Hospitals Automating Inventory Management

Healthcare Purchasing News • Martin Beaulieu, Maria Costin, Christine Quellette, Monique Bielen

An innovative approach to improving operating room supply chain performance: the CHUM case

An increasing number of hospitals are turning to new approaches to improve supply chain processes and enhance performance. One such hospital is the Centre hospitalier de l'Université de Montréal (CHUM), which, in implementing a number of innovative practices to more efficiently manage sterile medical supplies, has improved case preparation activities in its operating room (OR) department.

An Unsustainable Situation

Located in the heart of downtown Montreal, the CHUM is a world-class healthcare institution. Its mission is five-fold: clinical services, teaching, research, the evaluation of healthcare technologies and intervention methods, and health promotion. In addition to its 900 physicians, the three-site, 1,000-bed institution employs 10,000 people. Some 30,000 surgical procedures are performed at the CHUM each year.

Given the volume of activity, all three OR departments must be managed very efficiently to maintain the pace of work at the CHUM. The existing manual, non-standard processes had begun to show their cracks: some sterile medical supplies ran short while a surplus of others occurred. The OR's medical administrative management team turned to the materials management and sterile processing departments to help rectify the situation.

The three departments resolved to collaborate on a project to establish an effective system to manage OR supplies. Following a public call for tenders, the CHUM selected Logi-D Inc. as its external partner on the task force. Logi-D offers extensive hospital supply chain expertise, consulting services and material management automation solutions adapted from the industrial sector and developed for the specific needs of healthcare.

The workflow processes at each of the three sites were analyzed and mapped, from replenishment to case preparation. Following this analysis, the project was broken down into four clear objectives:

  1. Assure supply availability for the procedures scheduled;
  2. Ensure key OR inventory management information is kept up-to-date;
  3. Minimize clinical personnel involvement in supply management and case preparation;
  4. Use automation to limit (a) staff involvement in low value-added tasks and (b) the hospital's overall dependence on human resources.
  5. The project focused on two aspects of the supply chain: management of material flows (inventory and case preparation) and information management. The process review that was conducted saw the deployment of measures targeting the specialization of personnel, standardization of work procedures, and introduction of new technologies (management software and RFID).

Inventory Management Process Review

In an OR, the material flow consists primarily of sterile medical supplies and instruments. This supply circuit can be divided into two sequential segments: replenishment at the point of storage (storage units) followed by picking and transfer to the point of use (OR) (Figure 1).

To begin, the replenishment of sterile medical supplies was reviewed. These supplies were divided into two groups: (1) general supplies consumed regularly and (2) supplies requiring individual tracking, either for cost purposes or due to clinical requirements.

For general sterilized medical supplies, the project team opted for a two-bin (empty-full) inventory management system combined with RFID technology. The system functions as follows: the quota of a given product is divided between two bins, and an RFID-enabled tag is affixed to the front of each bin. When the first bin is empty, the user removes the tag from the bin, places it on an RFID board, and begins to use supplies from the second bin. The board, which is networked to the hospital's materials management system, automatically sends a signal that triggers the replenishment process for this item once certain quantitative or time-based business rules have been met.

For more expensive sterile medical supplies, the CHUM chose to track each unit consumed. Once an RFID sticker is affixed to the packaging of these supplies, each product is entered into a database that allows for visibility and tracking from the receiving point to the point-of-use. CHUM employees can access the information system at any time to identify a product's lot or serial number, expiry date and precise storage location. In the OR, when such a product is used, a replenishment request for the item is automatically launched when its packaging, including the RFID sticker, is discarded in a state-of-the-art data collecting receptacle equipped with an antenna.

The process steps for the two groups of supplies differ slightly based on the traceability requirements for each. However, in both cases, the transactions are captured in the information system via automatic RFID signals, facilitating the tracking of more than 90% of all OR purchases at the CHUM.

One of the key project objectives was to release clinical personnel from inventory management duties. To this end, the hospital instituted a team of stock handlers, primarily reassigned from other departments and now reporting to the materials management department. This dedicated team is responsible for replenishing storage areas, administering stock rotation and monitoring quota updating. The Logi-D information system is a first line tool facilitating and supporting the work performed by this team.

For the second material flow component, i.e. the preparation of cases with sterile medical supplies and instruments picked in storage areas and brought to the OR, the transformation was major. In fact, the management of case preparation information went from a paper-based system to a computerized one. In addition, as with the first component, responsibility for case preparation changed hands. However, in this instance, the activities were taken over by a technical team in the sterile processing department who already had expertise in the handling of sterile instruments.

