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Supply Chain's Simple, But Everlasting Constructive Goals

Supply chain’s simple, but everlasting constructive goals

Supply chain management veterans share some personal success stories they’ve experienced first- or second-hand, highlighting how supply chain was involved in a construction project, what happened and why it mattered.

One recent engagement provided an excellent outcome for our client and a great deal of satisfaction for our team and the supply chain department. Three examples of their success were:

1. The hospital system in its early planning had decided to include an AGV (robotic) system to transport supplies from their Materials Center to the new patient tower at the very opposite end of the complex. However, they grossly underestimated the cost. Once the total requirements were scoped out and costs calculated, the idea was reconsidered. They are currently attempting to balance the cost of the system against the significant [full-time equivalent] savings.

2. One of the key outcomes of a thorough study of the supply chain aspects of the construction was the identification of constrained storage spaces, which was missed by architects that would have resulted in additional operational costs for years to come.

3. Both lower supply and labor costs are to be a result of the development of a plan that will streamline and optimize space utilization and foster efficiency in the operating room case cart process.

– Michael Bohon, CPSM, CMRP,
founding principal, HealthCare Solutions Bureau LLC, Show Low, AZ

A West Coast multi-hospital integrated healthcare system engaged my firm to assist in the design and construction of one of their large hospitals near a large metropolitan area. Our scope of work included all supply chain management and related systems through all phases of the design and construction process. The facility has recently been occupied and opened for business. More importantly, the savings strategies recommended have been implemented for several years – before the hospital was constructed and opened its doors. The economic benefits were achieved during construction from both operational cost reductions as well as capital construction cost savings.

Areas of economic impact included:

• Right sizing and designing all supply chain management-related departments at the new site to integrate with the newly designed operating systems and a planned Service Center. Functional areas affected include:

• Sterile Processing

• Supply Distribution

• Loading Dock

• Waste Management

• Patient Care Unit

• Stat Stores

• Purchasing/Procurement

• Linen Management

• Pharmacy

• Small Item Transportation

• Departmental Supply Storage

• Consolidated purchasing and procurement function for several geographically linked sister institutions.

• Provided swing space/short term storage during construction and consolidation activities.

• Reduced construction cost of new facility by saving in excess of 30,000 square feet – saving approximately $15 million in construction cost.

• Reduced purchase acquisition cost of supplies by approximately $20 million per year by having the ability and resources, including facility and staff capabilities, to negotiate directly with selected manufacturers.

– James Dickow, president,
Dickow Consulting Group LLC, Mequon, WI

A Premier member was replacing three centrifugal water chillers. This is typically an expensive undertaking. Using the estimating knowledge of an outside engineering firm, they had established a project budget of $1.3 million.

Rather than issue a standard bid to mechanical contractors, they made the decision to bid the project themselves directly to the manufacturers. By keeping the specifications open to multiple manufacturers they were able to create a more competitive environment. Many times the specifications are written towards one manufacturer and the competitiveness is limited to a contractor’s labor and markup. By handling the procurement of the chillers in house and creating a competitive situation between multiple manufacturers, they were able to drive the price down to $935,000. This represented a savings of $365,000 over the established budget.

– Mark Kearschner, director, construction services, Premier Inc.

Many years ago, I participated in a project related to a nursing unit redesign. For the most part, the process was extremely collaborative and resulted in an excellent plan that would benefit workflow and patient care. During the final plan review, and prior to going to bid, we realized that the equipment storage area did not have any outlets to plug in equipment, such as IV pumps. We never really talked about what equipment was going to be stored there, or the quantity, but it would have necessitated a significant change order, possibly major electrical changes, etc.

Once we thought about the actual functional use, we actually changed the door location, reconfigured the workspace and ended up with a much better project than we did initially. I like to think that because my team – who handled the equipment – was at the table we averted a crisis and actually made a difference. Although I can’t assign a specific dollar value to a return-on-investment, the operational impact was huge. Sometimes it is the little things that matter.

– William Stitt, CHL, CRCST, CMRP, FAHRMM, vice president, materials management, Robert Wood Johnson University Hospital, New Brunswick, NJ


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