EMERGING TRENDS( Only for hifsa shaukat , do not send any chat messages for this homework).

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LEAN HEALTHCARE SUPPLY CHAIN MANAGEMENT: MINIMIZING WASTE AND COSTS

Catia M. L. Machado Faculdade Dom Alberto - FDM, Brazil

E-mail: [email protected]

Annibal Scavarda Federal University of the State of Rio de Janeiro - UNIRIO, Brazil

E-mail: [email protected]

Guilherme Vaccaro University of Vale do Rio dos Sinos - UNISINOS, Brazil

E-mail: [email protected]

Submission: 15/06/2014 Accept: 27/06/2014

ABSTRACT

The purpose of this research is to investigate the management models

applied in the supply chain providing services in healthcare

organizations, considering the lenses of lean. The aim of this is to

develop a model of supply chain management focusing on the

identification and minimization of waste, assisting in decision making

and contributing to the quality of services and as a consequence the

reduction of the costs involved in healthcare supply chain. The

philosophies of continuous improvement and lean techniques have a

role to play in helping healthcare to provide quality service and support

to reduce costs in the current budget constraints. In the supply chain of

hospitals the financial costs can be around 40% of its budget

(MASOUMI et al. 2012; SOUZA et al., 2013). This article sheds light on

the improvement in decision making and the effect of reducing costs in

the healthcare supply chain. In this sense, the research intend to

expand knowledge related to supply chain management in the area of

provision of healthcare services through the use of the philosophy of

continuous improvement and lean principles, helping healthcare to

provide quality service within their current budget constraints.

Keywords: Supply Chain Management, Lean principles, Healthcare.

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1. INTRODUCTION

Nowadays is competitive market, changes occur very quickly and the

performance of the companies alone is no longer enough to ensure their survival

(KIPPER et al, 2011; BORH et al., 2012; GIBBONS et al., 2012). The alternative for

business management cases include options beyond organizational frontiers, that is,

companies feel the need to organize themselves in the form of chains or supply

networks, due to that originated the expression supply chain, which emerged in the

manufacturing, when companies began to organize themselves in order to reduce

the risk of lack of production inputs (ASHBY et al., 2012).

Recent economic trends have created highly complex supply chains and

supply design, organization, interactions, skills, capabilities and management of

supply chains have become key issues (GOLD et al., 2009).

Organizations providing healthcare services are essential to the community, in

special in peoples lives, and the management of these organizations offers

uncommon character, there are few manufacturing processes as complicated as

organizations providing healthcare services because of the relative risks to health. In

this way these organizations must continually balance the need to assistance to their

patients, along with an attention to financial constraints as the transfer of funds from

private health plans and the Unified Health System (Sistema Único de Saúde - SUS)

Brazilian public. The SUS is one of the largest public health systems in the world. It

ranges from simple outpatient care to organ transplantation, ensuring

comprehensive, universal and free to the entire population of the country access.

Supported by a broader concept of health, the SUS was created in 1988 by the

Brazilian Federal Constitution (Constituição Federal Brasileira), to be the health

system of more than 180 million Brazilians.

Although demonstrating notable advances in technology and treatment, the

healthcare industry is fraught with inefficiencies and errors (TANER et al., 2007).

According to the statistics of Brazilian Hospital Federation (Federação

Brasileira de Hospitais - FBH) in 2008 was appointed 7,540 hospitals. Four years

later in 2012 the FBH conducted further research and found that the number of

hospitals in Brazil was 6,690 units. Analyzing the statistical data from 2008 to 2012

there was a reduction of 12.7% of hospitals in Brazil. According to Souza (2013), the

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supply chain in hospitals may account for the consumption from 25% to 40% of

monthly financial resources.

Therefore, hospitals should develop their own supply chains to deliver drugs

and other materials coming from suppliers to their patients or clients. Consequently,

the presence of two chains in the supply management of the health sector is

observed: one external, one internal to the organization (RIVARD-ROYER et al.,

2002).

