Pinpointing storeroom, warehouse design slips, slides

Where do Supply Chain leaders slip up when laying out their storeroom and warehouse footprints? Thirteen experts share their thoughts.

• Designing storeroom space with only one style of racking, wall-to-wall. Racking options should be considered carefully based upon the products that will be stored on those racks. For example, items that expire do well on gravity-fed racking. This allows for stocking from the rear and picking from the front, which supports the first in, first out inventory method. Additionally, racking should not run parallel to the door. This type of layout reduces visibility and increases the footprint required to stock and retrieve items.
• Filling the shelves with as much as will fit, regardless of utilization. We commonly see hospitals order up to the space available, not based on utilization. This leaves the hospital at risk of over stocking and potentially even understocking.
• Lack of attention to the type of material handling equipment provided to the team. Having the appropriate material handling equipment, which is properly maintained, benefits the efficiency of the storeroom staff. It also saves wear and tear on the physical plant as products are delivered throughout the facility.
• Not having aisle and bin locators built into their storeroom inventory management system. This type of manual system is common and is built upon institutional knowledge and experience. Operating this way opens the door for risk of the process breaking when the person with the knowledge takes vacation or leaves the hospital.
• Lack of attention to what items are placed where, which means the picking and stocking processes takes a larger footprint than necessary. At times, not enough space is devoted to receiving and product staging. It is difficult for the storeroom team to perform daily restock and product pull activities when pallets with incoming supplies are blocking aisles and pathways. There is also risk of workplace injury if heavy items are placed too high or too low.

Cindy Measurall, Director of Supply Chain Consulting Services, Cardinal Health Inc.,
Dublin, OH

• The first mistake that a lot of hospitals make is not designing their storerooms/warehouses in a lean “U” for picking.
• The second mistake is not designing a method to rotate inventory. Expiring sterilized products is a major problem in hospitals.
• The third mistake is not leaving enough room for suppliers to manage supplier-owned product.
• The fourth mistake is not having product in pre-counted quantities that can be distributed.
• The fifth mistake is not utilizing robust technology such as PDAs.

Brent Wigington, Director of Continuous Improvement, Intermountain Healthcare

• Too many aisles. In supply areas which are often tight or overfilled, valuable space is often taken up by extra aisles due to the layout of the shelving. Having fewer, longer rows is a better use of space than many short rows with aisles between each shelving unit.
• Too many locations for one item. Wherever possible, an item should have one main stocking location. This is the location where the bulk of the material should be for the department, and it should be the area where the parring takes place. If a week’s usage is spread out over several locations, accurate ordering and replenishment becomes labor intensive, inaccurate and stressful.
• Not using data effectively. Using IMS/ERP (Enterprise Resource Planning) data to aid in the design of the space is a great way to confidently make improvements to save time, save labor and save space.
• Not enough floor space for staging/breakdown. At peak activity, storage areas are seeing high numbers of people and products in motion. An area must still be functional even if a large order comes in and is in the process of being broken down and put away. With nutrition, med/surg., linen and environmental services often sharing routes and floor space, it is important that there is enough space to coexist.
• Not giving it the planning and effort it deserves. Think of the number of products used on a patient. It could be as few as two or three for an ER visit, or into the double or triple digits for surgery or long-term care. Each product takes several transactions to get where it is going, involving both supply chain and clinical staff. For small hospitals, supply chain transactions can easily be in the hundreds per day. For large IDNs, it could be well into the tens of thousands. Good planning and strategy in the supply chain space can have real and lasting effects in performance and clinical satisfaction and stress reduction for years to come.

Gregory Seiders, Director, Supply Chain, Claflin Co., Warwick, RI

• Growth space. As the hospital grows, does all the support service areas grow.
• Constant change, in technology and process.
• Nursing change in process and equipment.
• Nursing floors spacing for supplies. Not enough space for the change in products.
• Rodney Simpson, Corporate Supply Manager, Supply Chain Services, Orlando Health
• Not recognizing SKU velocity (those 20 percent of the SKUs that represent 80 percent of the activity) and managing all activity related to those SKUs accordingly.
• Not considering workflow in the layout to maximize efficiency.
• Not taking full advantage of ERP/MMIS capabilities to generate replenishments and for other inventory functionality and relying on manual methods and work arounds.
• Not periodically evaluating stocking requirements relative to usage based on data and adjusting stocking levels and replenishment frequencies.
• Considering moving to offsite warehouse and/or deploying automation and technology before or without addressing the root causes of problems that are fueling that consideration.

