Just as the free flow of blood is vital to keeping the human body alive, the unimpeded flow of medical and surgical materials is key to running a healthy hospital. At Kingston General Hospital (KGH) in Kingston, Ontario, Canada, a team of SAP professionals has built a series of systems around SAP ERP 6.0 and Materials Management (MM) to do exactly that.

KGH is an academic health sciences center that offers acute inpatient clinical services, cancer care, and is home to the region’s only trauma center capable of dealing with large-scale disasters. With 456 beds, 50,000 square feet of research space, a medical staff of 546 (plus another 1,900 students annually), and more than 3,700 support staff, KGH relies on an intricate network of systems to track and manage all the scalpels, swabs, tubes, needles, bandages and other supplies necessary to keep the hospital running.

As an early adopter of ERP technology, KGH went live with SAP Financials and MM in 1997. HR and Payroll followed in 1998 and the Industry Solution for Health Care in early 2000. In 2007, the hospital made the decision to re-implement SAP ERP 6.0 and extend the system’s capabilities to manage inventory from the loading dock through the operating room.

The result is a centralized system that tracks supplies from the moment they arrive at the hospital loading dock, feeding real-time data into the SAP system for accurate planning and supply chain management.

Project team members say the goal of the new SAP system was to do more than simply update and improve dozens of business processes from invoicing to procurement, accounts payable, and materials management (MM). Dubbed the Lighthouse Project by team members, the system was meant to serve as a beacon of clarity for other SAP customers in the health-care industry.

“We were tasked with building a lighthouse -- a leading practice-based health-care model for Ontario,” says Derrick Morey, Business Information Specialist (MM) at KGH. “When you sit down and think through all the things that you want to do, it really snowballs into a huge pile of work. We really had to try to get the best value for our money and we had to justify everything we wanted.”

Talking to the Carousel

The central warehouse at KGH stores more than 3,500 different types of medical and surgical items. With 140 smaller storage locations around the hospital, keeping tabs on the hospital’s 22,000 or so clamps, hoses, stents and other items is a massive undertaking.

Like most large distribution centers, KGH uses a carousel system to start the flow of medical and surgical supplies from the central warehouse into the hospital. A carousel is essentially a spinning platform that delivers goods to an employee called a “picker” on the floor. The carousel system at KGH uses four different carousels simultaneously for maximum efficiency — the pickers at carousel stations are typically three to four times as productive as the “bulk” pickers who manually pick up items from the center floor (some items are too large or heavy for the carousel system).

Concurrent with the reimplementation of SAP ERP 6.0, KGH augmented its distribution center back end to allow the SAP system to effectively manage the carousel system. Previously, the SAP system was only capable of feeding reservations into the carousel system, which would collect items and batch them together for delivery to a picker. After upgrading the Microsoft Windows-based software that runs the carousel system, the KGH project team redesigned the carousel system interface to allow it to update the SAP system in real time.

“Before, we were using flat file transfers. The SAP system produced the file, which was then moved onto a network where the carousel system picked it up. We still use a flat file communication method, but it’s much more streamlined and there are fewer touch points for external programs. Basically, the SAP system sends out one file, then the carousel system does everything it needs to do and sends a file back,” says Morey.

Getting More out of Mobile Devices

The next challenge was to more efficiently track each item after it leaves the warehouse and is stored in one of the smaller storage locations. Under the old system, technicians were responsible for daily inventories of the storage locations using outdated barcode scanning devices. The technicians would feed data from the scanners into a docking cradle located in the warehouse. From there the data would be fed into the SAP system that managed KGH’s requirements planning.

To get the most out of its SAP MM system, the KGH project team decided to upgrade its mobile device platform alongside the SAP ERP reimplementation project. There were several goals for this upgrade, including:

• Reduction of paper costs

KGH had made reducing paper waste an overarching priority, and the SAP project team spotted an opportunity to help the cause by upgrading the mobile device platform. Previously, warehouse workers were handed paper slips with instructions for putting away items or lists of items to pick up for delivery to in-hospital storage locations.

