1. What do you recommend be done when an error is found in a pack as it is opened for an operation?

2. How might the procedure for custom surgical packs described here be improved?

3. When discussing JIT in services, the text notes that suppliers, layout, inventory, and scheduling are all used. Provide an example of each of these at Arnold Palmer Hospital.

4. When a doctor proposes a new surgical procedure, how do you recommend the SKU for a new custom pack be entered into the hospitals supply-chain system?

Orlando's Arnold Palmer Hospital, founded in 1989 , specializes needed. The packs are bulky, are expensive, and must remain sterile. in treatment of women and children and is renowned for its high- Reducing the inventory and handling while maintaining an quality rankings (top 10\% of 2000 benchmarked hospitals), its ensured sterile supply for scheduled surgeries presents a challenge labor and delivery volume (more than 14,000 births per year), and to hospitals. its neonatal intensive care unit (one of the highest survival rates Here is how the supply chain works: Custom packs are assemin the nation). But quality medical practices and high patient sat- bled by a packing company with components supplied primarisfaction require costly inventory-some $30 million per year and ily from manufacturers selected by the hospital, and delivered by thousands of SKUs.* With pressure on medical care to manage McKesson from its local warehouse. Arnold Palmer Hospital and reduce costs, Arnold Palmer Hospital has turned toward con- works with its own surgical staff (through the Medical Economics trolling its inventory with just-in-time (JIT) techniques. Outcome Committee) to identify and standardize the custom Within the hospital, for example, drugs are now distributed at packs to reduce the number of custom pack SKUs. With this intethe nursing stations via dispensing machines (almost like vending grated system, pack safety stock inventory has been cut to one day. machines) that electronically track patient usage and post the related The procedure to drive the custom surgical pack JIT system charge to each patient. Each night, based on patient demand and begins with a "pull" from the doctors' daily surgical schedule. Then, prescriptions written by doctors, the dispensing stations are refilled. Arnold Palmer Hospital initiates an electronic order to McKesson To address JIT issues externally, Arnold Palmer Hospital between 1:00 and 2:00 P.m. daily. At 4:00 A.M. the next day, turned to a major distribution partner, McKesson General McKesson delivers the packs. Hospital personnel arrive at 7:00 A.m. Medical, which as a first-tier supplier provides the hospital with and stock the shelves for scheduled surgeries. McKesson then reorabout one-quarter of all its medical/surgical inventory. McKesson ders from the packing company, which in turn "pulls" necessary supplies sponges, basins, towels, Mayo stand covers, syringes, and inventory for the quantity of packs needed from the manufacturers. hundreds of other medical/surgical items. To ensure coordinated Arnold Palmer Hospital's JIT system reduces inventory daily delivery of inventory purchased from McKesson, an account investment, expensive traditional ordering, and bulky storage and executive has been assigned to the hospital on a full-time basis, supports quality with a sterile delivery. as well as two other individuals who address customer service and product issues. The result has been a drop in Central Supply Discussion Questions average daily inventory from $400,000 to $114,000 since JIT. JIT success has also been achieved in the area of custom surgical 1. What do you recommend be done when an error is found in a packs. Custom surgical packs are the sterile coverings, disposable plastic trays, gauze, and the like, specialized to each type of pack as it is opened for an operation? surgical procedure. Arnold Palmer Hospital uses 10 different custom packs for various surgical procedures. "Over 50,000 packs are used each year, for a total cost of about $1.5 million," says George DeLong, head of Supply-Chain Management. The packs are not only delivered in a JIT manner, but packed 2. How might the procedure for custom surgical packs described here be improved? 3. When discussing JIT in services, the text notes that suppliers, layout, inventory, and scheduling are all used. Provide an example of each of these at Arnold Palmer Hospital. that way as well. That is, they are packed in the reverse order they are used so each item comes out of the pack in the sequence it is 4. When a doctor proposes a new surgical procedure, how do you recommend the SKU for a new custom pack be entered into the hospital's supply-chain system