WAREHOUSE CONSOLIDATION PROJECT

It was 9:30 am on a rainy morning in August 2016 and Sunil Kumar, Assistant General Manager of
Procurement at Manipal Hospitals Bangalore (MHB), was stuck in the notorious Bangalore traffic, while
inching towards an important team meeting. It had been almost a year since he took charge of the
procurement department and had introduced several operational improvement initiatives to improve the
service levels1 and reduce the costs involved in the fulfilment of consumables. Although, these initiatives
had significantly reduced costs, and driven up scale economies, the service level had dropped to about
23% (compared to the erstwhile 60% level). The journey which was usually a 20 minutes’ drive from his
home at 8 am, was turning out to be a hellish nightmare owing to the excessive peak hour traffic.

One of these initiatives involved the consolidation of consumables at a central location for all the four
hospitals in Bangalore that were spread throughout the city. Other initiatives included the implementation
of state-of-art IT systems and the outsourcing of routine activities to a BPO. In a previous meeting, which
involved all the cross-functional stakeholders, Kumar had been bombarded with pain points which he had
not foreseen during the implementation of these initiatives. The day’s meeting was scheduled precisely to
address these issues with the hope to get the service levels up to at least 80%. The performance of the
stores was closely monitored in all management review meetings as it not only contributed significantly
to operating costs but also aided nurses and doctors in providing a great customer experience. Moreover,
the success of this consolidation activity would also determine whether such centralization initiatives
could be run for common activities such as sterilization of medical equipment.

INDIAN HEALTHCARE DELIVERY INDUSTRY

The Indian healthcare delivery industry which comprises hospitals, nursing homes, diagnostics centers
and pharmaceuticals was expected to hit INR 18,000 billion2 by 2020.i The entire Indian healthcare
industry which also includes medical devices, telemedicine and medical tourism was expected to show a
healthy 22.87% CAGR from 2015 through 2020. This highly attractive industry attracts huge private
investment and private hospitals’ captured about 80% market of the total healthcare industry in 2015.i

The rising per capita income had led to an increase in vehicle ownership with the number of two-wheelers
increasing 16-fold and the number of cars increasing 7-fold between 1981 and 2002, which drastically
increased the number of road accidents.ii Moreover, the shift to sedentary lifestyles and increasing life
expectancy led to a significant increase in non-communicable lifestyle diseases with about 25% of the
people contracting diabetes, cardiovascular ailments, and cancer.iii These factors have led to an increasing
demand for secondary and tertiary care providers in the form of multi-specialty hospitals. India has also
been an attractive location for medical tourism. India offers world class facilities and doctors who
perform surgeries at a cost as low as one-tenth of that in Western Europe or in the United States and is
price-competitive to its Asian peers. Medical tourism in India has attracted people not only from
developed countries but also from developing countries which lack the needed medical services. India
witnessed 3.2 million medical tourists in 2015, and medical tourism in India is expected to grow at CAGR
of 20% from INR 195 billion in 2015 to USD 515 billion in 2020.i
1 𝐶𝑢𝑚𝑢𝑙𝑎𝑡𝑖𝑣𝑒 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝐿𝑖𝑛𝑒 𝑖𝑡𝑒𝑚𝑠 𝑖𝑛 𝑡ℎ𝑒 𝑖𝑛𝑑𝑒𝑛𝑡𝑠 𝑠𝑒𝑟𝑣𝑖𝑐𝑒𝑑 𝑓𝑜𝑟 𝑡ℎ𝑒 𝑙𝑎𝑠𝑡 𝑡ℎ𝑖𝑟𝑡𝑦 𝑑𝑎𝑦𝑠
Service Level =
𝑇𝑜𝑡𝑎𝑙 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑎𝑙𝑙 𝑙𝑖𝑛𝑒 𝑖𝑡𝑒𝑚𝑠 𝑖𝑛 𝑡ℎ𝑒 𝑖𝑛𝑑𝑒𝑛𝑡𝑠 𝑟𝑒𝑐𝑒𝑖𝑣𝑒𝑑 𝑓𝑜𝑟 𝑡ℎ𝑒 𝑙𝑎𝑠𝑡 𝑡ℎ𝑖𝑟𝑡𝑦 𝑑𝑎𝑦𝑠
2
1 USD = 64.5 INR
MANIPAL HOSPITALS

