility rendering the receiving a problem to internal flow.
Third, due to inefficient visibility on inventory levels, the receiving area can be regarded as a bottleneck to internal flow. The tedious and time-consuming process in the receiving area made it hard to track inventory levels. According to Slack and Brandon-Jones (2019), poor tracking of inventory levels could lead to over-ordering or under-ordering, leading to stock-outs or excess inventory (p. 10). In this scenario, workers would spend more time on receipting. Also, overstock led to a lack of space in the receiving area, and thus, items were to be temporarily stored in the corridors. These items in the corridors were not logged into the hospital's inventory system rendering them difficult to get or provisionally 'lost.' Clinicians who found it hard to secure such supplies would send repeat orders making the receiving area mastermind of the flaws in the internal flow.
Finally, the receiving area was a bottleneck to problems in internal flow due to overreliance on manual systems rather than automated systems. For example, materials would flow effectively if the receiving area had tools like RFID or barcode scanners to minimize manual labor and enhance speed (Valente and Neto, 2017, p.159). Such an endeavor frees up space and resources, making the internal flow process effective. Due to a lack of automated tools, some materials would bypass the hospital's receiving area directly to floors. This activity led to two primary problems: First, the items would not be captured in the ERP system, and hence receipt records were never reconciled. Lastly, expedited materials would cost the hospital more due to incurred freight costs. All these issues due to poor automation in the receiving area harbored effective internal flow process in NMH.
Overall, the problems at the receiving section constituted a significant problem for the facility's management since many hospital employees accessed orders because of uncertainties within the receiving area. The leading cause of such bottlenecks relates to lead times variability because extended lead times typically lead to unpredictable deliveries, thus pushing the healthcare organization to rely solely on making an order via demand forecasts (Chang & Lin, 2019).
Problems Caused by 3-Day Lead Time Variability and how Average Lead Time Eliminates Most Problems
Based on the case study, variability in lead time has significant problems for not only the hospital's supply chain system but any other organization's flow system. The primary idea in the case is the impact of lead time on creating successful operating systems and supply chains to enhance customer satisfaction. The hospital's average lead time for supplies from the study was three days, but with significant variability. This variability led to problems in the hospital's receiving area and overall supply chain system. The first problem was overstocking, especially when supplies reached the facility unexpectedly early. The receiving area was forced to overstock, leading to disorganization and congestion. The other problem is stock-outs which were made possible by supplies delivered late. The receiving site, in such scenarios, would run out of crucial materials, leading to disruptions and delays in hospital operations. Third, variability in lead time led to staffing issues since it took a lot of work to schedule staffing in the receiving area. For example, when materials arrive early, some extra workforce would be demanded processing and vice versa. Also, variability in lead time made space in the receiving area insufficient. The hospital would be in a temporary glut of items for early supplies, taking up valuable space. When the supplies arrive late, the space is limited, worsening the internal flow process (McNicholas et al., 2019). While these problems are not unique and are not only experienced in hospitals, studies claim that variability in lead time connotes a range of operation issues like an inefficient use of resources, excess inventory, and stock-outs. Therefore, to minimize these problems, reducing lead time from 3 days to 1 day would eliminate most problems, according to Suett.
Arguably, reducing lead time from 3 days to one day would reduce overstocking. When an organization adopts a more predictable lead time, the receiving area plans effectively and minimizes overstocking. Second, lower lead time would reduce stock-outs in NMH because there is an opportunity to effectively plan for inventory needs and avoid running short of crucial supplies. Third, reasonable lead time would make the hospital efficiently schedule the staff in the receiving area. Finally, the activity would help better plan for space and utilize the limited space effectively (McNicholas et al., 2019). According to Alzoubi et al. (2022), supply chain systems are effective by reducing lead time, creating enhanced customer service and market, and reducing delays (p.5). He adds that lead time makes an organization gain capacity to adapt during rapid shifts, outpace competitors, quickly replenish stock, and become consistent in meeting deadlines (Alzoubi et al., 2022, p.5). NMH should focus on the 1-day lead time strategy and minimize process time to enhance the internal flow system and customer satisfaction. Based on the preceding arguments, it can also be noted that achieving a one-day lead time would assist Mr. Suett in augmenting the receiving areas reliability. The approach would ensure consistent respect for the deadline via the quick replenishing of health inventories, thus avoiding stock-outs that could negatively impact customer satisfaction (Mihalj et al., 2022).
Batch Oriented and Single-Piece Flow System
According to the case study, NMH faced several problems concerning delivery and package handling. The hospital adopted a batch-oriented approach, prone to delays, variability issues, and an average 3-day lead time. In this vein, a batch-oriented approach is a method of processing packages referring to large batches or groups instead of using single individuals. This approach led to various delivery process problems and inefficiencies. The batch-oriented framework to package handling in the hospital's receiving area was causing a series of problems. First, it was explicitly variable due to the arrival of packages within distinct timeframes and quantities. Variability makes it difficult for organizational staff to predict the exact arrival time of packages and how many supplies need to be processed within a specific time. Single-piece flow is a safer process than batch process because of its less clutter and optimized layout (Slack and Brandon-Jones, 2019, p.110). The facility can reduce work-related defaults with minimal touches because it focuses on reducing defects and enhancing quality. Consequently, NMH's receiving area could have been more overwhelmed or understaffed, leading to several processing errors and delays.
Second. the batch-oriented approach increased delays in delivery and processing times. Since most packages were processed in large batches, there was a valuable lag time from when packages were received and delivered to the rightful departments. Such delays caused frustration to numerous staff and undermined patient care, as vital components and supplies were not delivered promptly-JIT (Just In Time) (Phogat and Gupta, 2019, p. 27). Finally, the batch-oriented mechanism led to a 3-day lead time. Such a lead time is unacceptable in a hospital setting because timely delivery is crucial for improving patient care. Delays and ineffectiveness caused the 3-day lead time in package handling due to the batch-tailored approach.
To address these problems, Suett proposed implementing a single-piece flow approach in package handling in the hospital's receiving area. In this context, single-piece flow means that all packages are processed and delivered individually, but not in huge batches. This approach renders the process predictable and efficient because packages and consistent packaging and delivered on time. Therefore, unlike the batch-oriented framework, the single-piece flow approach had several benefits. First, it minimized process viability by ensuring that packages were processed well and delivered within the stipulated schedule. Such consistency allows the hospital staff effectively plan their work and ensure timely delivery of the packages to various departments. The system is essential for necessitating flexibility. For example, operators can only move to the next stage after completing the activities of the initial stage. This means they can match quality concerns in real-time (Greasley, 2019, p.7). Other benefits are that the system offers to schedule, enhances employee morale, enhances packaging flexibility, ensures conducive working environments, and uses less space.
Second, the single-piece flow mechanism reduces lead time by allowing for fast processing and delivery of packages. Since these packages are processed individually, there is no lag between delivery and arrival. The approach reduces delays and ensures supplies are delivered on time-JIT (Phogat and Gupta, 2019, p. 29). Also, the single-piece flow method minimizes errors and enhances quality, giving staff time to focus on effective and correct packaging and delivery. In such cases, errors are mitigated, and patient care is improved.
Modification of Value Stream Map to Single-Piece Flow Suggestions
To help t...