CHAPTER # 4
1. Is it HOT in Here, or is it YOU? - "We only buy new Lab capital equipment every once in a while, because all the Lab stuff is tied to the consumables contract (and vice versa). That consumables agreement was negotiated by our GPO, so I figured to leave it all alone and not buy anything new. Then, our GPO decided to switch Lab capital equipment manufacturers they had contracts with for many years, literally forcing us to switch companies - overnight. My Purchasing staff had to scramble to eliminate the former Lab products from the MMIS database, identify the cross-reference to the new manufacturer's products, determine Sales Representative contact information, call him / her and order in a supply of consumables to start the testing, purge my inventory in the Storeroom & in the Lab of the old products, relabel the shelves, repackage and work out a return of the old products, sequester an allotment of similar-coded reagents, etc..
I was going to handle negotiating the contract for the Lab capital equipment. I didn't want a "bundled" agreement, whereby you pay a premium on top of the consumables price to cover the lease, depreciation, cost of money (and so on) of the capital equipment. To me, that's like paying $65.00 for a gallon of gas while getting the use of the car for no charge - of course, just as long as you keep filling that "free" car with the exhorbitantly-overpriced gasoline!
No, I was going for a straight capital purchase. No financing of anything. I had my MD Buyline report and ny ECRI comparative factors report, also, to guide my contract negotiations.
That's when either the Sales Rep, or her Company (a pretty well-known manufacturer of Lab equipment for many years), or both, authorized her to do something incredibly stupid.
As she walked in to my office to start "jaw-boning" the terms of the contract, I noticed that she had on a sort of low-cut top with buttons down the center. Hey - I'm a guy - we can't help but notice things like that. Plus, she was a looker (that's an "L" not an "H"), in a field of Sales Reps I deal with on a regular basis who were pretty much faceless - at best.
As we continued our discussions, I noticed that she kept moving her chair closer to my desk. Every time I looked down at her proposal, I saw her (out of the corner of my peripheral vision) loosen one more button on her top. This continued for a few minutes more, because I wanted to see just how stupid she was & how desperate she'd become for this multi-million dollar deal.
That's when I turned to her and exclaimed, "Excuse me, but are you hot? If you are, I suggest you go to the ladies' room and compose yourself." With that notification, the Sales Rep turned beet red. She got up from her chair and proceeded to the washroom. A few minutes later, she returned to my office - all put back together. We spent the remainder of her appointment reviewing the details of her proposal.
Did I ultimately consider her proposal? The answer is a flat-out "No" for many reasons, the least of which is that her GPO-negotiated pricing was the highest out of all the manufacturer's proposals. Kind of a no-brainer decision I made. We went off-contract and got a great deal when I unbundled the capital equipment from the consumables.
Whatever happened to the "looker-with-an-L" Sales Rep? It seems that the manufacturer realized that they had just another pretty face on their hands, and that was all, and unbundled her from the employment contract that she worked under. Which leads one male Materials Manager to wonder, "How would she have handled herself with snaps? Velcro? zipper?"
2. Man, It REALLY IS Hot In Here! - "I remember touring the Storeroom of this tiny hospital and hearing about its history and background from the current Materials Management Supervisor. Apparently, Sterile Processing used to be located in the same room and, before that, the morgue occupied this same Storeroom space. Seems that this small Hospital was strapped for space; they (the "they" being Hospital Administration) became as creative as possible with any available four walls in any location and turned this space into a Storeroom. Hey, why not?
On the day of my visit to the Storeroom, I noticed that it was pretty hot in there - muggy, too. It felt pretty good at the time, as it was below zero outside. I first rationalized the temperature increase as being due to the heat kicking on after Receiving just brought down a load of skids of solutions from the Prime Distributor's truck. But, I reasoned that this wouldn't account for the humidity. In fact, the reading glasses in my shirt pocket fogged up!
I took the dumb approach and asked a Storeroom worker why it was so hot in here. As soon as I asked that question, a load of steam shot out of a pipe located in the middle of the Storeroom. Wait - don't tell me - CS moved their sterilizers to another spot but Maintenance never got around to capping off the steam pipe. Yup - I guessed correctly. Give that man a shiny, brand new car!
With that brilliant deduction being made public, I continued my tour of the Storeroom. The top of the linens stored as backup in the Storeroom were all slightly damp. Additionally, the packs of sutures stored there were also slightly damp - a telltale sign that both the sterility of the product and the catgut itself might be compromised.
The slowest-moving custom OR packs had labels which had darkened (when compared to newer product) and exhibited a slight layer of black mold just inside the outside wrapper. How'd you like to be the next patient to have one of THOSE packs opened for YOUR surgery? As a matter of fact, all of the storeroom's cardboard boxes were slightly damp. Even goods to be returned to the manufacturer or distributor were ruined.
My recommendation? You guessed it - cap off the steam feed pipe today, if not sooner. Buy a whole bunch of dehumidifiers, plug them in and let them run 24/7 until everything dried out to an acceptable level. Then, take a damage control assessment of what is ruined and what is not. Also, I made sure that Finance was prepared for the huge hit this year in their "Damaged Goods - Inventory Writedown" category. I also educated the Storeroom staff on what constitutes a damaged box or product, and what to do with that box or product. DUH!!!
3. Yeah, We Gotcher NovaPlus Right Here! - "Every once in a while as a Supply Chain Consultant, you run into a situation that is so astounding, so incredible, so downright stupid that it makes you wonder how some Materials Management folks manage to stay in the position they've got for as long as they do. This was one of those situations.
The Operations Review Team & I were contracted by this HUGE Hospital chain to review their entire Materials Management opeations - from the identification of need for a product to requisition of that product to procurement to receipt, storage, distribution and invoice payment. In other words - the whole gamut of each facility's Supply Chain.
In the course of interviewing the Purchasing Manager, I asked questions pertaining to cost savings achieved in the last 6 months. We discussed a few things she worked on in the past and others on her platter for the coming months. It all sounded very matter-of-fact and reasonable, all of her efforts to save some money for her IDN. Since the IDN was a Corporate-wide member of Novation, I specificaly inquired about the facility's purchases of private label, generic, or even NovaPlus products, since they can represent significant saving to the member facility and increase the patronage dividend for the IDN.
That's when she mentioned a warehouse the IDN has a few miles from the facility. The warehouse was on ABC Street, so was called the ABC Warehouse. Coincindentally, other Materials Supervisors & Purchasing Managers from the other IDN's facilities mentioned that I should see this ABC Warehouse, also. Never one to back down from a challenge, I set up a tour of this ABC Warehouse for the first thing tomorrow.
At the crack of dawn, I took sight of this ABC monstrosity. I thought it unusual to have such a large warehouse in such a bad part of town, but (I reasoned) the rent must be at a discount for this location. I mean - this sucker was huge! Covered 2 square city blocks and had 16 receiving bays! Talk about heavy duty! Then, I entered the warehouse and realized the need for such aggressive truck movements.
One third of the warehouse consisted to locked cages and floor space devoted to unused, unneeded junk that every Hospital in the country has to deal with at one time or another - broken X-Ray portable machines, outdated Lab analyzers, computer Hollerith card readers, torn chairs, banged furniture, aisle after aisle of vertical & horizontal metal cabinets, wooden conference tables, old printers, even an empty oxygen tank or two (on which, I am sure, the Hospital has been paying monthly demurrage fees for many years).
The second third of the warehouse consisted of floor-to-sixteen-foot-high-shelving-units packed full of medical records, X-ray film jackets and other paper necessities. The front half of the warehouse consisted of huge bin after huge bin (all sitting on pallets for easy movement) filled with medical records and X-ray film jackets waiting to be filed in the vertical shelving units. There was even a 16-foot high stepladder on wheels in place for the poor suckers to reach the top shelf in search of the appropriate medical record or X-ray jacket. I walked over to an open bin and pulled out the first medical record I laid my hands on. It was dated 1916 and was written in longhand script by a fountain pen. Something about some guy's gall bladder needing treatment. I didn't read on to see if his infected gall bladder was treated by letting out a pint or two of his blood.
The last third of the ABC Warehouse was chock full of row after row after row of palletized supplies and equipment. Here, I saw a brand new laser, still crated. I checked the receiving document and determined that it was purchased 6 years ago. Talk about state-of-the-art! Think it still works? Think the warranty is still in effect? Better yet, think the Company is still in business?
Over here, I saw a whole bunch of pallets of IV tubing. Over there, a couple of pallets of non-ionic contrast media - the expensive stuff. I checked the dates on the bottles. Yup, all the skids had expired contrast. Over there, a whole bunch of pallets of X-Ray film. Surprise of all surprises - most of it was not outdated! Seems that X-Ray had "gone digital" and neglected to tell Purchasing, who never cancelled the monthly standing order. Purchasing was waiting for the X-Ray supplies Sales Rep to come to the ABC Warehouse and arrange for a pick-up of the film - good luck getting him to take all this stuff back into his inventory!
That's when I saw the skids after skids of a whole bunch of NovaPlus products. I asked the Purchasing Manager what the deal was with these NovaPlus items. She mentioned that Hospital Administration had received a lot of pressure from the local Novation Rep to increase their purchases of the NovaPlus-branded products. After all, didn't they want to save money?
So, in an effort to appease Administration, she started buying NovaPlus products. And buying NovaPlus products. And so on, and so on. Unfortunately, there was no room in the end user's storage cabinets for such vast quantities of these products - so off to the ABC Warehouse they went.
Seems that nobody in Materials Management sat down with the end users to explain that they (the end users) were going to receive many of the same products they've been using for years, but will now be packaged in a different box. Or, that the boxes of products will now have the words "NovaPlus" somewhere in an obvious place. No, nobody in Materials Management told anybody anything.
So, when the "unusual looking" boxes containing the products they've used for hundreds of years arrived at the end user's departments, they were rejected as being something new, or (at least) something they were not familiar with. In fact, Purchasing was accused of switching manufacturers and / or products without telling the end users. All rejected merchandise was summarily forwarded to the ABC Warehouse until discrepancies could be sorted out and the problems dealt with. Unfortunately for this IDN, no one was assigned to "work" the problems.
Trust me, there was enough work in the ABC Warehouse to keep a cadre of Purchasing Managers busy for a year. If I was Corporate Director of Materials Management at this IDN - that's exactly where I'd station their offices until this place was cleaned of all of its headaches.
You may have seen just a small part of what the ABC Warehouse looked like when I was there last, and not even realized it. Remember that last scene from the first Raiders of The Lost Ark movie, when you're shown one box on a skid at a Government storage facility - presumably containing a crated Ark of the Covenant? Just then, the camera pans back to reveal more crates after crates after crates, all stacked up to the ceiling, also in this warehouse? Now you've got an idea ......"
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