Optimizing CUF Hospitals Inventory Management

Challenge

In response to the challenges brought by the COVID-19 pandemic, the CUF Hospitals and Clinics network felt compelled to enhance its stock levels to ensure clinical and operational safety. This led to an uncontrolled growth of inventory in hospitals, raising concerns regarding reduced stock turnover and potential material obsolescence as the pandemic situation improved and consumption patterns shifted to the new normal. Moreover, the expansion of the CUF network, including the establishment of a new distribution center and the enlargement of the hospital network across Portugal, further challenged the management of approximately 20,000 different materials on an annual basis.

In 2021, CUF initiated a strategic partnership with LTPlabs to address these challenges and optimize inventory management throughout its network.

The collaboration focused on implementing data analytics and optimization strategies to enhance the efficiency of the supply chain, from the distribution center to services within the hospitals.

Solution

The analytical journey, which began in 2021, involved the deployment of actionable dashboards, a replenishment algorithm, and reverse logistics initiatives. These methodologies aimed to streamline inventory management processes, enhance service levels, and minimize waste and holding costs.

The collaborative efforts between CUF and LTPlabs were founded on a holistic approach to address the complex challenges of inventory management and emphasized a data-driven strategy:

• Actionable dashboards for real-time insights: The implementation of actionable dashboards provided stakeholders with real-time access to performance indicators related to inventory, service levels, and operational efficiency. This empowered decision-makers to proactively tackle challenges and seize opportunities, fostering a more agile and responsive supply chain management ecosystem.
• Replenishment algorithm: A sophisticated replenishment algorithm was implemented to reoptimize the entire purchasing process. By leveraging data insights, the algorithm enabled precise demand forecasting, leading to a decrease in excess inventory and ensuring the availability of the right materials when needed.
• Reverse logistics initiatives: These efforts aimed to improve the efficiency of product returns, ensure the timely retrieval of unused materials, and minimize waste. The outcome was a more streamlined and environmentally conscious approach to managing perishable stock.
• Adaptability to dynamic circumstances: Recognizing the evolving nature of the healthcare industry, the project showcased adaptability in addressing both the challenges posed by the pandemic and the expansion of the CUF network. This flexibility ensured the resilience and alignment of the stock management approach with the changing needs of the healthcare business.

Result

The optimized replenishment process has led to a €7 million reduction in inventory, alongside enhanced supply chain service levels and, consequently, the quality of healthcare services provided. Efficiency has doubled, signaling a more streamlined and responsive system.

Moreover, the analytical journey has ignited a transformative shift, fostering an analytical mindset across the entire team. The collaboration between CUF and LTPlabs highlights the effectiveness of data analysis and optimization in enhancing stock management efficiency within a healthcare network.

The sustainable improvements achieved underscore the success of the analytical journey that commenced in 2021. As the healthcare landscape evolves, this project stands as evidence of the positive impact that strategic partnerships and data-driven approaches can yield. These initiatives not only optimize operations and service delivery in the healthcare sector but also foster an analytical and performance-driven culture among all stakeholders involved in management and operational endeavors.