COE member Cardinal Health gets supply chain honors

Sometimes the scope of the machine can obscure the beauty in the little cogs that make it all work. Take Center for Operational Excellence member Cardinal Health Inc. for example: It’s a $100 billion-plus company, highly profitable, one of the largest employers in the Columbus area and manager of a network of distribution centers so vast its products can reach a staggering share of hospitals nationwide in no time flat.

It’s also an extraordinarily efficient and nimble enterprise, having navigated through the recession with few bruises, shed a piece of itself to create a new West Coast entity and plotted an ambitious expansion into Asia that could pay untold dividends in the future. It’s the efficiency and its translation into high-quality service to customers that has captured the attention of the number-crunchers at research firm Gartner, which recently named the Dublin-based company the No. 1 health-care supply chain in the nation.

To reach No. 1, Cardinal moved past last year’s holder of the top spot, Owens & Minor, which slipped to No. 5 this year. Nos. 2-4, in order, were Mercy, BD and the Mayo Clinic.

It’s reasons quantitative and qualitative that got Cardinal the honors. Gartner perused data on financials and inventory levels, combining that with other survey data and peer opinions (Cardinal’s top-notch there, in specific). The company in bestowing the honor called Cardinal “a complex combination of well-connected businesses … (that) combines the varied strengths of a medical-surgical distributor, a pharmaceutical wholesaler and a large manufacturer.”

So why all the hoopla over a health-care supply chain? Gartner gets at a key distinction that strikes at the heart of why operational excellence in the health-care realm is so important: “Losing sight of the customer, in most industries, results in frustrated tweets and blog posts about a product or service that may lead to lost sales opportunities. Losing sight of the patient, however, can reduce the quality of life for particular patients and, in the worst case, can lead to the loss of life.”

So congratulations to Cardinal, an all-star on COE’s roster that recently came to Fisher to share its lean story at our Dec. 2 quarterly seminar.

A congratulations by proxy goes to fellow COE member Abbott Nutrition, whose sister pharmaceutical operation made Gartner’s top 10.

When opportunity knocks

Any time I see a great lean process at a company or in real life, it looks so natural I’m shocked it wasn’t always that way. That’s probably why I had to read a recent Akron Beacon Journal article featuring Center for Operational Excellence member Akron Children’s Hospital twice before I saw the lean thinking behind the innovation.

Akron Children's Hospital

The Oct. 30 piece by medical writer Cheryl Powell focuses on the growing importance of so-called advanced-practice providers – you know them as nurse practitioners and physician assistants – at Akron Children’s and other hospitals. This is taking place because of restrictions on resident work hours and growing demand for service. Akron Children’s, however, is using that situation to create a lean environment where ownership is shared and the blame game isn’t played. Think about that when you read the anecdotes that open the piece:

“When the medical staff executive committee helps chart the future of Akron Children’s Hospital, nurse practitioners sit side by side with doctors as peers. As the hospital’s pediatric neurosurgeon finishes a complex brain operation, he usually steps back and lets a physician assistant close the child’s head. And if a cancer patient has a problem in the middle of the night, an advanced-practice nurse or physician assistant often provides the care.”

Much of the article focuses on the promising salaries of those advanced-practitioner careers, but what struck me were anecdotes about the Cleveland Clinic, which is using those workers to help patients with less-serious problems, “which frees up doctors’ time to spend with people who have complex problems.” Sounds like standard work to me.

The results, by the way, are the true goal of any standard work implementation: Smooth flow and more time for innovation. The clinic also boasts of higher patient satisfaction and quality scores coupled with lower average stay length and readmissions.

As in any industry, sometimes a problem becomes an opportunity.

Lean Principles: Are they really applicable to me?

Because lean principles have their roots in automobile manufacturing, people in the service industry are prone to bristle at the thought that their organization could benefit from them. Health care is a prime example and its workers sing a common refrain:

My patients aren’t cars. They are human beings.

I agree, but there’s a hidden distinction that’s key here. Health-care workers with this complaint mean to imply that humans not only are different but superior (though who hasn’t had a car more reliable than some people?). If that’s the case, patients must be given even better treatment than cars. A health-care setting, where potentially deadly errors lurk around every corner, should have:

  1. Safe customers
  2. Safe employees
  3. Reduced defects
  4. Standardized processes

The Catch

These are all pillars of lean thinking, embodied in the Toyota Production System. That process aims to create safe processes for employees and workers, turn out well-tested cars and produce them with as few defects as possible to reduce the potential for recalls. Their processes are standard and led by cross-trained employees in a way that someone from a different factory can step in and work without any problem. How is this anything but a win-win for health care?

We want our nurses, doctors and staff safe. We want our patients to be treated right and on the road to recovery. And we want them out the door for good when they’re discharged as readmissions are costly to the hospital and the patient’s quality of life. Strategies vary patient to patient but the core processes are the same, from check-in to admission to follow-ups. Yet every department has a different way of doing things and doctors even within the same discipline follow different processes. This results in staff and customer dissatisfaction and increased chances of errors, which lead to an unsafe environment for everyone.

The core process seems so simple, but we’ve managed to complicate it because we don’t understand the process and its defects – but some organizations are working to change that. Thedacare Health System, Seattle Childrens, Cleveland Clinic, Akron Childrens, GroupHealth and others have successfully experimented and implemented lean principles, proving they’re not just for cars. And these organizations are reaping the benefits.

What are some of the concerns that hold back service organizations from implementing lean? What are some ideas that could help them see differently?