can we manage blood inventory effectively?

ISBT Science Series (2014) 9, 184–188

STATE OF THE ART 3A-S11-01 © 2014 International Society of Blood Transfusion

Can we manage blood inventory effectively?J. CaulfieldAustralian Red Cross Blood Service, Melbourne, Vic., Australia

Abstract

Background and Objectives In Australia, we rely on voluntary, non-remunerateddonors to provide sufficient blood to meet patients’ needs. For fresh compo-nents, the Australian Red Cross Blood Service (Blood Service) is 100% self-suf-ficient, with only rare phenotypes imported as required. Hospitals andpathology laboratories, as well as the Blood Service, are under increasing pres-sure from Government/s to improve value for money for blood and blood prod-ucts, which is resulting in extra demands being placed on the Blood Service.There is also some pressure, in relation to lower age at issue for red cells, anda continuing trend to hold more Group O stock and less of the other groups,especially AB where demand is low. With a typically seasonal inventory patternfor red cells, the Blood Service has focussed on closer management of BloodInventory. The Blood Service is fully funded by Australian Governments.

Aim The aim of the inventory programme was to improve reliability of bloodcoming into the supply chain and therefore to improve reliability of delivery tocustomers. This is measured by average variance in the number of whole bloodcollection packs being receipted at the Blood Service processing centre. The aimwas to reduce the variability in this metric, which would naturally lead todecreased inventory holding requirements, greater control and efficiency, andincreased reliability and service to the customers. Order fulfilment is anothermeasure used to demonstrate improvement.

Methods To manage blood inventory effectively, the first step was to introduce aminimum and maximum inventory level, by blood type and by state. This pro-vided a common and visible target to aim for. The bands were calculated byfirstly setting a minimum inventory level using traditional supply chain safetystock calculations. The next step was to develop a 12-week inventory forecast,using a number of planning assumptions. One of the core assumptions is thenumber of appointments booked in the lead up to a donation. To improve reli-ability, minimum targets were agreed at 3 months out (re-booking time) throughto 1 week out. A ‘traffic light’ style appointments portal was developed to provideimproved visibility of appointment levels for each collection mode and by state.

Results Results show that the quarterly standard deviation of blood coming into the Blood Service inventory has improved from 1711 units to 1285 units inthe last four financial years – a 25% reduction. In addition, order fulfilmenthas improved from 82% to 95%, demonstrating that, with improved planningsystems and processes, it is possible to manage inventory effectively. The BloodService in Australia set a goal to improve reliability of fresh components, inparticular, red cells entering finished goods inventory, to improve order fulfil-ment and provide service excellence to customers. By implementing robust anddisciplined planning and reporting systems, reliability has improved, demon-

Correspondence: Jacqueline Caulfield, Australian Red Cross Blood Service, GPO Box 5103, Melbourne, Vic. 3001, Australia.E-mail: [email protected]

184

strating that there are methods available to improve the effectiveness of inven-tory management for blood components.

Key words: Australia, blood supply management, inventory management, supplyand operations planning

How does the Australian Red Cross Blood Service (the

Blood Service) measure whether inventory management is

effective? Theoretically, inventory management is effec-

tive if components are available at the time and place

patients’ transfusions are scheduled. In other words, if

order fulfilment is 100% on time and in full, then one

can assume that inventory management has been fully

effective. Is this realistic with a precious and rare resource

such as blood where we rely on voluntary non-remuner-

ated donations? Has the inventory been managed effi-

ciently, at reasonable cost? Is wastage of blood

components acceptable, to achieve 100% order fulfilment?

These are the questions the Blood Service asked in 2009.

In 2008, the Blood Service put a programme of activi-

ties in place to improve the effectiveness of inventory

management. This multifaceted programme of work has

delivered significant improvements in Finished Goods

inventory availability and reliability, resulting in

improved order fulfilment to customers. Order fulfilment

for red cells has improved from 82% in July, 2009 to

98% in February, 2013.

The programme is still very much a work in progress,

and some elements have been more successful than oth-

ers. It is difficult to attribute each activity’s contribution

to the overall result as the benefits have grown steadily

over the years.

Refer to Fig. 1 for a timeline of initiatives.

In the beginning

Prior to the introduction of the Supply Chain function in

2007, the Blood Service and its customers expected sea-

sonal and day of week shortages in relation to the avail-

ability of finished goods. It was very common to be on

‘Medical officer restriction’, a self-imposed rationing or

allocation of finished goods components due to perceived

and/or actual insufficient Blood Service stock holdings to

meet demand. Staff and customers expected component

shortages in winter, and it was common for the Blood Ser-

vice to go to ‘National Appeal’ to encourage donors to

visit donor centres and donate blood during the cooler

months when collections were low due to weather and the

cold and flu season. It was also common to have more

component inventory than required in the warmer months,

particularly in January. This resulted in higher than aver-

age age at issue and increased component expiry.

