DEMAND MORE FROM YOUR SUPPLY CHAIN:

How hospitals can improve forecasting with analytics and collaboration

Data and analytics can empower hospitals to collaborate with distributors and establish demand planning that eliminates costly stockouts, while protecting patient and staff safety.

The COVID-19 pandemic highlighted the importance of demand planning for hospitals and distributors of medical supplies. But effective demand planning does more than help hospitals prepare for health emergencies. Demand planning that is based on real-time data allows hospitals to better prepare for seasonal fluctuations, such as increased demand for PPE during flu season or demand for orthopedic supplies when school sports are in season or when winter makes walking outside treacherous.

If hospitals aren’t prepared for these shifts in patient needs, they may find themselves stocking out of essential items, which impacts patient quality scores and outcomes, as well as staff job satisfaction. On the flip side, buying more materials than is needed causes hospitals to become overstocked, which ties up valuable financial capital. Unfortunately, the way in which most hospitals currently manage inventory does not allow them to conduct adequate demand planning.

Demand planning for hospitalsQuite simply, demand planning is the act of forecasting when specific materials will be needed at a specific location within your hospital or health system. Effective demand planning is based on current usage data, vendor performance, and historical consumption of inventory.

TIP: Partner with supply chain vendors whose platform is powered by algorithms that accurately predict inventory needs at a particular point in time based on actual historical data.

Getting to the heart of the problem Hospitals generally do not have a point-of-use solution in place that accurately captures the data needed for effective demand planning. Instead, they rely on PAR replenishment (counting) and the communal knowledge of supply chain technicians to keep supply rooms stocked. The downfall of this approach is that one person’s memory or perspective will be different from another person’s and depending on who is onsite at a given time, that knowledge is not always available to everyone else on the team. Furthermore, because PAR values are rarely adjusted, they are typically wrong. The staff in these rooms acknowledge this shortcoming and will report inaccurate inventory levels in order to yield the amount of product they feel is required for the room. This means the data that is being used for demand planning is wrong, as it does not reflect actual usage, but rather what that staff person feels is necessary for the room.

Why do hospitals need demand planning?Hospitals have come to rely heavily on their distribution partners to manage materials across their health system or across departments, consider the following scenerios as examples of why hospitals need demand planning.

Most hospitals have outsourced demand planning to their distributors. They do this because they have come to expect 98% fill rates or better on a 24-hour lead time from their distributor. When you receive 98% of what you need within 24 hours, the burden of demand planning shifts to the vendor providing you with that service.

Hospitals have engaged their distributors in low-unit-of-measure programs wherein the distributor actually restocks the floors with totes delivered to the dock that are filled with orders provided by the hospital. Many hospitals will stock their floors from central supply areas; however, the central supply areas are also stocked by the distributors where 98% or better fill rates are expected within 24 hours. Again, this transfers much of the demand planning burden to the distributor.

PAR locations are no exceptionDemand planning also involves forecasting demand for materials that are delivered from central supply to PAR locations. Whether you are running a just-in-time system with your distributor or servicing PAR locations from a central supply location or a warehouse, in our experience at Jump Technologies, hospitals expect the same fill rates that they would get from a distributor.

A smaller number of health systems are running a self-distribution model. These systems have invested millions of dollars in large warehouses, staff, and logistics software, and deal directly with manufacturers, bypassing the distributor in most cases. Hospitals that are serviced from self-distribution centers expect the same fill rate and vendor performance as they would get from a distributor, making the need for an accurate demand plan vital for health systems using this approach.

The future is powered by data visibilityMany hospitals believe that managing PAR levels based on orders received is accurate because demand naturally normalizes over time. In reality, demand is more cyclical than that because a hospital’s daily patient census is always changing. This, along with seasonality of healthcare needs, impacts demand and can interfere with the normalization process.

In reality, demand planning works best as a partnership between all stakeholders — clinicians, supply chain staff, suppliers, and distributors. For example, a distributor could share information about their days of supply for an item, showing critically low supplies in their distribution centers. They could also show recommended substitutions for items that are in short supply, while the hospital can send a change log of their PAR levels to the distributor because those changes serve as a demand indicator for the distributor and could impact their demand plan.

