Lean Six Sigma Review of Stores Management Process

Continuous Improvement Projects Ltd were asked to carry out a 10 Day Lean Six Sigma review of the stores process, including purchasing and inventory management, on behalf of a large London-based NHS Trust. An internal audit was carried out within the organisation that identified a number of risks and issues that concluded that there was limited assurance relating to the management of stores. There was an inefficient stock inventory and purchasing process with a high amount of waste, and poor financial control that did not demonstrate Value for Money (VFM). The review identified a number issues relating to how the stores were managed and recommended a process review and redesign.

We carried out a Voice of the Customer survey to understand feedback and requirements from Customers of the stores process, i.e. the individuals who purchase or use the stock. We categorised the feedback into common themes: lack of standardisation, significant process delays, purchasing system challenges, and lack of consistency of both the process and roles and responsibilities between the teams. We facilitated a workshop with a variety of key stakeholders to map the “as-is” process and captured estimations of process timings which was then plotted into a Value Stream Map. This activity identified significant variation in the process cycle time dependant on whether stock had to be purchased and the delivery time of this. We found that 99% of the total process time was delay time, and 95% of the total process time specifically was “waiting”. Within this workshop and subsequent meetings, the feedback was analysed further to identify the root cause of the problems. To provide further context and supporting evidence, we also visited the sites and storerooms in particular, and held meetings with the stores staff to understand some of the challenges. Photos from the site visits were included within a storyboard to the Leadership team to provide supporting evidence of observations and further recommendations. We carried out a 5S review on the stores and provided a copy of the completed checklist and also a blank version of the template to the stores staff so that they could continue to carry out the review on a regular basis, identifying areas for improvement and implementing corrective actions on an ongoing basis. There were concerns regarding the system functionality to enable effective inventory management, and so we carried out gap analysis between the functional requirements and system capabilities, which flagged that there was not a significant gap between the two – albeit there are more advanced systems for stock control in the market.

Further external considerations were identified and flagged within the review including adjacent processes that would need to be considered alongside the new solutions, limitations with the purchasing system and a review elsewhere in the business that should not be carried out in isolation.

Following from the as-is review, we identified a number of short, medium and long term recommendations that could be implemented. The short and medium term recommendations resulted in a conservative estimated annual saving of £272k per annum cost reduction and a further £39k per annum of process reduction time. Details of the cost saving calculations were provided as part of the review, with demonstrable examples including reduction in annual spend on stock, reduction in stock price variation, reduction in approvals and duplicated purchasing activities. The long term recommendations provided further estimated annual savings of over £100k per annum through implementation of automated stock control, reduction of over-purchasing and alternative solutions to stock control. Upon completion of the review, we also included a proposed “to-be” process, and implementation roadmap so that the client could easily implement the solutions provided.

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