Hybrid stockless: a case study

Abstract

Due to the diversity of its players, the American healthcare sector has experimented with different types of integrated supply chain management systems for medical supplies. In the 1980s, US distributors were offering customers the so‐called stockless replenishment method, whereby the distributor picks and packs products according to the particular needs of each patient care unit and, in most cases, delivers them directly. By the late 1990s, stockless agreements had run out of steam, as distributors sought to optimize the balance between their efforts expended in hospital replenishment and the hospitals’ inventory savings. Among the various reflections and initiatives aimed at finding such a new balance, we focused on the experience of a Quebec (Canada) hospital adopting a hybrid version of the stockless system, under which the distributor supplied high‐volume products for the patient care unit in case quantities, leaving the institution’s central stores to break down bulk purchases of low‐volume products into point‐of‐use format (eaches). The study reveals marginal benefits from the hybrid method for both the institution and the distributor. However, it also reveals the importance of the manufacturer’s role with respect to packing formats, and demonstrates that the rearrangement of storage areas can generate substantial savings, opening the way to means for improving the healthcare sector supply chain.