Improvement Of Preference Card And Picklist Management

For case preparation that is both fast and accurate, it is critical that the information on physician preference cards for each procedure be current and reliable. These cards detail the sterile medical supplies and instruments required for any given surgeon and procedure. The CHUM uses thousands of these cards, so the challenge during the transformation project was to gather fragmented and scattered data that was often committed to memory rather than paper.

In general, preference cards are frequently incomplete or obsolete, and updating them is a painstaking process, as it tends to be done between more urgent tasks. In the case of the CHUM, the cards were paper-based and distributed throughout the various specialty departments. It was necessary to document, organize and structure activities to enable the technical team in sterile processing to take over this responsibility.

To establish a process structure and set of rules that would facilitate the transfer of knowledge into the information system, a number of meetings were held with OR clinical personnel and managers. Through a series of interviews and simulations, a Logi-D engineer collected the necessary data and digitized the CHUM's preference cards.

Following this digitization, the CHUM reengineered its case picking procedures; based on the surgical schedule and planned procedure, a sterile processing technician generates a picklist alongside an RFID sticker for that case (which is affixed to the picklist). The technician then selects a case cart and picks each item in stores following a sequence designed to minimize both distance traveled and time spent picking. Just before the procedure, the nurse checks the cart contents. The picklist is then swiped in front of the aforementioned receptacle, which reads the affixed RFID sticker. Following this action and until the end of the procedure, any product packaging dropped into the receptacle will be linked to the procedure underway, the patient, and the room, which assures end-to-end tracking of any medical supplies used.

At the end of the operation, the picklist is placed in a bag along with any unused and uncontaminated sterile supplies. A sterile processing technician then returns all of the sterile supplies in this bag back to their storage locations. In parallel, the RFID sticker affixed to the picklist enables technicians to capture all deducted items from the procedure to assure accurate case costing. An automated link between the picklist and actual consumption enables the information system to keep track of any items added or returned. The system creates an organizational memory of the items required and their storage locations, which greatly relieves the hospital of its dependence on the memory of users. This allows for the regular updating of preference cards in the information system by way of suggestions based on consumption patterns (Figure 2).

Supply chain performance is in part dependent on how inventory information is managed. Tools such as dashboards and quota optimization reports can help assure the consistency and efficiency of supply replenishment. The system implemented has now made these key tools available to the management team.

Results Of Implementing CHUM

The most immediate gain resulting from the robust supply chain management system implemented at the CHUM is an improvement to the workflows of all OR employees. Relieved of inventory management duties, clinical staff are now able to increase their focus on patient care and support and the training of future nursing personnel. In addition, stock handlers in the materials management department and technicians from sterile processing now have a direct impact on the day-to-day progress of activities in the OR.

The new management system has improved the control of both inventory and waste. Stockouts and expired products have been virtually eliminated, and accurate data on stock levels has nullified the need for overstocking. These gains have also translated into significant savings, as the cost of many sterile medical supplies for the OR is extremely high, and their use is often restricted to this department.

In addition, RFID technology has delivered traceability on two levels; it helps identify the storage locations of expensive medical supplies, and it enables the hospital to link supplies to a given procedure. From a quality control point of view, these gains are considerable.

Finally, by converging practices and capturing these within an information system, the CHUM now has data it can use to conduct statistical analyses of supply consumption at the point of use and by procedure. Because, like all hospitals, the CHUM must work within a tight financial framework, these analyses help managers identify the most effective practices. The system's ability to combine information about the supplies picked with data on unused products has resulted in very precise case costing.


The OR is often viewed as the driving force of a hospital, and the CHUM is no exception; highly specialized employees, state-of-the-art instruments and high-value supplies are Mlt, all found in this important hub. Given the nature and scope of these resources, it is vital to create a working environment that reaches its potential and where processes are designed to maximize the service and care offered to patients.

According to the CHUM's own description of the transformation, an optimized OR inventory management system hinges on three key factors: specialized and dedicated inventory management personnel; well-defined procedures to assure uniformity of practices; and an information system that generates an organizational memory rather than relying on that of individuals.

The CHUM experience demonstrates that the successful implementation of such a system is possible through a solid alliance of OR and sterile processing managers and an external partner who brings technological support and sector expertise to the table. This alliance assures that a transfer of knowledge will not only take place during the system implementation but also during system maintenance and throughout its continuous improvement.


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