Lean operations and JIT
Short case: Just-in-time at Jimmy’s
St James’s Hospital, in Leeds in the north of the UK, affectionately known as ‘Jimmy’s’, is Europe’s largest teaching hospital. It employs around 4500 people to support the 90 000 in-patient treatments per year and over 450 000 total admissions. Under increasing pressure to reduce costs, to contain inventory and to improve service, the Supplies Department has undertaken a major analysis of its activities, to try and adopt some of the ideas from the JIT approach.
The initial review highlighted that Jimmy’s had approximately 1500 suppliers of 15 000 different products at a total cost of £15 million. Traditionally, the Supplies Department ordered what the doctors asked for, with many cases of similar items supplied by six or more firms. Under a cross-functional task force, comprising both medical and supply staff, a major programme of supplier and product rationalization was undertaken, which also revealed many sources of waste. For example, the team found that wards used as many as 20 different types of gloves, some of which were expensive surgeons’ gloves costing around £1 per pair, yet in almost all cases these could be replaced by fewer and cheaper (20 pence) alternatives. Similarly, anaesthetic items which were previously bought from six suppliers, were single-sourced. The savings in purchasing costs, inventory costs and general administration were enormous in themselves, but the higher-order volumes also helped the hospital negotiate for lower prices. Suppliers are also much more willing to deliver frequently in smaller quantities when they know that they are the sole supplier. Peter Beeston, the Supplies Manager, said:
‘We’ve been driven by suppliers for years ... they would insist that we could only purchase in thousands, that we would have to wait weeks, or that they would only deliver on W ednesdays! Now, our selected suppliers know that if they perform well, we will assure...