Achieving effective demand planningTo manage supply chain data and accurately forecast demand, hospitals must start by deploying simple, point-of-use technology that makes it easy for supply chain technicians and clinicians to record the consumption of materials they use every day. If systems are easy to use, compliance will increase. Data that is derived from consistent use of technology that does not complicate existing workflows can then be turned into actionable information in the form of a demand plan.

With simple point-of-use technology in place that enhances workflows for the user and proper system integrations in place, you can collect the following key demand plan elements:

Current inventory by location

Inventory velocity by item and location

On-order quantities by location

Vendor fill rate and lead time

Census data by location

Start in the ORAs the heart of the hospital, the operating room is the leading source of supply spend. In fact, it’s broadly acknowledged that 40% to 60% of a hospital’s supply costs stem from the operating room or procedural suites.

That’s what makes the OR an ideal place to begin implementing demand planning. The majority of surgical procedures are scheduled ahead of time, with the exception of emergency situations, so hospitals can anticipate what their need for certain supplies will be based on what’s scheduled. However, usage trends, vendor performance and the accuracy of the physician preference cards all impact the forecast. That’s why capturing data properly in procedural areas is also crucial to demand planning success.

Finding a solution that can record supply consumption—including implants—in one application without requiring any duplication of data entry, and that will update your inventory systems and EMR with all the required data is vital to clinical adoption.

With the proper tools and data visibility, hospital supply chain professionals and nursing staff can not only develop a proper demand plan, they can also collaborate to identify discrepancies between what’s being ordered for procedures based on physician preference cards and what’s actually being used.

At a higher level, clinical managers can use this information to identify clinical variances between physicians and across procedures. This ultimately supports a clinically integrated supply chain, as well as more effective procurement and improved negotiations with vendors.

Case Companion: Point-and-click your way to revenue gains and seamless integrationCase Companion is a solution from Jump Technologies that integrates a hospital’s surgery schedule and case pick list information from their existing EMR into one easy-to-use interface that clinicians can use to generate a demand plan, and forecast orders so the hospital can meet their upcoming case demand.

With Case Companion, the pick lists for individual cases display on a handheld mobile device that supply chain or nurses can use to pick the items needed for that procedure. Using the Case Companion mobile app, the materials that are picked are automatically decremented from inventory as they are pulled for the case. Nurses then use this same application during procedures to scan items including implants; to modify quantities that are actually used; and track items which are wasted in that particular case. This allows the hospital to identify and track waste and monitor preference cards.

At the end of the case, the nurse taps a single button within the application and the hospital’s EMR system is updated with data about all materials consumed. At the same time, inventory is decremented and requisitions are prepared for items below PAR, as well as implants and bill only materials used during the case. These requisitions are then sent to the ERP system, where a PO is generated for the vendor. This simple workflow avoids the duplicate entry of supplies consumed, reducing the time clinicians spend documenting a case, increasing the adoption rate of this technology and providing the hospital with the vital data it needs.

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Reimagine the future of healthcare supply chainTo future proof healthcare supply chain, we must collectively learn from the past. For true and effective demand planning, we must build a healthcare supply chain ecosystem — from manufacturers to distributors to hospitals and even government entities. This level of collaboration and information sharing will empower hospitals to accurately plan for demand using their data, and data from beyond the walls of their hospitals, to avoid costly stockouts that put staff and patients at risk while freeing up millions of dollars in vital cash that is otherwise tied up on overstocked shelves.

Jump Technologies is on a mission to reimagine healthcare supply chain to save lives and improve the financial performance of hospitals. With Case Companion, hospitals empower nurses to effortlessly manage supply utilization in the most expensive area of their hospital or health system, while capturing what could otherwise be lost charge capture, and contributing to data

transparency between clinical and supply chain staff.

Finalize the Case

Update CaseConsumption

Update Implant Log

DecrementInventory

Create Bill Only/Consignment Requisitions