1. Richard Bays MBA, RN, CPHQ

2. Ambulatory Surgical Centers
ASC’s operate in a different
environment than traditional Operate
hospitals. There is less physical
space for stock and cases can be
scheduled with short notice.
Financial constraints prevent a large
buffer stock from existing.
Change
ASC Orders
Optimize

3. Whip It !
The Bullwhip Effect (or
Whiplash Effect) is an
observed phenomenon in
forecast-driven distribution
channels.
Since the oscillating
demand magnification
upstream a supply chain
reminds someone of a
cracking whip it became
famous as the Bullwhip
Effect.

4.  Because customer demand is rarely perfectly stable, businesses must forecast
demand to properly position inventory and other resources.
 Forecasts are based on statistics, and they are rarely perfectly accurate.
Because forecast errors are a given, companies often carry an inventory buffer
called “safety stock”.
 Moving up the supply chain from end-consumer to raw materials supplier,
each supply chain participant has greater observed variation in demand and
thus greater need for safety stock.
 In periods of rising demand, down-stream participants increase orders. In
periods of falling demand, orders fall or stop to reduce inventory.
 The effect is that variations are amplified as one moves upstream in the supply
chain (further from the customer).

5. Information Coordination: The Bullwhip Effect
Consumer Sales at Retailer Retailer's Orders to Wholesaler
1000 1000
900 900
Consumer demand
800 800
Retailer Order
700 700
600 600
500 500
400 400
300 300
200 200
100 100
0 0
11
13
15
17
19
21
23
25
27
29
31
33
35
37
39
41
1
3
5
7
9
29
11
13
15
17
19
21
23
25
27
31
33
35
37
39
41
1
3
5
7
9
Wholesaler's Orders to Manufacturer Manufacturer's Orders with Supplier
1000 1000
Manufacturer Order
900
Wholesaler Order
900
800 800
700 700
600 600
500 500
400
400
300
300
200
200
100
100
0
0
19
11
13
15
17
21
23
25
27
29
31
33
35
37
39
41
1
3
5
7
9
13
10
16
19
22
25
28
31
34
37
40
4
1
7
5

6. Behavioral Causes
 Misuse of base-stock  Panic ordering after
policies unmet demand *
 Misperceptions of  Perceived risk of other
feedback and time players rationality
delays

7. Operational Causes
 Dependent Demand Processing  Trade promotion and
 Forecast Errors forward buying
 Adjustment of parameters with
each demand observation  Anticipation of shortages
 Lead Time Variability (forecast  Allocation rule of suppliers
error during replenishment lead
 Shortage gaming
time)
 Lean and JIT style management
 Lot-sizing/order synchronization
of inventories and a chase
 Consolidation of demands
production strategy
 Transaction motive
 Quantity discount

8. Sources of Performance-Cycle Variation
Total Performance Cycle
5 10 40
Customer
Delivery Time Range - Days Order
Transmission
1/2 1 3
Time Range - Days 1/2 1 3
Time Range - Days
Order
Transportation Order
Processing
2 4 10
Time Range - Days Order
Selection 1 2 4
Time Range - Days
1 2 20
Time Range - Days

9. Supply Chain Quiz
 A box of cereal spends ?  A box of cereal spends 104
days in the supply chain. days in the supply chain.
 Total inventory in the  Distorted information causes
pharmaceutical supply total inventory in the
pharmaceutical supply chain to
chain exceeds ? days and ? exceed 100 days with $11
$ in savings to be realized. billion in savings to be
 Poor coordination in the realized.
food industry supply chain  Poor coordination wasted $
wasted ? dollars. 30 billion annually in the food
industry.
 Boeing wrote-off ? dollars
in 1997 due to supply chain  $ 2.6 billion is how much
Boeing wrote-off in 1997 due
inefficiencies. to supply chain inefficiencies
 It costs, on average, ?  $80 was paid, on average, to
dollars to process each process each purchase order.
purchase order.

10. Time is Money….
ASC’s attempt to eliminate all
work and time not bringing
value.
ASC’s look for suppliers who:
• Integrate Customer Service
• Respond to Production
• Supplier Integration - Limits

11. Supply Chain Performance Outcomes
Cost
Safety Assets
Responsive
Sustainability Outcomes ness
Customer
Satisfaction Reliability
Revenue

12. Urgent Need to Address Customer Needs
On average, suppliers lose the sale 41% of the time
Consumer behavior when confronted with an option
Delayed Other
purchase
8%
Did not buy product 14% Substituted
another brand
10% 19%
Purchased at Substituted same brand
another supplier (different size)
31% 18%

13. Results of Poor ASC Supply Chains
Since ASC’s work on a streamlined
system without the traditional
buffers of hospital networks, the
consequences are felt more directly Cancellation of Surgery
by the facility.
Physician / Patient Dissatisfaction
Patient safety can be compromised Increased cost for services
due to poor planning.
Loss of future Business

15. Questions??
Thank You
Richard Bays MBA, RN, CPHQ for
Rbaysconsulting@gmail.com
832.316.2701
Your