High Level Turn Ratios in Excel are Not Enough to Do Your Job Well
You are definitely ahead of your peers if you are calculating and acting on high-level turn ratios. Yet, to be able to perform true advanced asset utilization including using predictive modeling with machine learning, AI and cognitive computing, there is more to do, more to apply.
Level 1: Analytics – Basic Turns Calculated
When we first engage with a client, we find that some of them are doing an ok job with turn-ratios. They are, at the least, calculating turn ratios at the distributor or rep level. If they take it one step further, their organization emails these ratios out monthly to those stock locations. If they are even more advanced, they have incentives in place for those above or below average.
It’s a great start, and these organizations wouldn’t be calling us if they didn’t care about asset utilization, and have some good practices in place. We would say they are at “Level 1” asset utilization, or base camp.
To get to true asset utilization the standards need to be raised. The goal is to dive deeper than high-level turn ratios to change behavior, and therefore, see significant, system-wide turn improvements of 40% or more. Here are the next 4 levels to reach asset utilization nirvana.
Level 2: Analytics – Automation and Visibility
“What gets measured gets improved.”
– Peter Drucker
The monthly excel reports being sent to those behind desks is a great start, but turn-ratio analysis needs to get in the field to those that make decisions daily. We found that moving a turn-ratio to our dashboard instead of buried in the reports section of our app increased viewing by users by 21x. In other words, “turns” were top-of-mind 21 times in a month instead of once. This is because those actually selling, moving, or counting inventory use the system every day and are the ones making decisions on where inventory is needed most. Additionally, getting away from excel sheets allows much more dynamic reporting. It allows real-time calculation of how that location is performing versus others, with built-in hierarchy to make the level of inventory shown most relevant to that user.
Level 3: Asset Utilization Analytics – Sub-Location View
Most organizations can see inventory at the “ERP” level – often field offices or rep trunk stock, depending on the product and organizational set up. The “sub-locations” in the example of a rep-level consignment are where that rep chooses to place inventory to maximize “turns”. This could be in their trunk, at hospitals, at home, or in a storage locker. Most organizations can’t track inventory at this level, and certainly not sales from inventory at that level. Instead of sending, say 30 field offices a turns report with hope that will help them reduce turns, the “sub-location” analysis helps everyone make better decisions within their span of control to improve turns through smarter inventory placement. In addition, inventory can be located quickly in the field, allowing rep to rep transfers to cover unexpected needs.
Level 4: Asset Utilization Analytics – Request-Based Turns
Caution: your mind may be blown at this level. The biggest issue of high-level turn analysis is that it doesn’t take into account the hidden inventory need by specific surgeon or account: requests. Perhaps 20 medical device sizes and 10 instrument trays were brought into a surgery, but only one of each was used. Did the surgeon need the rest brought in? We’ve found the greatest cost and time savings analyzing “cost-to-serve” metrics for surgeons and procedures. High-level turn ratios may be low because items are often requested but not sold. Our favorite weapon to move the needle further is the “request to sold ratio”. This shows which surgeon/procedure combo’s are wasting resources. The system should help reps and their surgeons reduce the size of saved item/kit/tray preferences over time to unlock higher savings.
The other benefit of this analysis is to mathematically determine the correct “safety-stock” and par levels to service that surgeon. This more accurate measure not only changes stock levels, but behavior as well. And that is when true efficiency is born.
Level 5: Asset Utilization Analytics – Systematic Actions
With the foundation of the first four levels, imagine an organization that could systematically rebalance inventory levels, locations and types (loans versus consignment) according to need. Imagine a system that could automatically change par levels in real-time as upcoming surgery schedules change. Imagine a system that would instruct a rep to move inventory from their storage locker to an account and every other action that needed to happen.
It is time to stop imagining and start doing.
Much like Everest until 1953, no one has reached Level 5 Asset Utilization…. yet. While we aren’t quite at the peak, it is in view, it is so close. Our clients are pushing to new heights because the tools needed to ascend to full inventory predictive capabilities are finally available.
Now it is time to make the final push.
Contact us: 858.956.0219 or info@movemedical.com
A good field inventory solution and/or a wms are worth their weight in gold, a fully integrated medical device specific operations and sales force effectiveness platform is priceless.
A complete tool should be able to or have:
- CRM / Case Management
- Directed Picking & Put-away (Bin Mapped)
- Surgery Scheduling (+ Calendar)
- Active Order Visibility
- Shipping Coordination (FedEx, UPS Integration)
- Customer/Account Management
- Opportunity/Lead Management
- Surgeon Preferences / Preference Cards
- Inventory Control & Visibility (All Locations, All Buckets)
- Auto Product Replenishment
- Commission Calculations
- Expiration Notifications
- Direct Orders
- Send & Receive Tools (Rep to Rep etc.)
- Contract & List Pricing (Real-time)
- Audit/Cycle Counts
- Reporting & Billing
- Image & File Sharing
- Secure HIPAA Compliant Communication
- Mobile Usage Capture
- UDI Compliance
- Barcode Scanning
- RFID Integration & RFID Reconciling (HF/UHF)
- ERP/CRM/EMR Integrations
- Demand Planning Tools
- Consignment/Loaner Management
- Pluggable Workflows (Programmatic Integrations, Integrated Prediction Models)
- Sourcing Matrix Tool
- HIPAA Compliant Communication Platform (Messages, Calendar, Usage, Notes, Files)
- Sourcing Optimization
- Future Stock (Virtual Inventory Assigned to Future Events)
- Atomic Inventory (UDI Ready, Piece Level Tracking, Serialized or Not)
- Hybrid Kitting (Skinny Kits, Kit Management, Kit Versioning, Tracking)
- Cross Boundary Workflows
- Lost & Found (Automatic Cycle Counting )
- Merger/Acquisition Integration
- Par Management
- Multi-Catalog Management
- Loan Optimization (1 Loan Per Day)
- Separate or Combined Sales & Operations Alignment
- Cost-to-Serve Metrics
- Turn Ratio Dashboards
- Sales Metrics / Data (Reps, Leaders, Corporate)
Need to talk with someone? We understand. Call anytime.
phone: 858.956.0208
email: mm@movemedical.com
or visit: www.movemedical.com/product