Introduction of supply chain management

Inventory targetsRed cell inventory was not managed by blood type –

except for O Negative red cells, which were managed

intensively due to routine shortage. All donors were

encouraged to donate, regardless of blood type and over

time the Blood Service inventory skewed to a dispropor-

tionate volume of the less common blood types. Often,

there was more than 20 days cover of AB positive, for

example (see Fig. 2 for a comparison of AB+ collections

in 2008 compared with 2013. See Fig. 3 for comparison

of number of days cover for all blood groups). It was

common for ‘bundles’ of red cells to be shipped to cus-

tomers who received a mixture of blood types were so

that the Blood Service avoided expiry and wastage of

components not in great demand.

In 2008, Blood Service inventory targets by Blood Type

were established for the first time. These inventory targets

were based on standard safety stock calculations. These

targets showed that if the desired inventory was to be

held, more targeted collections by blood type would be

required. Targeting collections by blood type (other than

O negative which was relatively well established) required

more specific contact with blood donors than the generic

‘it’s time to donate’ message that was generated by the

National Blood Management System in donor letters. In

late 2008, a National Contact Centre was opened in A-

delaide, South Australia. This Contact Centre provided the

facilities to start to contact donors in a differentiated

manner, by blood type. In order to do this, the calling

lists for donors and the overall marketing plan were

adjusted.

Creation of inventory response team (IRT)In 2007-2008, the Blood Service experienced a slow and

sustained reduction in O Positive Whole Blood collec-

tions, resulting in unprecedented low stock holdings of O

Positive Red Cells (See Fig. 2). The decline was very grad-

ual. In that year, the Blood Service went to National

Appeal three times. National Appeals, although providing

an increase in collections, were acknowledged to be an

action of last resort as it was impossible to select the

donors who would respond to the Appeal. In 2009, The

Blood Service created a cross-functional team to look at

more effective strategies to bring the right donors in at

� 2014 International Society of Blood Transfusion, ISBT Science Series (2014) 9, 184–188

Can we manage blood inventory effectively? 185

the right time. This team was called the Inventory

Response Team, responsible for improving the quality and

effectiveness of actions undertaken to improve the vol-

ume of donor appointments, by blood type. The planning

horizon for this team was short term – in the next 1–

6 weeks. Members included supply chain, donor services,

marketing, public relations and the contact centre. As a

result of this team forming, more data were collected to

improve planning assumptions, such as donor do not

attend (DNA) rates. The effectiveness of public relations

and marketing activities started being measured and the

quality of data improved. At the same time, a greater

understanding of the challenges facing each of the cross-

functional teams developed and team camaraderie

improved. There was less blame and a greater focus on

the desired outcome – meeting the inventory targets.

Victorian bush firesIn February 2009, the tragedy of the Victorian bushfires,

where 173 people perished, resulted in an unprecedented

influx of donors wanting to help victims. This created

great difficulties for the Blood Service as there was not

an increase in component demand following the bushfires

and inventory started to build very quickly, while donor

centres experienced long waiting times for donors who

presented without a prior appointment. It took many

months to reduce inventory back to acceptable levels (see

Fig. 4). The learnings from this event included an

acknowledgement that the Blood Service needed

improved methods and processes to delay donation

appointments when there were sufficient appointments

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Fig. 2 Impact of S&OP inventory management on AB+ red cell collec-

tions.

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Fig. 3 Average # days cover by blood group 2008–2009 to 2012–2013.

Fig. 1 Timeline of inventory management

activities aligned with improved order

fulfilment.

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Fig. 4 Decline of O positive collections 2007–2008.


186 J. Caulfield

already booked. Improved communications were devel-

oped and the National Contact Centre implemented proce-

dures and systems so that donors calling to make an

appointment for whole blood could be introduced to con-

version to apheresis plasma. Improved planning assump-

tions were developed to calculate the number of

appointments necessary to take sufficient donations,

through processing and testing and into finished goods

inventory. Many of these planning assumptions values

(such as yield) differed by state.

Order fulfilment measureRudimentary supply chain measures were introduced to

the Blood Service in 2009. The first was order fulfilment,

a measure of how many order line items were delivered

to customers by midnight of the day the order was

placed. Early data suggested that order fulfilment was

about 82% (see Fig. 1). The order fulfilment measure was

resisted internally because Blood Service staff felt that

customers held more inventory than was actually

required. This was sometimes true as customers naturally

built inventory buffers because they never knew when

the next Blood Service restriction was going to take

place. Supply was somewhat unreliable due to seasonal

blood collections and surges and shortages during the

course of the week – again related to blood donor dona-

tion patterns. Blood Service staff were reluctant to share

order fulfilment data with customers, as this reinforced

the message that orders were not being met satisfactorily.

In summary, there was a lack of trust between the Blood

Service and its customers.

