In past blog entries, we’ve talked about how the concept of the Perfect Order is gaining popularity as a metric for measuring the performance of the buyer-supplier relationship in Healthcare. But, is the concept of the Perfect Order only good for tracking supplier performance?
This month at AHRMM, I attended a session presented by Phil Pettigrew, Director Materials Management, and Stewart Layhe, Supply Chain Project Manager, at Denver Health, where they presented a new twist on the use of these metrics – the ‘Perfect Department’. As they pointed out at the start of their presentation, you could be very efficient in sending out your purchase orders, but, inefficient in your supply chain processes within the departments that originate the orders. Hence the need for the Perfect Department.
Denver Health began their journey to the Perfect Department over a year ago with an initiative to examine and redefine the supply chain processes first in their Paramedic and then Laboratory departments. With a strong commitment to lean principles, they leveraged lean techniques to examine those processes within these departments and redesign them. Out of this work, they came up with a ‘checklist’* for a Perfect Department:
- Correct items on the shelf in a neat and organized manner
- Correct quantity based on usage
- Electronic requisition system for replenishment
- Items obtained from a local source (this definition includes Central Supply)
- Correct person managing the replenishment process
- Automated PO, ASN, invoice and EFT for all orders
- Immediate 3-way match of all invoices
As they move forward to roll this out across all departments, they’ve come up with a set of measures that roll into a target Perfect Department Index. These measures* are:
- % of items with optimized inventory levels
- % of requisition lines created electronically
- % of order lines from a local source
- % of lines delivered on time, complete & undamaged
- % of purchase order lines transmitted electronically
- % of lines invoiced at the correct price
- % of electronic invoices
- % of suppliers using E.F.T.
- % paid on time and complete
Unlike the Perfect Order, which requires data that is sometimes difficult to track and report on, the Perfect Department Index leverages measures that typically can be pulled from an ERP system like Lawson into an analytical or BI tool. In addition, many of the changes required to improve department performance are within the control of your own supply chain staff, allowing rapid progress.
How are you doing in your journey to achieving the Perfect Department or the Perfect Order? How does your organizations efforts match with Denver Health’s? Are there different measures you use within your hospital?
*Source: Moving Beyond The Perfect Order: Attaining The Perfect Department, Phil Pettigrew and Stewart Layhe, Denver Health, presented at AHRMM11.