Manipal Health Enterprises, also known as Manipal Hospitals, is a network of 15 multispecialty care
hospitals across six Indian states with a total of about 5000 beds catering to about 2 million domestic and
overseas patients a year.iv It is a part of Manipal Foundations, established in 1961. Manipal Hospitals
Bangalore, the group’s first and flagship hospital, was launched in 1991 as a 600-bed quaternary care
facility. v It later expanded to a cluster of four hospitals in Bangalore (Exhibit 1). Manipal Northside
Hospital Bangalore in Malleshwaram was launched in 1993 with 83 beds. Dr. Malathi Manipal Hospital
Bangalore in Jayanagar was launched in 2008. The fourth hospital in Bangalore, Manipal Hospital
Whitefield (MHW), was launched in January 2017 with a capacity of 280 beds. Manipal Hospitals’ credo,
consisting of core values of ‘‘Clinical Excellence, Patient Centricity and Ethical Practices’’, has guided its
operations and helps them deliver the best healthcare service to its customers. The team of expert doctors
and medical specialists helped Manipal Hospitals to develop trust and brand value among its customers.
Patient centricity is evident in the level of hospitality that greets each patient at all hospitals run by the
Manipal group – be it stretching late working hours, working on holidays for the sake of patients, or the
cordial and helpful nature of Patient Care Coordinators who welcome every incoming patient with a
warm smile. Along with Fortis and Apollo chains of hospitals, Manipal is among the top three healthcare
service providers in India.vi

In 2012, Manipal Hospitals had raised INR 11.6 billion from India Value Fund Advisors and had been
vehemently pursuing an asset light expansion strategy through acquisitions. vii All new network hospitals
had about 200-250 beds, but were run on an “owned and managed” basis. This expansion into tier-2 and
tier-3 cities posed new challenges such as availability of infrastructure in line with providing top quality
tertiary care and the access to skilled doctors and surgeons. In 2015, Manipal Hospitals raised an
additional INR 9.4 billion from TPG Capital and received access to the best-in-class operational know-
how and international experience.viii

MANIPAL HOSPITAL BANGALORE

Manipal Hospital Bangalore (MHB), located on the Old Airport road, often counted among the prime real
estates in Bangalore, was one of the four hospitals of the Manipal group in Bangalore. It was the flagship
multi-specialty quaternary hospital of the Manipal group which received National Accreditation Board for
Hospitals and Healthcare Providers (NABH) accreditation3 in 2008. This provides international
recognition and promotes medical tourism. In 2017, MHB was one of the only 219 hospitals in India to be
awarded NAHB accreditationix and ranks among the top 10 multidisciplinary hospitals in India.v With
NABH accreditation, a diverse variety of patients, and its high-end appeal, MHB was one of the most
recognized and preferred locations for drug trials by pharmaceutical companies x and a hotspot for medical
tourism. It also had provision for guesthouses behind the MHB campus for such “tourists”.

3
Typical Patient Workflow

A patient with an ailment would typically enter MHB first as an outpatient and a unique code (Hospital
Number) would be generated against his name on the payment of a nominal registration fee and
completion of the customer information formalities. The patient can then consult with the on-call medical
specialist or doctor regarding their ailment. The doctor may recommend additional tests such as X-rays,
CT scans, MR scans, etc. to diagnose the patient.

In the instance of minor ailments where the corrective involves just medication, the doctors prescribed the
medicines in the required dosages which could then be obtained from the in-house pharmacy at MHB. If
the patients needed to be admitted for further surgical procedures, they were directed to book a bed in the
ward against their name. Patients were free to choose from a variety of wards with varying degrees of
privacy (shared/single accommodation) and luxury (TV, air conditioning, square footage, etc.) depending
on their willingness to pay.

The patients could also avail the help of an in-house financial counsellor who would help them with
estimated price of the surgery and educated them about how they could claim insurance and other
formalities. Patients were free to opt for a second opinion or not proceed with the surgery at MHB.

Once the patients were committed to undergo surgery at MHB, they would be directed to their chosen
ward and an appointment would be booked in an operating theatre. Appointments could be taken from up
to one month in advance. These appointments were typically registered manually with the nursing staff in
the General Operation Theatre (GOT) complex, with the notable exception of the ENT (ear, nose, throat)
department which would book appointments via the TrakCare Healthcare Information System tool.

On the day before the surgery, the recommending doctor would visit the patient in the ward to perform
basic checks to evaluate the patient’s eligibility for the surgery. The patient would be transferred to the
General OT’s pre-operations ward about 30 minutes before the surgery due time. Here, patient data such
as name, hospital number, operating room number, type of surgery and surgery start time were manually
entered in a register and later entered into TrakCare.