Based on the assumptions reduction of 12.7% of hospitals in Brazil, the supply

chain in hospitals is responsible for 40% of financial resources, the work was

developed through exploratory and descriptive methodology in seeking to meet

models management supply chain of adhering to lean, aiming to propose a model of

supply chain management focusing on the identification and minimization of waste in

the process aiding in decision making and contributing to the quality of services and

as a consequence the reduction of costs involved in this chain.

This research is divided into eight sections, including this introduction, next

section discussed the importance of the supply chain from the perspective of

healthcare. Section 3 explains the lean principles, focus on the customer and

teamwork, in section 4 explains the seven wastes in the area of healthcare, in section

5 explains the methodology used in the research. Section 6 explains the analysis of

selected articles and the results found. Section 7 explains the proposed model and

practice management for the process of change lean healthcare. Finally, the

conclusion presents and findings of our research.

2. SUPPLY CHAIN IN THE HEALTHCARE PERSPECTIVE

The supply chain includes a set of management techniques, performing the

integration and coordination of business processes and strategy alignment

throughout the production chain in order to satisfy end customers in the supply chain

and reduce costs (MENTZER et al., 2001).

In hospital organizations, the tendency to reduce all problems of supply is due

to insufficient budgetary resources, although, in fact the effects of lack of shortages

are caused by problems in budget execution. However, they are also notorious waste

and misuse of supplies and equipment, the limited qualification of professionals in the

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field of supply and little attention to logistics planning in service organizations in

healthcare.

The procedures in healthcare are complex, layered on top of a supply chain

that incorporates sequences of actions defined for the generation of their products

and services. Each procedure requires a specific combination of products and

services, their composition may vary between different organizations and even

according to the different types of patients and professionals from the same

organization. Not only the products offered in health care organizations are complex

involving high-skill, but the inputs used in their production are increasingly

sophisticated, with numerous high costs (JAHRE et al., 2012).

3. LEAN PRINCIPLES – FOCUS ON THE CUSTOMER AND TEAMWORK

The principal challenge for organizations is the identification and involvement

of delivering value every customer and interested parties. Meet this challenge

requires ability to be lean. (CARVALHO, 2012).

Is not new preoccupation of organizations with the efficiency and effectiveness

of their processes. This begins in the studies of Taylor, focusing on the times and

movements that changed the way the world production (GAPP et al., 2008). The

same authors report that soon after, in Fordism had become a new revolution in the

mode of production based on the series production. Currently the model of lean

production also known as the Toyota Production System, using as proposed focus on

minimizing waste, but that the organizational mentality should be expanded.

For Womack and Jones (1998), is lean because it is a way to do more with

less and at the same time offer customers exactly what they want. This means using

less human effort, equipment, time and space to increase the value and minimize

waste simultaneously. Five are the general principles of lean thinking as shown:

1. Specify value from the standpoint of the end customer by product Family

2. Identify all the steps in the value stream for each product family, eliminating

whenever possible those steps that do not create value.

3. Make the value-creating steps occur in tight sequence so the product will flow

smoothly toward the customer.

4. As flow is introduced, let customers pull value from the next upstream activity.

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5. As value is specified, value streams are identified, wasted steps are removed,

and flow and pull are introduced, begin the process again and continue it until

a state of perfection is reached in which perfect value is created with no

waste.

Figure 1: Five Lean Principles

Source: Adapted from Womack and Jones, 2004

According to Womack (2005), when compared to other industries, hospital

management has been slow to identify who the customer really is. Due to the

complexity of the health system, the processes are often designed to meet the needs

of internal customers - doctors, hospitals, insurers, government payers. The author

emphasizes that it is extremely important that the value will be set by the patient's

primary customer.

The secret to successful implementation of lean system is transparency. This

system will only bring benefits to the company, for employees and for customers

consecutively through the implementation of a work team who understand this new

culture, so you can use this philosophy in the most optimized way possible (BRANDI,

2012).

