Implementing Lean in Healthcare’s Warehouse Operations – Evaluation of 5s’s Best Practice

Lean strategies in healthcare aims to improve patient throughput, reducing medication errors, redesigning work flow, improving patient safety, and reducing cycle time but studies to improve healthcare’s warehouse operation was not common. Managing medical supplies has always been a priority due to demand uncertainties and the risk of shortages which would greatly affect patient safety. This study showcases two implementation approaches for 5S (Hybrid and traditional) conducted in three different hospitals’ central warehouses at Ochsner Health System. These warehouses store similar medical products with over 1000 supplies (e.g. syringes, gloves, primary IV) that supply different departments within hospitals and clinics. The participating warehouses faced similar problems due to over/under stocked inventories, space constraints, and poor layouts. The objective of this study was to compare the impact of implementing a Hybrid 5S (integrated with inventory management techniques and process improvement tools) along with two traditional 5S’s to improve healthcare warehouse operations. Although, all the two approaches improved the baseline warehouse process, the warehouse that used the Hybrid 5S showed the greatest improvement with an increase of 59.5% in inventory turnover and 15.7% space saved. Lessons learned from this case study are discussed and used to propose guidelines to integrate inventory management techniques and 5S. 1. Overview of Lean in Healthcare Currently, a rapid need for Lean in healthcare has been growing due to its systematic approach in improving quality, safety and efficiency (Kim et al, 2006). Applying Lean has always been challenging in healthcare, particularly in addressing patient needs and providing a safer environment to avoid errors. Emphasizing wastes in medical practices, Endsley et al (2006) considered output (wrong process, overproduction, delay, large variation in output rate and demand) and flow (waiting, duplication of process, rework, work interruptions, and nonstandardized work) as the two main categories for problems in medical practices. According to Koning et al (2006) one of the significant contributors to health care cost is operational inefficiencies in medical service delivery. Managing supplies efficiently and having proper levels of inventory is a major activity that supports high quality levels of health care delivery. Managing medical supplies has always been a priority due to demand uncertainties and the risk of shortages which would greatly affect patient safety. Even though uncertainties are impossible to be completely removed in any supply chain system, strategies could be developed to match supply and demand without accumulating unnecessary levels of inventory (Jones, 2006). Ochsner Health System laid its Lean foundation in the year 2007 with a handful of Lean Leaders and five LSU interns. The team is involved in conducting Lean projects in nearly 200 departments across its 8 hospitals and 35 clinics in Louisiana. This research is concentrated in the warehouses of three hospitals holding similar supplies and operations. This research explores the effectiveness of a Hybrid 5S compared to two traditional 5S’s in reducing overall inventory and streamlining supplies. The Hybrid 5S integrated traditional 5S with process improvement and inventory management tools within healthcare. The Hybrid 5S model uses the Kaizen event structure to establish the relationship between process improvement tools and inventory management techniques. In order to evaluate the impact of the Hybrid 5S model, the results of its implementation were compared with two traditional 5S’s at Ochsner. This study assesses the impact of a new strategy, the Hybrid 5S, in healthcare’s warehouse operations starting with identifying critical items, reducing overall inventory, redesigning warehouse layout, optimizing space, and reducing distances travelled. 2. Inventory Management in Healthcare Kilpatrick (2003) emphasized the need for Lean Production strategies for eliminating seven different types of wastes. In particular, excess inventory, which negatively impacts the hospital’s cash flow, leads to inefficient use of warehouse space. For instance Kumar et.al, (2006) implemented Lean in Indian