“We were going through thousands of sheets of paper every week,” says Morey. “We quickly realized that we could reduce the amount of paper we produced by using handheld mobile devices in a number of spots within the supply chain.”

By linking a new mobile device platform to SAP data and functionality, KGH technicians and staffers are able to rely on their mobile devices for information and instructions that were previously printed out and handed to them.

• Getting more out of the staff

A second goal of the mobile project was to enable the technicians responsible for managing inventory to serve a greater function for the clinical teams. Instead of simply counting and putting away stock items, technicians equipped with advanced tools become valuable resources for doctors, nurses, and researchers.

“The can provide a wide range of MM services to the team, such as offering product knowledge and managing stock levels appropriately,” says Morey.

• Boosting system reliability

Finally, the KGH team hoped to improve the reliability of its mobile devices through a system-wide upgrade. The older model mobile devices ran on proprietary software that made it difficult to trace errors.

“There were a number of background jobs that would have to be triggered to complete a download, and many touch points for the systems where there were failure opportunities,” says Morey. “The failures were extremely difficult to trace. Often, we simply would not be able to trace an issue, and we’d just have to go back and start over again.

From a technological standpoint, the project team benefited from the Cisco wireless system the hospital had installed two years earlier to help manage patient care devices such as infusion pumps. Not only did the SAP project team spot an opportunity to capitalize on an existing radio frequency (RF) infrastructure, but the existence of that infrastructure made it easier for the project team to secure investment in the SAP reimplementation project.

“Showing that we could tap into that technology and improve our processes based on an investment we had already made was definitely key to getting approval,” says Morey.

KGH brought mobile device service provider Catalyst to help with the mobile device upgrade. Morey says KGH chose Catalyst ? which specializes in SAP Supply Chain Management (SAP SCM) components ? in part because the firm’s expertise went beyond mobile device hardware.

“When we spoke to Catalyst, we realized that its strength was in the system design, system build, and implementation phases. They were also able to provide the hardware that we needed,” he says.

With help from Catalyst, KGH was able to implement a mobile device strategy based on linking Motorola (Symbol) MC9090 devices with interactive data from the SAP system. The team used Web Dynpro to help build the interface for the mobile devices.

Going Mobile in Multiple Ways

Morey has identified seven different business transactions that have been moved onto the mobile platform:  

1. Goods receipts (stage one)

The KGH team divided the process of goods receipts into two parts. In this first stage, receipts generated by mobile devices alert the SAP system that a quantity of goods has arrived at the hospital, but is not yet ready for use.  

2. Goods receipts (stage two)

The second stage of the goods receipts process occurs after the goods received at the loading dock are put away in the warehouse. This alerts technicians that the goods are available for use.

Upgrading to a two-stage goods receipts system offers several advantages. For one, it avoids confusion over whether items have merely arrived at the hospital or are stocked and accounted for in the warehouse. The system also helps KGH track where items are in the warehouse and how long they have been there.   

3. Storage location and transfer

Before implementing the new mobile device strategy, there was no good way to track the movement of items from one storage unit to another inside the hospital. This affected the overall accuracy of the system, according to Morey.

The new mobile device system allows technicians to account for such items during the move, feeding the updated data directly into the SAP system.  

4. Stock overview

This overarching transaction performs a basic function ? allowing the MM team to view supplies broken down by quantity and location.

“That transaction is used across the supply chain by our supply assistants at the units as well as our warehouse assistants within our central distribution center,” says Morey.  

5. Departmental inventory

With the increased ability to track inventory in real time, the MM team began to track inventory by department, rather than just from a central depository. This allows the team to track items that have been purchased for the department but have not passed through the central inventory warehouse.

For example, some specialty medical devices are used only by one department. To track those devices as part of the greater supply chain, a supply assistant can scan the items into the system at the department level ? rather than routing the items to be checked in at the central warehouse.  