Once the assigned OT was free, the patient would be transferred from the pre-operating room to the OT
for the surgery. On completion of the surgery, the patient would be wheeled into the post-operative
recovery room where the surgery end time would be noted and the patient would be regularly monitored
until he could be sent either to the ward or to the intensive care unit. The patient would be discharged
upon healing, completion of formalities, and payment of bills.

Exhibit 2 shows an abstracted schematic of the typical patient workflow.

Operating Theatres

MHB has twenty-one operating theatres spread across five departments – General OT complex,
Cardiovascular, Orthopaedics, Ophthalmology, and Neurology. The four cardiac care OTs were equipped
to solve relatively routine surgeries such as angiography and angioplasty as well as complex surgeries
such as open heart bypass, cardiac valve replacements, and heart transplants. Neurological surgeries
(related to brain biopsies, spinal cord injuries, and deformities) were conducted in three dedicated neuro
OTs. Orthopaedic surgeries had three dedicated OTs, and included procedures such as fracture repair,
tendon and ligament repairs, arthroscopic surgeries and total knee replacement. There were two OTs
dedicated to eye surgeries such as cataract surgeries and pterygium excision. The General OT complex,
consisting of nine OTs, catered to most other surgical specialities such as obstetrics and gynaecology,
gastroenterology, urology, oncology, ear nose throat (ENT), plastic surgery, vascular, and paediatrics.
Exhibit 3 shows the layout of the General OT complex.

Stores and Warehouse

Materials procurement at MHB could be broadly classified into two categories: pharmaceuticals and
consumables. Pharmaceutical materials consisted of medicines, vaccines, and other equipment such as
stents which were used daily at the ward, OT, or pharmacy level. These materials were directly required
for service delivery to the end customer, that is, the patient. They had high demand variability owing to
the diverse types of cases that came to the hospitals. Consumables were typically materials such as
stationery, housekeeping equipment, and long-shelf life medical equipment such as gauze dressings that
had stable demand and reasonably large shelf life. These materials were necessary for the day-to-day
operations of the hospital but did not directly and/or critically impact service delivery to the end
customer. Exhibit 4 provides a sample list of pharmaceuticals and consumables. Manipal Hospitals in
Bangalore procured pharmaceuticals and consumables worth INR 17 billion per annum with
pharmaceuticals constituting about 55% of the total expenditure.

Pharmaceutical materials were stocked at MHB and at each of the group hospitals in Bangalore. At MHB,
pharmaceuticals are delivered to the bulk store. The procurement for the bulk stores was done every 15
days on the Fixed Order Interval model, and replenishment was outsourced to two firms: Hospitalis
Supply Solutions and Alaric Healthcare. The bulk store in turn provided supplies to in-patient and out-
patient pharmacies inside the hospital. The in-patient pharmacy provided daily supplies to locations such
as wards, intensive care units, and out patient departments based on the indents raised by the nurses.
There were 104 such locations in MHB alone which received supplies once in a week and held inventory
to last for a week. The bulk store held pharmaceutical inventory worth INR 10 million (approx. 4500
SKUs).4 In addition, the wards held one week of inventory. Any ad hoc or emergency requests were
fulfilled by the in-patient pharmacy. If a drug was not available with either the in-house pharmacy or the
bulk store, it was procured on priority basis either from nearby private pharmacies or other hospitals in
Bangalore.

Prior to March 2015 each hospital procured and stored consumables individually at the respective
hospitals, similar to pharmaceuticals. Later, the procurement of consumables was done at the Bangalore
cluster level, which included four hospitals in the city. Consumables were stored in a central warehouse
at Mahadevapura in Bangalore, which procured them every month. The warehouse would supply to
4
SKU = Stock Keeping Units
individual hospitals as per indents raised every day. At the hospital, consumables were stored at two
takeaway counters, which would in turn supply to the nurses in the 104 wards and OTs. The central
warehouse provided economies of scale to the cluster. Exhibit 1 provides the approximate locations of
the hospitals and the warehouse.

THE WAREHOUSE CONSOLIDATION PROJECT

With increased ‘‘medical tourism’’, NABH accreditation, and new in-flow of cash, Manipal Hopitals was
looking to increase capacity and service quality. They planned to add new hospitals to Bangalore network
by 2017. However, for increasing capacity in the existing three hospitals, the management looked for
ways to increase number of beds, improve operational practices and patient satisfaction. In January 2015,
Kumar analyzed the hospital value chain and identified stores as an area for potential improvement.