To address this problem, Blood Service staff started to

visit customers, with a data pack including patterns of

orders, order volumes and complaint data, with appropri-

ate responses. At these meetings, inventory data were also

discussed with the Blood Service providing proposals

regarding target stock holdings and also sharing informa-

tion about how the Blood Service intended to improve

reliability. These meetings were helpful as common under-

standing of issues in both organizations were shared.

Introduction of sales and operations planning

Sales and Operations Planning is a methodology used by

many manufacturing organizations throughout the world.

‘S&OP can assist in managing change across the organiza-

tion as it provides the opportunity to be proactive in the

face of problems and opportunities while establishing a

plan for everyone to follow’ [1]. In other words, S&OP pro-

vides the operational plans to meet demand. These plans

typically include production plans, labour plans and pro-

curement plans. An adopted S&OP methodology was intro-

duced into the Blood Service in April 2010 (see Fig. 5).

There are now three reviews per month: Demand, Sup-

ply and Products & Services. These reviews check the

planning assumptions and sign off on one set of figures

for the organization to work until the next review [2].

The planning horizon is 36 months, to enable and

required Capital spending to be incorporated. The adopted

methodology focuses on Demand – what customers will

request; Supply – collections and production and Prod-

ucts & Services. The demand control period is fixed at

3 months. This is the short-term period where it is too

late to change the plan and so other levers need to be

used if the plan is not being met – such as if collections

are insufficient. The Demand Control Period is managed

by the Inventory Response Team.

Sales and Operations Planning has resulted in the

Blood Service’s activities being much better co-ordinated

with improved accountability for the different functions

that contribute to finished goods inventory. Sales and

Operations Planning has improved order fulfilment from

82% in 2009 to 98% in 2013; and customer satisfaction

has improved from a mean score of 8�4 of 10 in 2011 to

8�9 in 2013. See Table 1.

Introduction of productivity measures inlaboratories

In July 2011, productivity measures were introduced in

Processing and Testing, along with a new Manufacturing

Identity. This identity stated that the Manufacturing

Division aimed to be ‘efficient and reliable, day in day

out, year in year out’. Reliability was more than order

fulfilment, it was a mindset in manufacturing, and it was

Fig. 5 Sales & operations planning framework.


Can we manage blood inventory effectively? 187

relevant to processing and testing release times, labour

availability and consistency of processes. In the first year,

productivity improved by 7% in processing and 11% in

testing.

Introduced national inventory managementframework

The NIMF is a joint project between the Blood Service

and National Blood Authority. The purpose of the NIMF

project is to establish a comprehensive, efficient and

effective national inventory management framework that

will ensure a secure and timely supply of blood products

that meets demand and enhances effective cost manage-

ment. This will be achieved through defining the most

appropriate risk-based models to inform red cell inven-

tory levels for the Blood Service and the customers to

ensure stock is held where it is best placed.

Therefore, the project objective is to encourage

involvement at the customer level to optimize red cell

inventory across the sector to provide for patient needs,

maintain security of supply and minimize product wast-

age.

Results

Results show that the quarterly standard deviation of

blood coming in to the Blood Service inventory has

improved from 1711 units to 1285 units in the last four

financial years – a 25% reduction (See Fig. 6). In addi-

tion, order fulfilment has improved from 82 to 95%,

demonstrating that, with improved planning systems and

processes, it is possible to significantly improve inventory

management. Figure 3 shows average # days cover for

each blood group by year from 2008–2009 to 2012–2013,

demonstrating a significant reduction in surplus holdings

of AB and B blood groups, while maintaining O neg lev-

els, demonstrating that the Blood Service has successfully

been able to target collections by blood group.

The Blood Service in Australia set a goal to improve

reliability of fresh components, in particular, red cells

entering finished goods inventory, to improve order fulf-

ilment and provide service excellence to customers. By

implementing robust and disciplined planning and report-

ing systems, reliability has improved, demonstrating that

there are methods available to improve the effectiveness

of inventory management for blood components.

References1 Keal D, Hebert P: Benefits to blood banks of a sales and opera-

tions planning process. J Blood Serv Manag 2010; 50:2785–

2787

2 Caulfield J: Blood supply management: experience and recom-

mendations from Australia. ISBT Science Series Volume 8,

Issue 1; pages 41–45 Article first published online: 31 May

2013

1,7111,599

1,489

1,285

0

200

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1,800

2009-10 2010-11 2011-12 2012-13

Standard Deviation in the Daily WB Pack Receipt

Fig. 6 Standard deviation of daily WB pack receipt (2009–2010 to

2012–2013).

Table 1 Impact of S&OP on order fulfilment and customer satisfaction

2008 Baseline 2013

Order fulfilment Unmeasured 82% (Feb 2009) 98%

Customer

satisfaction

Unmeasured 8�4/10 (Sept 2011) 8�9/10 mean

score


188 J. Caulfield

can we manage blood inventory effectively?

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