4. SEVEN WASTE IN THE HEALTHCARE

The basic concept of lean is to eliminate waste within companies. According to

Ohno (1988), waste refers to all elements of production or service provision that only

increase costs without adding value, that is, are the activities that do not add value to

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the product from the point of view of the customer, but are performed within the

production process.

According to Shingo (1996), classifies waste into seven types:

1. Overproduction: Is related to the fact that they produce more than the

quantity demanded by the market. We can mention the health of testing

beyond what is a necessary, unnecessary test for lack of preparation of the

team.

2. Transportation: Regarding transport for distances greater than necessary, as

an example of excessive transport patients, equipment and drugs operations.

3. Processing: Corresponds to processing activities that do not add value to the

product. We can cite excessive treatment time by difficulty in establishing

standard procedures, excessive corrections and inspections.

4. Rework: Corresponds to construct items out of specification. We can cite

medication errors, infection of patients in hospital.

5. Motion: Related to the movement useless in the execution of activities, that is,

the inefficiency of the operation itself. We can cite excessive movement by

hospital healthcare professionals.

6. Waiting: Related to issues of synchronization of production or provision of

high batch processing due to the high preparation time tasks, or failures in the

information system of the organization. We can mention the patients waiting

for diagnostics, treatments and surgeries.

7. Inventory: related to the existence of high stocks or lack of product. We can

mention inputs and outputs in excessive or unnecessary.

In lean focuses primarily on minimizing waste, defined as everything that is not

necessary in the production cycle of a product or service. Thus the understanding

and identification of wastes within the hospital chain, will provide the alignment of

value-generating activities, seeking to provide customers exactly what they need.

To achieve the goal proposed by the lean, it is necessary to apply some tools

that will assist in achieving the results. In organizations management methodologies

with more modern they are always real for it to turn knowledge into value need.

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Therefore companies should take care that the knowledge generated in the

organization is not dispersed. These tools are instruments used for the

implementation of lean philosophy, which dictate "how to" follow its principles

(FERNANDES et al., 2012.), According to the authors:

 Value stream mapping (VSM): is the identification of all activities / specific

tasks that occur throughout the value stream for the product process. An

example is the mapping of the input from the patient, all activities, procedures,

diagnoses made until discharge from the hospital.

 Total Productive Maintenance (TPM): the basic concept of TPM is to

redesign and improve the business structure from the restructuring and

improvement of people and equipment, involving all levels of organizational

change and posture, in order to achieve the goals of "zero breakdown", "zero

defect" and "zero accident" (NOGUEIRA et al., 2012). Example is planning

maintenance of equipment.

 Takt Time (TT): The takt time is the time available for work in a given period

by the demand in that period (SANTOS et al., 2011.).

 Just in Time: is a set of activities aimed at high volume production using

minimal inventories of raw materials, intermediate and finished goods

inventory. Nothing is produced until it is needed (REBELATO et al., 2012).

 5S: The five senses that name the 5S program are derived from the initials of

the Japanese words Seiri, Seiton, Seiso, Seiketsu, Shitsuke are known to the

senses of use, organization, cleanliness, health and self-discipline. (GAPP et

al., 2008).

 Poka-Yoke: Means "failsafe", and seeks to minimize the defects caused by

failures by human and ideal distraction ever produce faultless. The poka-yoke

in services is applied both for employees and for customers to avoid both

commit human faults that generate losses in the process or rework (NADAE,

2009).

 Kaizen: Singles improvements made by frontline staff, targeted for certain

occasions where there are losses in the process.

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 Visual Management: Allows for quick and clear visualization of production

progress so that management of the system more responsive, by presenting

partial results in wall so that all employees can monitor the process.

 Setup: Aims to achieve reductions in the time required to perform the setup

activities on machines or equipment that involve exchange of tools or

materials and, therefore, imply the need to stop them (COSTA et al., 2012).

