Materials_Management_Proposal

Materials Management Proposal As recently appointed Operations Manager of this hospital, the decision has been made to create a Materials Management Department to direct the hospital’s supply chain. Although operations management focuses on processes to produce and distribute products and services, materials management focuses on product lines or supplies. Materials management includes decisions regarding the procurement, control, handling, storage, and distribution of materials. Materials management is becoming more important because, in many organizations, the costs of purchased materials comprise more than 50% of the total production cost (Reference for Business, 2010). Integrating a centralized process will relieve clinical departments and nursing from the intricacies involved in ordering products (Langabeer, 2008) allowing employees to function and perform in their hired capacity and providing effective and efficient flows of products and services. This proposal will address effects of and justification for the planning process, constraints in the supply chain, and handling supplies during times of disaster. The Planning Process To achieve operational excellence at this facility, a strategy will be created through careful operational planning. Operational planning involves mapping the external opportunities and threats with the internal strengths and weaknesses to define strategic alternatives and stake out an appropriate competitive position (Langabeer, 2008). Four phases are included in the planning process: 1) analyze operations and environment; 2) generate strategic alternatives; 3) deploy strategies; and 4) measure, benchmark, review, and adjust. The first phase, analyze and operations and environment, involves choosing a team with members from both the clinical and strategic levels to include the hospital chief executive office, the chief financial officer, the purchasing manager, the director of nursing, and the chief of medicine among others. An internal analysis will be performed to determine clinical effectiveness and core competencies. A portfolio analysis will also assess the competitive position of the hospital’s service lines. The structure and style of the organization will be assessed and the right strategy chosen. The market will be assessed using a SWOT analysis to discern available opportunities and weaknesses in which potential suppliers are concerned. An assessment of the hospital’s current operations will be performed to determine its capability to maintain a materials management department. Management and information systems as well as financial resources will be assessed to determine availability and need. Competitors, the environment, and the industry will be addressed using external analysis methods. The second phase, generate strategic alternatives, will occur once internal and externally analysis of the first phase are completed. The competitive position of the hospital will be determined by discussing products and services, competitive pricing, alternative providers, and a product line portfolio strategy. During this phase the team will also focus on areas of growth, diversification, capital investment, and marketing. The third phase, deploy strategies, encompasses the use of a breakeven analysis. According to Langabeer (2008), a break even analysis analyzes cost structures and volumes to identify at what point total returns equal total loss. The breakeven point is the point at which money is neither made nor lost in producing a product or delivering a service. The cost of overhead (fixed costs) as well as the incremental cost-per-unit (variable costs) must be known before breakeven point can be determined. Total costs (the sum of the fixed and variable costs) and price per unit (the fee to be charged for the service) must also be known. Breakeven analysis will help this hospital determine how many units are necessary to be sold or provided to have total revenues cover total costs (Langabeer, 2008). The fourth phase – measure, benchmark, review, and adjust – will serve to implement the plan to add a materials management department. Measuring and benchmarking are imperative to ensure that the hospital is moving in the right direction when making comparisons with the competition. Performance measures will be in place to monitor effects over time and make any necessary revisions or adjustments. Constraints in the Supply Chain Supply chain management is the coordination of businesses and processes involved in producing and delivering a product or service (Filepie, 2010). Many businesses have attributed their success to effective supply chain management (Health Management & Policy, 2010). But there are several constraints that hospitals face relative to the supply chain. Budget constraints, storage, lack of specialized skills and preparation for better management are some of the issues materials managers deal with daily. Those skills directly relate to customer service, logistics, human resources, finance, and business analysis. Another constraint is that materials managers are often paid lower salaries. With opportunities to seek higher education available, materials managers gain a more professional image as does the department. The planning team will discuss the constraints that currently affect the hospital and determine a strategy to minimize impact and initiate changes that positively improve supply chain management in this hospital. Accessibility to Supplies during Times of Disaster According to the Government Accountability Office (2003), most hospitals are often unable to acquire and deploy the resources needed to respond to a large-scale disaster effectively. Before a crisis occurs, this hospital will address three primary components: 1)required supplies and equipment for general and specific threats; 2) where supplies and equipment used for disasters should be stored; and 3) maintaining group purchasing organizations (GPOs) contracts to keep costs low. This hospital will plan collectively and regionally by also using other available processes. The process of sales and operations planning (S&OP) will help to make the best choices about how to fulfill demand. The S&OP process is about matching demand with supply at aggregate levels. It involves managing these constraints to identify the demand that the firm seeks and fulfill this demand in the most responsive and efficient means possible (Langabeer, 2008). Collaborative planning, forecasting, and replenishment (CPFR), the process that seeks to improve the relationship or partnership between retailers and suppliers, allow for the sharing of consumer data information thereby improving the performance of the supply chain.   References Hospital Preparedness. (2003). Government Accountability Office. Retrieved on May 9, 2010, from http://www.gao.gov/new.items/d03924.pdf. Langabeer, J. R. (2008). Health care operations management: A quantitative approach to business and logistics. Sudbury,MA: Jones and Bartlett Publishers, Inc. Operations Management (2010). Reference for Business. Retrieved on May 7, 2010, from http://www.referenceforbusiness.com/small/Op-Qu/Operations-Management.html. Supply Chain Management (2010). Retrieved on May 9, 2010, from http://www.filepie.us/'title=Supply_chain_management.