Operations Review on Supply Chain Management, Logistics, and Inventory

Operations Review on Waste Reduction, Cost Reduction and Process This memo will discuss the efficient ways that Supply Chain Management, Inventory, and Logistics have been successfully implemented in the Intermountain Healthcare Supply Chain Center. Peggy Lee, Card Program Manager at IHC led the tour in the Supply Chain Center. The goal of IHC distribution center is reduce waste, cost and centralized the high volume supplies in one location and distribute across all their facilities. This gives Intermountain better control of their inventories and negotiation advantages.Using these methods has had a great impact in waste reduction, quality and cost savings. Supply Chain infrastructure is an important process at Intermountain Healthcare (IHC). They have learned that building strong relationships with their suppliers is critical and can help eliminate costs as well as allow them to share their savings. How IHC has achieved this, is by supplier involvement. IHC provides a mockup room sp ecifically designed for their suppliers to show off new products and equipment allowing doctors and clinicians to test the equipment at a no cost to the supplier.Suppliers then receive immediate feedback on their products and the hospital can test products before purchase. This is a valuable approach for IHC to see results, make improvements, and negotiate effective distribution for both the supplier and the hospitals. This is gain for both parties, and in particular to Intermountain since supplies are one of the highest expenses they incur. The distribution facility was built with the purpose to manage inventories more efficiently.This facility only holds 6,000 items out of 81,000 products that can be ordered. Only those items that are housed in this facility are the high volume items, with a fill rate of 98% and accuracy of 99%. IHC has a great control on their inventories by assuring that cost of obsolescence, deterioration, and loss are managed properly. The warehouse is equippe d with big fans that move the air around the facility reducing temperature fluctuations allows less than a 4Â ° deference from top to bottom in the warehouse.This prolongs the longevity of the products they house by reducing deterioration. Also, all the shelves are set up on a slope allowing older inventory to shift to the front. This is also known as the FIFO method, which ensures the older products are not aging on the shelves. Another method they use is barcoding. Barcoding is not a new invention, but IHC has taken advantage of this technology in the way they fill their internal orders by implementing some of their own inventory system, VoicePic.VoicePic is a voice activated inventory process where barcodes are placed on the container that will carry the order from one place to another around their facility. As the container moves along the conveyor belt, the person with that order hears the amount of items to be picked up in the current position and repeats the number via his v oice. Another quality check used for their inventory system is that once the level is placed in the container the system knows the weight that is to be at the end of the order. This provides a quality control measure.If the weight is correct then process continues. If the weight is off, the order gets rejected. This lets the operator know that there is an item that does not belong. By combining these two systems in their inventory, IHC has increased their accuracy in their orders by 60%. Logistics is another important part of IHC’s business processes they are trying to refine. The facility was strategically placed in a centralized location to allow moving supplies to all of their facilities since 80% are within a 50-mile radius.They also use their own fleet to distribute their merchandise among the hospitals and clinics, with the exception of the southern part of the state of Utah. The reason for this is they rather use a vendor for this location since the vendor is able to r eturn with a full trailer. This would not be the case for IHC. Another important point in the way their logistics is setup is how they receive and pick up shipments. These activities have a time set when they can be performed.They have divided morning to receive delivery from 4am to 12pm; all deliveries are done on a schedule, as well as pickups, pick up activities begin at 12pm. This is to increase efficiency of the location and the use of resources, thus reducing the chance of error and process flows. In addition, order placement is another key process. All IHC facilities must have their entire orders placed by 11:00 am every day to ensure order fulfillment. One other advantage at the supply chain facility is that it is built to allow shipments to be cross-docking.So, instead of products being housed they are immediately moved to another truck to deliver to the final destination. Logistics processes in this facility are designed to make resources more efficient and allow them to e liminate costs. IHC has increased their success by implementing new strategies on supply chain management, logistics and inventory. They have been able to cut costs and increase efficiencies in inventory on internal orders. Along with inventory, IHC has an added savings by testing for effectiveness of new products when negotiating with suppliers in the mock up room.By having this kind of interaction with supplies, ensures that the products will meet their needs and will contribute to their efficiency. They have also modified their logistics by reducing the number of trips needed to facilities by consolidating all the orders, to transport all necessary supplies in one trip. These are some of the many operational activities implemented in this facility. IHC has identified areas for improvement and made the necessary changes. With all the new improvements within their supply chain center, the facility will pay itself off in 8 years.