 Kanban: Is any mechanism to communicate the time to replenish or produce

exactly what is being requested and the amount due, enabling the production

flow is pulled (JUNIOR et al., 2008; SLACK, 2008).

 Layout: It's the best use of available space in a productive area resulting in

the transformation of raw materials into finished product more effectively by

lower distance traveled in the production plant in the shortest possible time,

with the highest quality product , and mostly keeping the welfare and safety of

workers.

According to the authors (SHAH, 2009; KONING, 2007; JAHRE 2012;

SHAMAH, 2013) reported that lean tools help identify and combat waste found. The

authors emphasized that these tools have contributed to the solution of problems and

provided the organizations providing health services in a different view, helping to

hospital decision making.

5. METHODOLOGY

The search procedure used in this paper was based on the method of

classification defined by Lage and Godinho Filho (2010), adapting the empirical-

analytical analysis, doing a scan in the literature with to the keywords supply chain

management, healthcare and lean on periodic bases as Emerald Insight, SciELO.

To achieve the objective of this paper, a bibliometric analysis was performed

on 83 selected articles, which are prioritized based on criteria: a) be the area of

supply chain management and b) and be applied in healthcare. In the second phase

analyzed, the 83 articles, which could be characterized as near this study,

considering the keywords supply chain management, healthcare, lean, within these

set of 20 items, which were all analyzed completely found.

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6. ANALYSIS OF SELECTED ITEMS

As a result of the survey of the academic literature on supply chain in

healthcare, there has been a variety of research related to the area of supply chain

management in providing health services companies, as follows:

 Aronsson et al. (2011), developed a model for the supply chain in healthcare,

using a combination of lean philosophy with supply chain management (SCM)

and supply orientation (SCO) chain, was working the issue of splitting process

with sub-processes together with the guidance as a whole, the focus of the

model is the teamwork and organizational transparency.

 Agwunobi et al. (2009), uses the strategy of commodities and lean for

improving the management of the supply chain with low purchase volume,

which benefited from the reduction of inventories. Rationalization layers of the

supply chain and using bulk buying to reduce prices can save money.

 Bhakoo et al. (2011), used the lean implementation of e-business in the supply

chain of several companies. The lack of consistent patterns of global

identification throughout the supply of healthcare, and poor quality of data

maintained by the project participants, were the problems encountered in this

project.

 Chen et al. (2013), the proposed model demonstrates a series of interaction

results that are relevant, specifically, the influence of trust in the exchange of

knowledge is greater when a hospital facing uncertain environmental

conditions.

 Guimarães (2013), presents an attempted merger between outsourcing and

lean, using practices of both outsourcing in health services which suggests an

evolution.

 Jahre et al. (2012), the authors propose the use of simple tools to reduce

inventory, lead time, and secondly, there was a lack of product for winning

product in stock. The use of simple tools such as lean, helped combat the lack

of product in organization studies.

 Kafetzidakis et al. (2012), conducted a survey in some hospitals in Greece,

where it was observed that there was no structured SCM department. Despite

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the fact that the logistics departments or departments with similar structures,

the proposed model worked with partnerships and implementation of lean

tools such as Just in Time, the relationship of the above methods of

adaptation remains at low levels according to the lean.

 Koning (2007), using multiple teams to identify and improve the management

of a hospital in Israel, several tools have been used but with greater focus on

Lean Six Sigma and the DMAIC (Define, Measure, Analyze, Improve and

Control), and tools as the main lean 5s, MFV.

 Virtue (2013), propose the use of simulation modeling along with the tools and

methodology of lean to help health planners to map the processes of

identifying where improvements.

It may be observed a different view with regard to seeking a closer relationship

with the industries organs service providers in health, in order to reduce costs,

particularly in the supply chain.

