Because not all products are created equal, inventory management is not a one-size-fits-all process. Using the Pareto Principle (the “80/20 rule”), hospitals can identify their "top 20%" - those high-cost, regulated products that need to be managed as individual items. It's likely there’s a process in place to manage these items. But what’s really important is not to stop there! The next step: identify the "80%" - those low-cost, consumable, med-surg supplies used continually at a high velocity rates. Hospitals are finding great benefits moving those items to a lower cost, more streamlined approach to supply management.
What’s Driving Change?
Changes to reimbursement and billing practices for many hospitals means low-cost inventory items – those disposable/consumables that are most frequently used – are no longer billed separately. Brent Petty, 18 year veteran of healthcare supply chain management, recently said he has seen a number of healthcare organizations move away from billing patients for low cost items and instead institute a minimum billing charge, not reflective of individual supply consumption. Some organizations are adding a small increase to the average in-patient room cost instead of trying to track and charge patients for commonly used products. This approach leads to significant cost savings by eliminating material tracking for every item used on every patient that enters the healthcare system.
What is a 2Bin (or Kanban) Approach?
2Bin systems have been proven by LEAN manufacturing processes to be extremely effective at managing highly consumable items stocked at low units of measure, usually “eaches.” The 2Bin concept originated in Toyota manufacturing facilities nearly 60 years ago to reduce inventory costs and have a better system for stocking shelves inside its production plants. Along with a consistent supply chain process, this approach - still used by grocery store chains and manufacturers today – allows organizations to maintain a relatively small amount of inventory in their stockrooms and stop money from being tied up in slow-moving merchandise. Toyota adopted the practice for its manufacturing plants and added a new binary component: with a 2Bin approach, a bin is simply either empty or full.
How Does 2Bin Work in Provider Organizations?
2Bin approaches are now being specifically applied to the unique needs of provider organizations. Existing storage areas are being updated with shelving units to accommodate a system of bins - two for each product or product group - that contain the non-billable items previously stored in cabinets or other more restrictive systems. The 2Bin approach is based on a very simple concept: each item in a hospital’s inventory is placed in two separate bins, placed end to end on a shelf. The two bins combined contain the total amount of inventory required for the days of supply a department or unit plans to keep on hand.
Throughout the day, staff members take what they need from the bins. Once a bin is empty, the nurse takes the bin and places it on the empty top shelf and pulls the second bin forward. The top shelf of the storage shelves are reserved for empty bins.
At specified times, supply technicians visit supply locations and scan the barcodes on the empty bins using a compact “key-fob” scanner or a smart phone or tablet. Hospitals using an inventory management solution with their mobile devices will see their system automatically calculate the order to refill the empty bins based on reorder levels an organization has established in the system. Requisitions are created and approved, and orders are submitted directly to a hospital’s vendors, the materials or ERP system, or any other preferred ordering system. When an order arrives, the supply technician simply refills the bins and scans any remaining empty bins. This continual process ensures supplies are there, when and where nurses need them.
Benefits of 2Bin Approach in Hospitals
- Increases nursing satisfaction
- Reduces time nurses spend managing inventory by up to 60 percent, including time nurses spend locating and tracking supplies
- Eliminates the need for nurses to record individual items pulled from inventory
- Reduces stock-outs
- Reduces cost of overstocked inventory
Hospitals are finding great value using a streamlined, low-cost 2Bin approach. For more information about 2Bin, check out the JumpStock page or our Resource Center.