Warehousing before March 2015

In each hospital, the stores maintained one month’s worth of inventory level, occupying large space. The
prime location of the hospital sites meant that the high real estate costs were being amortized over storage
space rather than other revenue generating wards and beds. Consumables stores at MHB occupied 5,500
square feet area, sufficient to house 30~35 beds each generating revenue of INR 11 million per annum. In
addition, each hospital placed order for consumables and pharmaceuticals with multiple vendors who
delivered in an ad hoc manner. Stores saw a continuous stream of suppliers delivering pharmaceuticals
and consumables. The large number of vans and trucks blocked the path of incoming patients, especially
ambulances for trauma and emergency cases, which led to delay in service delivery and lowered customer
satisfaction (Exhibit 5). Kumar said:

[The influx of vendors] led to a constant stream of about 100-150 people from different
suppliers a day which clogged the entrance of the hospital. There were about 70-80
delivery vans at the entrance every morning, causing discomfort to patients and their
families waiting to enter through the gates of the hospital. The stream of vendors also
caused congestion in the hospital’s cafeteria facility.

The purchasing process was manual and approval for purchases from department heads was based on
paper-indents. Stock of inventory was maintained in Microsoft Excel. Internal users – nurses/staff could
raise an indent for any item needed. If the item was not in inventory, the purchasing team would find
suppliers, request quotations, raise purchase orders, and procure the material. If the exact name requested
in the indent was not available, a new item code would be created. Lack of naming conventions for
indents meant that the same commodity, through various suppliers, had distinct names/item codes in the
Excel tracker. Multiple indents could be raised for the same commodity and a new code would be created
if the requested item from a supplier was not found in the tracker. On this practice of autonomy in raising
indents, Kumar said:

This not only caused hassles in the approval process, as redundancies went unnoticed due
to its manual nature, but also caused service delays due to unavailability of a particular
 commodity from a particular supplier when the same commodity from another supplier
could just as well have worked. Every new part number would invariably lead to the
sourcing process all over again right from supplier search and evaluation.

This model also suffered from regular stock-outs which led to nurses ordering extra “safety” stock at their
ward level and exacerbated the tracking of inventory. These process inefficiencies led to the stores not
being able to cater to all the demands on time which in turn impacted the quality of service to patients.
With an aim to meet more than 80% service level, the number of orders delivered on time and in full,
Kumar and his team approached the problem via a three-pronged approach: digitization and outsourcing
of procurement processes, warehouse consolidation for consumables, and inventory rationalization.

Digitization and Outsourcing of Procurement Processes

The erstwhile sourcing department was split across divisions such as project, consumables, and
biomedical engineering. Personnel from these divisions could run the entire strategic sourcing process
independently. This led to a number of division-specific SKUs causing redundancy in the system. The
sourcing group was restructured into central purchasing unit (CPU) with task-based functions such as
strategic sourcing, execution, and governance. The strategic sourcing group was responsible for supplier
identification and evaluation, supplier performance management, and e-sourcing of materials. The
execution group was responsible for day-to-day procurement, logistics, and warehousing. The governance
group was responsible for the timely execution of the various policies and procedures of the sourcing
department.

Owing to the repeatable nature of the activities of the logistics group, it was outsourced to a third party
logistics provider (3PL) and a BPO.5 While vendor qualification and negotiations were done by an in-
house team, the BPO was given the responsibility of the lower levels of procurement decision making,
namely, getting quotes and raising purchase orders. These outsourced teams reported to CPU and enabled
stores and purchase to be decoupled. An online tool was implemented in collaboration with an IT start-up
to keep track of the various commodities being ordered and to streamline the approval process enabling
the approvers to check the available inventory levels of each commodity. The tool also provided quick
access to the availability of commodities at the various locations at site level for immediate consumption
and brought about a sense of accountability and traceability of inventory. SAP ARIBA® was implemented
for better control over inventory and vendor management.

Warehouse Consolidation for Consumables

Under the new arrangement, pharmaceutical and critical medical equipment continued to be stocked at the
site level, while the consumables were shifted to a separate warehouse in Mahadevapura (for all sites of
Manipal Hospitals’ Bangalore cluster), where the real estate costs were relatively low. This provided an
opportunity to leverage bargaining power over suppliers owing to the consolidation of order volumes and

5
BPO = Business Process Outsourcing
the ability to amortize the relatively lower real estate costs of the central warehouse over larger material
volumes. Only 2-3 days’ worth of inventory of consumables was maintained at the site level with daily
replenishment of the depleted inventory. The warehouse of 5000 sq.ft. area freed up space for 30-35
hospital beds. The central warehouse received materials from various suppliers and maintained
aggregated inventory to serve the four hospitals.