 Qrunfleh (2013), his study finds that the strategic partnership with supplier fully

mediates the relationship between a strategy of lean supply chain and supply

chain response, and that postponement partially mediates the relationship

between a strategy of agile supply chain and supply chain.

 Shamah (2013), developed an instrument to measure the impact of lean

thinking in the supply chain. This instrument can be used to examine the

supply chain and thus increase the availability of value. Furthermore, noting

the potential customers, competitors and suppliers, we can increase the

performance of the supply chain.

According Engeström et al. (2010), in most cases the knowledge required for

the formation of productive capabilities now available in the organization, but the

process for their mobilization is inefficient. One explanation for this is the lack of a

strategy for knowledge management, particularly as it relates to their integration

activities. One way to identify knowledge in enterprises can be through the lean tools

such as value stream map.

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7. MODEL – PRACTICE MANAGEMENT FOR THE PROCESS OF CHANGE

LEAN HEALTHCARE

The changes with globalization efforts have been demanding for organizations

in search of tools able to sustain their business. The supply chain in hospitals, as well

as other types of organizations, is interconnected with all departments and has great

influence on the results and processes. The change of culture arising from

globalization has forced companies to live with suppliers, service providers and

customers from all over the world, once tied to this new behavior, the pressure for

results, best service, innovation and relationships is inserted.

To survive in this increasingly competitive market, companies must adopt

mechanisms as prerequisites that determine the costs of activities that develop in

order to grow administratively. In this sense, means managing costs control them

and plan them, managing them in order to reduce those unnecessary and allocating

them in those most important activities to achieve its mission.

Due to the lean philosophy, companies today rely on logistic results to offer

competitive advantages, such as flexibility, price, quality, accuracy purchasing,

inventory and distribution, so it attract investors and enhance the brand in the stock

market.

It appears, however, that the professional, social and organizational difficulty

of a hospital, brings a much higher requirement as regards the creation of a

management model that seeks to secure the involvement of all stakeholders. The

difficulty lies mainly in the multiplicity of interests that have to be accommodated in

the variety of technical specialties involved in the life of a hospital, permanent

coexistence of human beings with cultures, backgrounds and completely different

backgrounds.

However, if such changes occur, it is crucial innovation with active

management, in this sense; people are the main instrument for change, with the

differential for the implementation of lean that aims transparent management.

According to Drucker (2003), the essence of effective management is the ongoing

pursuit of innovation through technology and new methodologies that is results-

oriented and cultural change in the organization.

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The largest portion of the methods employed have small improvement cycles

based on mapping the current situation, development of future situation and creating

an implementation plan for improvement. Deployments for improvement kaizen

events and employee engagement are also frequently cited.

As a starting point, through the principles of lean yielded the following steps

described below, focusing mainly on people as a vehicle for change:

1. Definition of Customer: As the first principle of lean seconds Womack and

Jones (1996), is to determine what is value for main customer is the patient

(SHAH et al., (2008); MCGRATH et al., 2008).

2. Lean Leadership: Aronsson et al. (2011), Koning (2007), cite the

implementation of a lean management system business is sued by a new

leadership profile. Where decentralization of power should occur in

organizations seeking sustainable growth.

3. Planning and goal setting: The planning and setting and monitoring of goals

and guidelines of the company is crucial to achieve the proposed objectives.

The Balanced Scorecard (BSC) is a methodology that allows an overview of

the organization, is based on four perspectives (customer, financial, process

and learning / growth), forming a logical and interdependent whole.

4. Focus on Value: Fourth stage is one of the main principles of "Lean

Management" as-if it determines the connection, the strategic focus of the

organization with the processes and consequently to the improvement actions

(VIRTUE, 2013).Setting the value should always contemplate the prospects of

"stakeholders" of the firm, such as shareholders, customers, society,

environment, and be well identified in the BSC. So that processes can be

properly managed by the leader and his teamwork.

