Kanban: a simple, effective solution to consumable supply management in the hospital

How hospitals are leveraging Kanban for better inventory management

October 5, 2023

By Steve Thompson, Director Supply Chain Solutions, Owens & Minor

Consumable supplies, such as tubing, syringes, needles and adhesives, while typically low in unit cost, are high in volume and therefore often time consuming and labor intensive for hospitals to manage. For example, an item as commonplace as 4×4 gauze is likely stocked in hundreds of different locations across a healthcare organization.

In today’s environment of widespread healthcare staffing shortages, no hospital has the extra labor to effectively or efficiently count supplies throughout all these locations to maintain periodic automatic replenishment (PAR) levels. And a “quick” glance by materials management to guess supply levels in a closet or storage room is exceedingly unreliable.

All too often, the burden of supply management falls on clinicians. During patient care delivery, if they can’t find a supply in the expected location, they end up searching around for it, taking time and focus away from the patient.

It’s a complex challenge that can impact both patient care and safety – poor consumable supply management can lead to stockouts or the risk that expired items are accidentally used in care delivery.

But there is a very simple, proven solution to efficient and effective inventory management and replenishment of common medical supplies in the hospital.

What is Kanban?

The term “Kanban” in Japanese roughly translates to “signal.” It’s a methodology that’s been used for decades across many industries, most recently healthcare, to maintain supply inventory levels.

How does Kanban work?

While there are multiple forms of Kanban, healthcare organizations typically use the 2-bin method. This consists of two bins that sit on a rack, one behind the other, both containing the desired quantity of the consumable medical supply, for example a 30 ml syringe.

Clinicians take the syringes out of the first bin, as needed, until the bin is empty. At that point, they simply place the empty bin on top of the rack and pull the full bin forward for continued access to the syringes.

With this primary and safety stock approach, clinicians have enough of the supply on hand until a materials management staff member makes their rounds for replenishment. As the name suggests, the empty bins on top of the racks serve as a visual signal that it’s time to replenish that item.

What are the benefits of Kanban?

Because Kanban is a relatively new concept in healthcare, health systems and hospital stakeholders expect it to be complicated and expensive. However, in reality, 2-bin Kanban is a simple, cost-effective, and straightforward solution for consumable supply inventory management and replenishment:

  • It’s affordable: equipment investment is minimal: racks and bins. And they can be used to standardize supply storage across departments.
  • It’s reliable: the 2-bin approach means clinical staff have secondary safety stock on hand once the first bin is emptied.
  • It’s efficient: the empty bin serves as a clear visual signal so materials management staff can quickly determine which items need replenishment.
  • It streamlines storage: space in hospitals is very valuable – and costly – real estate. With a 2-bin Kanban system, supplies are organized in bins and stocked neatly in the needed quantities on racks, as opposed to overstocked closets or storage rooms bursting at the seams.
  • It reduces costs and risk: Kanban supports right-sized inventory management to minimize waste. The “first in, first out” methodology lessens the risk that items will go unused and expire, or worse, be inadvertently used on patients.
  • It supports clinicians in providing care: clinicians have the items they need where they need them so they can spend more time with patients. This can even potentially improve job satisfaction and retention: In a recent survey of hospital supply chain leaders, 43 percent said they have lost nurses due to supply challenges or shortages.1
  • It’s scalable: a healthcare organization can easily extend its 2-bin Kanban methodology across its supply storage locations for enterprise-wide visibility of on hand inventory and value.

Kanban provides a simple and effective solution to the challenges of managing consumable supplies in healthcare organizations. The 2-bin method of Kanban helps the materials management team easily maintain inventory levels, promoting efficiency and reducing the burden of supply management on clinical staff.

Kanban also supports right-sized inventory management, streamlines storage space, reduces costs and risk, and ultimately supports better patient care. With its affordability, reliability and scalability, Kanban is a valuable tool that can help healthcare organizations optimize their supply chain management processes and improve overall operations.

Additional Resources