Mike Henry, Director, Performance Delivery – Logistics, Supply Chain Services,
Owens & Minor Inc., Mechanicsville, VA

• When looking at self-distribution, many hospitals tend to design warehousing facilities based on estimated throughput. It’s important that the supply chain organization first engineers the desired facility layout based on the current and anticipated throughput — inclusive of non-med/surg-anticipated volume prior to making a commitment on facility size.
• When self-distributing, hospitals need to consider the layout based on how goods will be received direct from vendor vs. how they’re received today through distributors. An example is racking layout and the use of floor storage. Many hospitals will implement racking a facility based on the current order profile coming from their distributor when the use of floor storage is much more suitable for inventory that is coming in ocean containers. Typically, these containers have a minimal number of SKUs but are dense in volume and ship quickly from the DC.

Brian Murphy, Director of Business Development, Ryder Systems

• Hospital systems don’t perform enough due diligence to understand what is available in the marketplace and is utilized in other industries. Business case development is a critical first step in improvement and creates true ROI, but it requires time and effort.
• Healthcare also has a tendency to be risk-averse, which can prevent them from taking advantage of the opportunities available.
• A new materials management system means creating all new jobs, but often the old way of doing things from healthcare is carried over, which reduces or negates the benefits.
• I’ve seen operations in healthcare that would have gotten me fired if I had designed it that way 40 years ago — warehouses with 16- or even 8-foot aisles, dock door spacing over 14 feet.
• How should an IDN approach the creation of a new warehouse or storeroom design? They should find an internal champion at the senior leadership level to take responsibility for total success, as well as a champion at the operations level to bridge between materials management and the hospital(s). They need to obtain external assistance to create a realistic and actionable solutions set, the business case/ROI analysis, and a roadmap to execute for success of systems, operations and facilities.

Patrick Sedlak, Principal, Sedlak Supply Chain Consultants

• Lack of appropriate and efficient use of space, including the location of [stock-keeping units] in accordance with usage velocity.
• Absence of efficiency and quality enhancing technologies that mitigate manual touches.
• Absence of a true disaster preparedness plan, including infrastructure to support delivery via air transportation.
• Lack of adaptability for multiple vehicle use.
• Lack of expansion contingency space in the event of growth, merger or acquisitions.

Jim Churchman, Vice President, Site Operations and Logistics, Supply Chain Management, Advocate Health Care, Downers Grove, IL

• IDNs don’t employ subject matter experts in warehousing and distribution in the decision-making process for engineering solutions. These decisions are predominantly made by people with healthcare backgrounds, which makes them a salesperson’s dream. They need to hire people with the proper expertise, present them with the operational requirements, and ask “How do we meet these needs?”
• Hospitals also mistake old processes and technology for innovation simply because the healthcare people have never seen it before. An example of this is Kanban or two-bin systems, which are touted in hospitals as a cutting-edge technology, but have been in use elsewhere for years.
• And they will need to go outside of healthcare to gain access to some of that expertise and provide “translators” to transmit information from the non-healthcare people to the healthcare people and back again. This type of intermediary is critical for both solution development and change management.

Fred Crans, Healthcare Consultant, Sedlak Supply Chain Consultants

Lack of domain-specific knowledge. Appointing a Supply Chain designer without domain-specific knowledge and experience to design your storeroom or warehouse can lead to a design that is inefficient and non-cost-effective. With the focus being on providing the patients with an efficient flow of medical supplies and other goods, the supply chain designer must know how to support clinicians and nurses’ work with a design based on healthcare’s best practices, regulations and technologies.

Not considering the whole supply chain. Hospital operations and patient care are inextricably linked to the supply chain and its challenges. Designing and optimizing the internal supply chain is a kind of art form combining assessment, performance metrics, analytics, and consideration of a multitude of internal versus external options, on a dynamic and continuously basis. Failing to consider the complex dynamics of daily interrelations between all elements of the supply chain could have a great impact on the facility design results.

Utilizing unreliable UOM Data. Failing to utilize reliable UOMs Volumetric Data (Height, Width, Depth, and Weight) to quantify volumetric capacity affect the selection of appropriate storage equipment and Items slotting. Overall, the unavailability of precise UOMs data has a negative impact on storage space utilization and processes performance.Consequently, the efficiency of automation systems (i.e., WMS, SMS, etc.) and technologies (i.e., POU systems) through the hospital’s internal Supply Chain is negatively affected.