5. Teamwork: The authors (ARONSSON et al., 2011; KONING, 2007;

KAFETZIDAKIS et al., 2012) emphasize the importance of involving

employees who work in the operation to success deployments to break the

resistance and cultural change. The involvement of physicians in the

development of improvements is crucial to the success seconds McGrath et al.

(2008). Another factor of great importance and involvement of top

management are key factors for success (WOMACK et al., 2005).

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6. Mapping the current situation and development of the proposed

improvements: The exercise of mapping processes (VSM) on staff, provides

waste and allows identification of a proposed logic minimization and

committed way, since the employees are from the area committed. Perhaps

this is the most powerful mechanism for the formation of the mental model of

lean management, creating a learning organization continuously. It is through

the sharing of skills and motivation of the people who work in a process that

experiences the lean system activities.

7. Deployment improvements and sustainability: Jahre et al. (2012), Shamah

(2013), cite examples of deployment through kaizen events, action plans or

projects. The standardization activities are a common practice found in lean.

Another important point and the maintenance of the system, with the definition

of "owner" for each stream worked with the responsibility to maintain, review

and change if necessary the activity worked.

8. Continuous Improvement: According to Guimarães (2013), Aronsson et al.

(2011), Agwunobi et al. (2009) and Jahre et al. (2012), comment that after the

implementation of the proposed improvements down the unconditional

domestic demand for excellence, where the entire organization is focused on

improving its processes, freeing both creativity and discipline of all employees.

The principle of spontaneous continuous improvement should be supported by

the organization and be one of the pillars of the system of recognition and

motivation, always observing the convergence to the unfolding of goals and

keeping consistency with the focus on value.

Lean allows the hospital to minimize waste, reduce lead time from patients

and processed materials, increase productivity, capacity and hence its profitability.

According to Souza (2008), lean healthcare is gaining acceptance, not because it is a

"new movement", but because it leads to sustainable outcomes for these

organizations and higher quality services to customers.

8. CONCLUSIONS

Throughout this research, the concepts related to supply chain approach to

lean and how these are embedded in the hospital, highlighting examples in the

literature were presented. In relation to bibliometric research, the authors

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(ARONSSON et al., 2011; GUIMARÃES, 2013; JAHRE et al., 2012;. KAFETZIDAKIS

et al., 2012;. KONING, 2007; VIRTUE, 2013) conclude that the concepts of lean are

increasingly present in the routine of hospitals, enhancing studies of various

researchers.

The application of lean techniques helps to identify for the minimization of

waste generated in the processes, ensuring greater productivity, and weak

development of priority issues for change, lower costs and better quality products

and services.

As proposed by the research goal is to develop a model of supply chain

management focusing on the identification and minimization of waste aiding in

decision making that enables the improvement of quality of services and reduce the

costs involved in this chain.

The proposed model aims to assist hospitals to identify what is important in

view of the customer (patient) through changing organizational culture, being the

main vehicle teamwork (doctors, nurses). Satisfaction of the end customer, the

patient, is only possible if the entire supply chain is compromised and integrated into

coherent and effective practices.

Figure 2: Proposed Model-Practice management for the process of change lean

healthcare Source: Author

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The figure 2 emphasizes the importance of customer satisfaction, with the

main objective of the hospitals. Through a lean management, with strong bases such

as transparent leadership profile, planning and clear objectives (BSC), with teamwork

with vision improvement continues assisting the process as a whole.

Thus, the lean becomes an important tool for the hospital environment,

especially the supply chain that seeks sustainability of their supply chains through

efficient management that aims at rationalizing flows, standardization of processes,

which lead the company to reduce waste and costs and increasing the quality of

services and hence customer satisfaction.

It is necessary, therefore, that hospitals are best suited to constant change

(ARONSSON et al., 2011; KONING, 2007), reviewing their processes and

modernizing their management models (VIRTUE, 2013; SHAMAH, 2013) so that they

can achieve results that guarantee continuity by promoting health for the community.

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