During The Question-And-Answer Period Of A Presentation You Should Not The Par Level Myth Exposed – The Method Nobody Uses (Except Hospitals)

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The Par Level Myth Exposed – The Method Nobody Uses (Except Hospitals)

First Story: the keynote speaker at the recent APICS (American Production and Inventory Control Society) regional meeting featured a high-level executive from a hospital material supply company, one of the largest in the country. After an informative but somewhat lackluster presentation, during question time, a hand went up. “How are Kanban methods used in your hospital supply chain strategy?” is the question. After a brief deer-in-the-headlights moment, the speaker answered: “What is Kanban?”.

Second Story: a recent meeting in Las Vegas of hospital supply chain professionals featured a speaker on the topic of Kanban. It was difficult to push away from the crowd, with person after person emotionally defending the Par Level system currently in use in their hospital. The speaker answered each challenge well, but the debate came to a conclusion when one of the participants stood up and said “Hey guys. Let’s be honest. Par Level is not very good. Kanban is the future. Get over it.”

You may have two questions in your mind at this point in the article: what is Par Level and what is Kanban? These two terms refer to the methods used to manage supplies and materials, in a hospital or anywhere else. We associate the Par Level system with hospitals because almost no one else uses it, for reasons we’ll see. Both methods share the idea that we should set up a target amount of material for any given item and location, nothing more than that amount, and not run out. On these points the two methods agree. Where they differ is in the way they propose to accomplish these goals.

The Par Level system suggests that we count the number of items left in a certain location, and replace only the items necessary to bring the number “up to par”, ie back up to the target number. What could be easier, right? Of course that includes constant counting, which is a wasteful and non-value-adding activity, and it requires constant trips back to the stockroom, which is another wasteful and non-value-adding activity. More importantly, the counting required is so heavy that most supply managers don’t do it anymore, they just “eye-ball” the materials and make an educated guess on the supplies to- refill. Many supply managers are experienced and manage to keep things moving most of the time, but as the saying goes, that’s a hell of a way to run a railroad. The end result: definitely too much effort and probably sub-par results as measured by shortages, organization of storage areas, and staff satisfaction.

As we said, the Kanban method has the same general purpose but a different approach to the replenishment process. Kanban is a Japanese word that means “signal”, and creating a clear signal is central to the Kanban method. Instead of counting everything all the time, Kanban suggests that we set up a signal system so that we only respond to items that need replenishment. We do this by dividing the quantity to be stored into several sub-quantities. For example, we can take the par level of 100 pieces and divide it into two quantities of 50. No action is required until the first 50 are gone. We will replace 50, but continue to use the remaining 50 during the refill process, so that there is no delay due to lack of supplies. The actual Kanban or signal can be an empty bin, a card taken and placed in a collection box, or a flag raised in the container itself.

It’s not rocket science, but using the Kanban method can reduce the number of items to be counted each day to zero (nothing!) This is why Kanban is the method of choice for world-class organizations around the world. world. And this is also the reason why the Par Level system cannot be considered at all.

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