Gaining the Edge on Advanced Supply Chain Operations in Healthcare: Three Key Decisions when Scaling Operations

As healthcare supply chains grow and adapt, forward thinking supply chain leaders are taking a strategic look at their operations, seeking to streamline workflows, scale effectively, and lower risk. As a result, an increasing number of health systems are moving beyond the confines of individual hospital campus operations and turning to shared-service centers, or centralized supply warehouses, where purpose built space can allow for increased product capacity, advanced automation, centralized emergency and safety stock, and improved labor efficiency.

Whether you’re centralizing operations with a new purpose built facility or evaluating an existing consolidated site for efficiency, extensive, careful thought and informed decision making are critical to unlock value. Missteps and lack of planning may leave health systems struggling to find the ROI in their strategic efforts despite best intentions.

We will explore three foundational concepts central to a successful advance supply management operation.

• How should software technology be employed?
• What role should automation play?
• Should a labor partner be considered?

Choosing the right software technology can lay the foundation to achieving an efficient, centralized operation, at the desired operational scale. Since every operation can have its unique challenges, the solutions must be carefully considered weighing the complexity of the application to the value delivered. Thorough exploration of process and targeted bottlenecks is needed to understand software requirements.

Most healthcare systems run native ERP inventory management modules, which may work well in a storeroom or smaller facility with a sub 10,000 sq ft footprint and two-tier pallet racking. However, once you decide to scale up, these solutions often lack the features needed to perform in larger warehouse spaces.

While healthcare distribution operations do not reach the scale of large retailers, a significant level of sophistication is needed when warehouses exceed 50,000 sq ft. At this point, operations will begin to employ heavy-equipment handling machinery and pallet racks four or five tiers and more advanced material conveyance solutions.

Exploring whether a warehouse management system (WMS) is right for your organization, and what solution may be best, begins with understanding the scale and target throughput of your operation. Consider the following questions as an introductory thought exercise:

• Do you expect to accommodate more than 1000 pallets and intend to store more than two pallets of individual common products?
• Will you pick “low unit of measure” products for direct delivery to PAR locations?
• Will you replenish local hospital storerooms via cross transfers?
• Are you picking for multiple facilities, requiring consolidation of shipments and wave based fulfillment on tight schedules?
• Do you anticipate multiple pick zones and intend to optimize pick-paths and carton-packing of selected goods?

WMS functionality shapes much of a centralized operation’s design, enabling dynamic slotting, wave-based fulfillment, pick zones, volumetric planning, and intra-warehouse replenishment. However, WMS solutions can introduce significant complexity and data demands, especially when an ERP “good enough” approach would suffice. Balancing capability and complexity is therefore an essential first step. Understanding what is needed vs. what is offered by these solutions is a significant, but important, activity during planning and execution phases.

Size is often an underestimated factor in scaled materials‐management operations. When leaders move into a 50 000 sq ft facility, they may be surprised to find staff walking over a quarter mile for a single round trip pick. That travel time alone can erode productivity estimates, and that’s before accounting for the hidden ergonomic strain of pushing or pulling carts through traditional pick methods.

Automation isn’t just fancy robots. It can range from riding forklifts, smart carts, and conveyor lines to picking aides like pick to light systems and inventory carousels that work hand in hand with your WMS and Warehouse Execution Systems.

Automation solutions must balance complexity, cost, technical expertise, labor costs, and reliability. Consider these factors in your use case:

• What facility size is required, or planned, to store the necessary volume of product, and how far will staff travel to pick items?
• Will you utilize vertical space, and will picking occur at ground level or on mezzanines?
• How will products be received, broken down, staged for picking, and consolidated?
• What is the total volume of movement in terms of picks, SKUs, and pallets?
• How will waste and packaging be consolidated and removed from the warehouse picking operations?

Automation can dramatically boost scale and staff productivity through follower or retrieval robots, conveyors, and specialized picking equipment. However, these implementations can be complex, and the cost of failure or missteps is high when solutions aren’t properly matched to the operation.

The decision to scale operations within an advanced materials management facility is a massive undertaking. Processes and workflows designed for hospital storerooms do not translate into large-scale warehouses. Consequently, solutions merge retail and manufacturing techniques with healthcare’s exacting demands, resulting in a hybrid-type operation.

Achieving target capacity gains, often a 300% to 600% increase in pick volumes, demands an unwavering commitment to operational excellence and safety. From heavy equipment handling and pallet slotting to intra-warehouse replenishment, choreographed wave execution, and integrated robotic and manual workflows, success hinges on a team of specialized experts extending beyond software and automation alone.

Consulting teams can help establish warehouse operations, select software solutions, and integrate initial automation, but once your facility ramps up to full production, their engagement typically ends.

Building in-house expertise is possible, but it focuses critical operational knowledge in a small group of individuals whose skills differ from core hospital supply management and can be difficult resources to locate and train. Moving to an advanced warehouse operation is a prime opportunity to leverage a third party labor partner, which brings deep healthcare supply experience and can adapt industry best practices, such as those offered by Canon Business Process Services.

A third-party operations partner brings in experts to leverage your software, build staffing models, and design procedures that embed KPIs and execution goals long after implementation. They also establish OSHA compliant safety programs, provide heavy equipment training and certification, and advise on best practices throughout the critical early years as your operation hits peak productivity. An experienced partner also enables health systems experts to focus on the facility planning, change management, and the implementation of the required technology.

Advanced materials management transforms health systems by reducing risk, boosting supply reliability, freeing space for patient care, and cutting labor costs. This is possible only with the right software, automation, and teams. Partnering with the right companies to help your organization across these areas is critical when stakes are high. By partnering with Canon Business Process Services, you gain the advantage of expertise in medical supplies distribution, logistics and warehouse management, while gaining access to key industry experts lending you support long after your new operations have successfully launched. Contact Canon Business Process Services to explore how they may assist you as you consider your own supply management transformation.