1. Applying Toyota Lean Principles in a Healthcare Supply Chain Partnering between Supply Chain & Clinicians WSHMMA Spokane 2006 Ken Fortune: Director of Purchasing & Distribution Allen Caudle: VP Supply Chain Management Swedish Health Services Seattle, Washington

3. Swedish Health Services  Largest Hospital System in the Pacific Northwest  4 Acute Care Facilities  25 City Blocks and 5.5 million Ft 2  1,286 Total Beds  Not for Profit – 501c3 Organization  Net Revenues - $1.1 billion (2006 budget)  6,970 Employees  1,744 Physicians  54 Operating Rooms  Approximately 40,000 Surgical Procedures  $170M Total Supply Spending Hospital Division Hospital Division Home Health & Hospice Physician Division Joint Ventures Joint Ventures Foundations Research & Education MOBs

4. Supply Chain Vision The Gold Standard Patient Care Med Surg Supply Implementation RPI Periop Services Supply Chain Clin. Info System RPI Redesign Nursing Unit Storeroom 5S Bed Turnover RPI Environmental Services Critical Use Equipment RPI Pyxis Treat the patient care constraint like Gold -- Align the organization and deliver The Gold Standard to our customers and clinical service partners! Forms Process Improvement RPI

5. What is the Toyota Production System or “Lean Thinking?” RequestRevenue Value Stream Time Line 1. Value - define precisely what delights customers 2. Value Stream = Service Lines - identify all processes 3. Flow - make value steps flow by removing waste in every form 4. Just-in-Time - design & provide precisely what customers want precisely when they want it 5. Perfection - pursue through Daily Management

6. 10 Leadership Practices for Managing & Sustaining Lean Operations Establish a Good, Two-way Relationship Goal Achievement Set Context Assign Tasks Plan & Resource Improve Work Continuously Employee Development Assess Judgment & Discretion Coach & Develop Staff Recognizing & Rewarding Staff Select & Orient Staff Reassign, Correct or Dismiss Quality Patient Satisfaction Lead-time

7. Success Requires 3 Stratum Leadership & Management Guidance Team DIR Mgr VP COO CEO VP DIR Mgr DIR Mgr DIR Mgr Customer Management Guidance Team Epidemiology & Nursing Cross-org. alignment -- BioMed, Envir. Services, Sterile Processing 3 Stratum Leadership Authorizing manager Process Manager Experts in the Process

8. Our RPI Project Process Our RPI Project Management Process Executive Commitment PLAN RPI Blueprint 60 Day Review 30 Day Review WORKSHOP WEEK DAILY MANAGEMENT (RPI Newspaper) RPI Hold the Gains P S A D Sustainable Improvement ASSESSMENT Go/No Go?

9. Activities of the Four Phases  Initial meeting  Process review  Site Visit  Assess managers  Feedback - Opportunities - Risks - Scope  Go/No Go decision  Learn tools  Analyze process  Eliminate waste  Implement short-term plans  Develop follow-on plans  Complete workshop actions  Implement Daily Mgmt  Check results and hold gains  Spread to other areas Assessment  Workshop Objectives  Process boundaries  Timing set  Participant preparation  Management preparation  Data collection  Agenda set PlanningWorkshopDaily Mgmt

10. Roles in the RPI Management Guidance Team  Provide uninterrupted team member participation.  Remove barriers for the workshop participants.  Empower and support the workshop participants to implement changes (i.e. provide resources).  Notify and coach workshop participants for their role in the workshop  Participate with team to resolve issues and mediate differences.  Advocate for the need of customers and “the whole” vs. a particular unit of people.  Take risks and encourage workshop participants to do the same.  Celebrate and congratulate the team on success.

11. 3 Actuals Walk “The time that provides me with the most vital information about management is the time I spend in the plant, not in the vice president’s office.” -- Taiichi Ohno  Go to the Actual Place  Talk to the Actual People  Observe the Actual Process

12. The 5S’s S ustainHold the gains & improve. S tandardizeDevelop common methods for consistency. S weep Sweep to clean and visual sweep to understand. S implify A place for everything & everything in its place, clean & ready to use. S ortSeparate the needed from the not needed (waste).

15. Pre-RPI SDS Case Cart Process

16. New Case Cart Building Process

17. Case Cart Building Process Flow

18. Data Summary # Steps11145↓ 59% # VA Steps 6 6 # NVA Steps10539 ↓ 63% # Queues 4 3 ↓ 25% # Handoffs 23 3 ↓ 87% # Feet Traveled10,234378 ↓ 96% # In Queue (WIP)Hundreds Lead Time58 Hrs17 Hrs ↓71% Cycle Time8 Hrs15 min ↓ 97% SpaceC Floor B Floor A Floor

19. Inventory Reduction Patient Chargeables BeforeFuture Change BeforeFuture Change  SDS Core 7,944 7,378  SPD 5,394 0 $ 13,338$ 7,378$ 5,960 Non-Chargeables  SDS Core & Inventory Room 19,498 2,765 Room 19,498 2,765  SPD 2,169 0 $21,667$ 2,765$18,902 Returns to MSC $ 2,000 Suture  SDS Core$ 65,119Marked boxes$ 9,896 Total $36,758

20. JULY – DECEMBER 2005 PERCENT OF SDS AVERAGE WEEKLY STOCKOUTS

21. JULY – DECEMBER 2005 PERCENT OF MSC AVERAGE WEEKLY STOCKOUTS

22. Communications & Instrument Delivery Protocol

23. Rapid Instrument Turnover Flow SDS

27. Becoming Partners  The week-long Rapid Improvement Process Workshop helped to break down long- standing barriers between departments…  Surgery was unaware of the services Supply Chain could provide to them…  Communications opened up during the workshop with many opportunities

28. Becoming Partners  The RPI was a strong success…85% reduction in “Go-Gets” by moving supplies closer to point of use and case cart accuracy improved to 99% because cases picked within core and on a just-in- time basis.  Right people, doing right job, at the right time

29. Summary HOW HAVE OUR ROLES CHANGED? Better partners between Supply Chain and clinicians Better partners between Supply Chain and clinicians Supply Chain viewed as professionals in supply management and leaders of sustained process improvement Supply Chain viewed as professionals in supply management and leaders of sustained process improvement Supply problems eased in the OR with better supply management process (fewer stock outs and “go-gets” from the rooms) Supply problems eased in the OR with better supply management process (fewer stock outs and “go-gets” from the rooms) Nurses can be nurses – focusing on patient care Nurses can be nurses – focusing on patient care

30. HOW HAVE OUR ROLES CHANGED? Supply chain professionals manage the process with data and continued “Roundings” with clinicians, OR managers, and physicians Supply chain professionals manage the process with data and continued “Roundings” with clinicians, OR managers, and physicians Supply chain professionals are now relied upon to solve other problems in the OR Supply chain professionals are now relied upon to solve other problems in the OR