6. Goods issued reservation

Prior to implementing the mobile device solution, paper transfer slips created issues for KGH’s inventory management goals. Because the paper slips would have to be entered into SAP manually, there was a lag between the time when goods were reserved and when the item arrived at the right place. To keep inventory counts accurate, technicians would have to manually adjust the inventory counts based on the paper transfer slips.

“Now, our pickers have the ability to adjust pick quantities on the fly in real time. So if they walk up to the shelf and they’re looking for 10 items but there’s only five there, they can issue that five and we don’t have to make any manual adjustments moving forward,” says Morey. 

7. Enter count results

The MM team does a daily count of items in the central warehouse based on the SAP system’s projections. Having real-time data available from the SAP system makes this process more efficient by directing warehouse employees to the appropriate location for a certain item and prompting him or her to verify a specific count.

Overcoming Challenges

Morey says the biggest obstacle to success of the entire Lighthouse Project was the lack of in-house expertise in the SAP development environment, which the developers used to link SAP ERP 6.0 to the carousel and mobile device platforms. 

“We didn’t have a strong technical background in that development infrastructure because it was new. Once we were able to stabilize that and move development forward, it just became code changes, which were pretty simple,” he says.

Another challenge the team successfully handled was poor performance after go-live ? the result of not having a full user load during the QA phase of the project. Correcting the issue took two to three weeks of tuning, but Morey says the performance issues were minimally disruptive because the project team had prepared for such complications, and was able to keep end users calm as the team improved performance.

Lessons Learned

The KGH project team identified several lessons learned during the project. They include: 

• Get feedback from the business early. During the design phase of the project, the MM team aggressively sought input from internal customers of the system. Morey credits this process for helping the project enjoy more success than it would have otherwise.

“We probably wouldn’t have designed anywhere close to the number of things we did to support the business moving forward,” he says.

• Tackle one process at a time. While it is tempting to roll out a full-featured system on day one, Morey cautions against rolling out too much functionality at the same time. Process changes are often difficult for employees to absorb, so Morey recommends implementing only the most necessary changes first. That way, issues affecting the system will affect the minimum number of users.

“Then you can begin to look at all of the processes you can implement in a phased-in approach and stabilize each one of those as you implement it,” he says.

• Know when to move off the blueprint. The original blueprint of the KGH plan was based entirely on requests from internal customers. Once it became clear that technical realities would not permit every request, the team was able to adjust accordingly.

“Especially when you’re working with a new technology,” says Morey. “We didn’t know what it meant to develop a Web-based transaction on a handheld device, so we tried to stick to the business perspective and then let the experts on the technical side determine how to get it done."

• Take testing seriously. To ensure that its transactions worked properly, the KGH team brought in business users and process owners to thoroughly inspect the system before go-live.

“Our unit tests and cycle one tests were the two keys for us in ensuring that the technology did what it was supposed to do,” says Morey.

Benchmarking Success

Of course the true measure of any project is not in the technical achievements of the team, but whether the project advances the goals of the business or organization. The KGH project team cites several measurable benefits of the mobile SAP MM system.

For example, the MM team can now gauge the efficiency of the entire supply chain more precisely with better inventory KPIs. Under the old paper-based system, the MM team couldn’t even establish KPIs without adding up reams of paper slips from each picker, says Morey. KGH now monitors inventory turn rates and can quickly adjust to improve those rates to help boost the hospital’s bottom line.

“Every dollar we save in inventory is a direct savings off the books for the hospital,” says Morey.

Another key benefit of the project has been to help transition responsibility for inventory management out of the hands of nurses and department administrators. The MM team is now able to manage the supply chain more effectively, freeing up other staffers to focus on their core functions.

“Every group of products we take over means time savings for them, which we can then reinvest into patient care,” says Morey.

Davin Wilfrid

Davin Wilfrid was a writer and editor for SAPinsider and SAP Experts. He contributed case studies and research projects aimed at helping the SAP ecosystem get the most out of their existing technology investments.

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