By John Freund
Talking with supply chain leaders in hospitals not using 2Bin to manage inventory, the comment I hear most often is “I can’t afford to double my inventory.” This is usually followed by some observations about how 2Bin may work in some situations, but not in this particular hospital. People often note they have no way to double their storage space. Because I’ve heard these comments so often, I thought I’d take a minute of your time to dig into this topic.
2Bin (also known as Kanban) is a very simple way to manage inventory, which began over 50 years ago at Toyota as they looked at their lean manufacturing processes. Today, it’s being applied in many industries that need efficient management of high-velocity, low cost supplies. (Need to know more about how 2Bin works? Click PDF link below for a quick industry report on 2Bin.
So let’s tackle a few of the most popular myths about using 2Bin:
Myth 1 – “I can’t afford to double my inventory”
Many believe that using two bins for your supplies means you’ll buy double your previous inventory. But you won’t - in fact experience shows you'll likely reduce many items within a month. When you move to 2Bin, you’ll determine an amount of product you want to have on hand, based on your current understanding of par levels and consumption, and how often you want to replenish supplies. Let’s say your current par level for an item is 20. To begin, you would have two bins placed end-to-end on your store room shelf. You would place 10 of the item in the back bin, 10 in the front. When the front bin is empty, it’s placed on the top shelf (reserved for empty bins) and the back bin is pulled forward. When your supply technician scans the empty bin on top, it triggers a replenishment of the item. As your experience with 2Bin builds and you have more velocity data, you may decide to change supply levels for different items based on usage and how frequently you want to replenish.
Myth 2 – “I don’t have a way to double my store room space”
Most hospital store rooms are already equipped with shelves and most of these shelves are deep enough to accommodate two bins placed end-to-end (there’s an enormous array of sizes and shapes of bins). There’s no doubling of space. There is just a dividing of supplies into two bins.
Myth 3 – “My nurses will grab all the supplies – we’ll stock-out in a day!”
I completely understand this concern! A supply chain director at a large university medical center moved from limited access cabinets to 2Bin for their high velocity consumables and expressed this fear. Reality was that once the nurses became confident in always having the supplies they needed, hoarding stopped; it became the “new normal” to walk into the storeroom and get the 1 or 2 items needed from open bins, without grabbing 6.
Myth 4 – “I’m not going to get information I need about consumption.”
Reality is you do need a good infrastructure behind any inventory approach you use, whether 2Bin or par or cycle counting. Cloud-based JumpStock – as one example – provides exceptional reporting and velocity data on every item stocked in your hospital. And over time, your planning gets more and more accurate, based on having real velocity information.
Myth 5 – “My ERP system supports 2Bin”
This one is tough. Yes, a few ERP systems claim support for a 2Bin approach, but it’s based on work-arounds and uses proprietary handheld devices that require data entry on small keypads. The time and expense we’ve seen go into getting an ERP-based 2Bin system to work has been significant and at the end, results in low staff satisfaction because the approach is difficult to use, the mobile device is bulky and heavy, and the need for data entry frequently results in errors.
Over the past two years, we’ve seen 2Bin work extremely in different departments all around healthcare systems – even in stand-alone emergency rooms and clinics. If you’d like a quick overview of JumpStock with 2Bin, here’s a very brief video that’ll give you the basics.
If we can ever answer your questions about 2Bin versus par or other inventory management approaches, please feel free to call us at 651-287-6000. We’re here to help.