Zero Supplies Shortages for Hospitals: It’s Possible! by Richard Rahn

Zero supplies shortages for OR supplies sounds like an impossible dream, a “vision statement” that we can travel towards but never really reach. In fact, creating a supplies delivery system that can deliver on this vision is not only possible, it is relatively easy. Hospitals in particular have a very short and reliable supply chain for most items. There really is no excuse for not having a bullet-proof supplies delivery system, that can virtually eliminate shortages, reduce the manpower required to maintain it, and optimize (not minimize) inventory dollars and quantities. Here is the recipe:

1. Eliminate the Par Level system.

2. Create a Plan For Every Supply.

3. Create Pull Signals

4. Design the Delivery Route.

5. Train the Staff.

6. Improve the System Continually.

Eliminate the Par Level System. There are some things we like about the Par Level method, the method used by most hospitals for supplies management. Stocking quantities are fixed, and well-organized supplies storage is possible. Where Par seriously falls apart is in the method for restocking supplies, the “eyeball method” in most cases. Looking, counting and doing daily physical inventory rounds is the most inefficient and inaccurate method imaginable. No world-class manufacturing company would consider using it, and hospitals shouldn’t either. The Par Level method needs to be replaced with the Kanban method that has been tested and proven world-wide (including in hospitals).

Create a Plan For Every Supply.Develop a detailed supply profile for every stocked item, and maintain this information in a controlled database. The information needed includes everything related to that supply, including supply identification, supplier data, storage locations and stocking quantities, and in fact all information related to that item. Access to this data is controlled, and changes need to be approved. Your Kanban quantities will be calculated and stored in this database. Hospital inventory systems already store most, but probably not all, of the data needed.

Create Pull Signals. The word Kanban means signal in Japanese, and every item will have a pull signal associated with it. These signals can be as simple as a card, an empty bin or an empty shelf. More sophisticated signalling techniques include bar codes and RFID tags. The pull signal should be clear: bring more supplies when the signal is raised. A variety of different signals can be used, depending on the nature of the item itself.

Design the Delivery Route. Designing a smooth-running delivery route is the key to zero shortages, especially in the face of variable usage common in hospital environments. Remember that the Kanban delivery route is many times more efficient than the Par Level method, since no counting or eyeballing is needed. Plan to run at least four delivery routes per day for each stocking location. Reasonable Kanban quantities combined with frequent delivery cycles are the golden key to zero shortages. No additional supplies handlers should be needed.

Train the Staff. A Kanban system is easy to understand and run, but some explanation will be needed. The staff should also understand that, just like washing your hands, using the Kanban system correctly is not an optional activity. When a bin is empty the signal needs to be raised, no exceptions. The demands on the staff are minimal, and in fact additional time should be saved through the elimination of shortages.

Improve the System Continually. The new system can be better over time, and the Lean approach is to engage all of the users in a continual effort, through small suggestions, to improve the Kanban system performance. Hospital management understands that their job also includes daily duties to maintain the necessary training and discipline, and to coordinate the improvement projects and ideas that come from the staff. Inventory quantities can gradually be reduced as the system becomes more mature. Outside suppliers can also be brought into the picture, so that they too can begin to respond to Kanban sigals.

This short article is a small appetizer compared to the large feast of knowledge about Kanban and world-class material management that has already been developed. A robust supplies delivery system represents a multi-billion dollar improvement opportunity for hospitals around the world. It’s not that difficult to do, and it’s an opportunity that doesn’t require an act of Congress. So let’s get going!

Richard Rahn is a principal with Leonardo Group Americas (LGA). LGA is a Lean training and mentoring firm that specializes in the application of Lean methods for hospitals. Richard and Gerard Leone are the authors of Lean in the OR, Supplies Management in the OR, Quick Changeover in the OR, and Lean Training Games in the OR. Their website is, and Richard can be contacted at

Article Source: