Report Number: NPS-LM-16-146

Series: Logistics Management

Category: Inventory Management

Report Series: Sponsored Reports

Authors: Audrey Carter

Title: Two

Published: 2016-06-01

Sponsored By: Acquisition Research Program

Status: Published--Unlimited Distribution

Research Type: Graduate Student

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Keywords: Medical inventory, cost, procurement


One of the most important aspects of hospital administration is the medical consumable inventory process. The Navy Bureau of Medicine and Surgery (BUMED) hopes to improve the medical inventory process across the Navy Medicine enterprise with a new lean medical inventory system called two-bin Kanban. In 2014, BUMED implemented two-bin Kanban inventory systems in 22 Navy military treatment facilities (MTFs). This project analyzes the efficiency and effectiveness of the two-bin Kanban inventory system in three departments at Navy Medical Center San Diego (NMCSD). In this evaluation, over 163,000 medical consumable transactions worth a net value of $1.6 million were analyzed across two years (2013 and 2015). Inventory ordering patterns, cost savings/avoidance, and cost per relative value unit (RVU) are a few analyses that were conducted to determine what impact, if any, two-bin Kanban had on the Gastroenterology, Urology, and Oral Maxillofacial Surgery (OMFS) departments at NMCSD. The data is statistically significant in 2015 when compared to 2013. Procurement order costs decreased and procurement order efficiency improved across all departments. However, given the nature of the observations and the existence of other process improvement efforts, this research is unable to confirm if the two-bin Kanban was the cause for the performance improvements.