Nurses and laboratories raised indents for the material required in TrakCare which was linked to SAP.
The warehouse retrieved and consolidated these indents from SAP and supplied the required consumables
in one or two truckloads which operated milk runs between various hospitals. This significantly reduced
the number of trucks blocking the path for ambulances and patients (Exhibit 6). These trucks supplied the
material to special take away counters (TACs) at each hospital. TAC delivery personnel would then
deliver the material to the nurses in the respective wards/departments.

Inventory Rationalization

The erstwhile in-house store had about 16,000 SKUs. Kumar’s team identified about 1200 items which
had high transactional levels and decided to maintain one month’s worth of stock of these items at the
central warehouse. The inventory replenishment for these items was based on a re-order point basis. The
remaining 14,800 items were to be ordered on a need basis and expected to have a lead time of about 20
days which meant that hospital sites would have to be agile about their stocking decisions.

Challenges in Warehouse Consolidation

Talking about the main challenges in warehouse consolidation, Kumar said:

The main challenge was on-boarding all employees with this vision of improving
productivity. Many believed that the distant location of the warehouse would be a
hindrance to the smooth operation of the hospital. People were concerned about the loss
of autonomy, especially in creating indents and approvals at will. We needed a cultural
shift; we needed to instil a conviction in our larger team that these measures will help
improve our hospital management practices.

Training programs were initiated across the sourcing organization on best practices in raising indents, the
use of new tools for materials ordering and inventory management, and the new approval process where
approvers could look at the availability of similar inventory. Users were also sensitized about not to order
materials when the inventory was in transit.

Performance Monitoring Post-Consolidation

The implementation of IT tools in material management enabled the use of data analytics for performance
measurement. The number of transactions and fulfilment level could be monitored and checked via
regular reviews of the warehouse, efficiency at site level, and BPO performance.
However, in spite of the consolidation of the warehouse and implementing multiple IT systems, the
service level decreased from 60% to an all-time low of about 23%, and complaints from nurses and
doctors increased to an all-time high. Talking about the performance of the new centralized warehouse,
Kumar said:

On implementation of the common warehouse, a dip in the service level was observed as
it fell to as low as 23% primarily due to the new way of working. I was perplexed and
could not understand what was going wrong – we had implemented the best of practices
and tools to manage our materials. We had implemented SAP, outsourced our logistics to
a reputed 3PL, outsourced our purchasing function to another reputed BPO and as if all
this was not enough, we had also implemented the best-in-class P2P tool ARIBA!
Something wasn’t adding up!

WAREHOUSE PROCESS IMPROVEMENT

To identify the underlying problem and to take corrective measures, Kumar undertook a holistic review of
the process. An internal customer model was created and in-depth interviews were conducted with
various stakeholders to understand their concerns about their orders not being delivered on time.
Nurses and Laboratories

Nurses found it difficult to adopt the new system and complained about non-availability of requested
material at TACs on time. A nurse when interviewed told:

We start our day at 8 am every day. As and when we see more patients, we need more
consumables which we take from a small storage facility in the ward. Whenever there is a
stock-out, we raise an indent and ask the TAC for delivery. However, TAC opens at 9 am
and there is a huge queue of orders when it opens. Delivery is delayed either due to huge
demand, unavailability of material from the warehouse or sometimes due to long time
from TAC to ward. On bad days, we receive the requested consumables by 2 pm which
prevents us from providing superior care to our patients. These deliveries are often too
little and too late and it takes multiple follow-ups to receive the full order. We don’t trust
that stores will be able to meet requirements in time. This increases our workload, and
therefore we either request material as urgent or indent for more than what is required.

Take Away Counters

TAC delivery personnel raise transfer posting, against indent, while picking up items and get
acknowledgement on delivery. TAC faced issues from both the stores and immediate customer, nurses. A
TAC supervisor said:

When we open at 9 am, there is already a huge pile of requests from various nurses and
laboratories. We start supplying whatever material we have while waiting for the rest to
be delivered from the warehouse. Sometimes, the warehouse delivery truck reaches the
 hospital at 11 am and sometimes at 2 pm, we can’t promise our nurses the exact time
when they can expect full delivery. We raise transfer postings vis-à-vis indents and
deliver the available material. Sometimes, delivery boys wait for long for lifts which are
being used for patients during the peak times. We receive many complaints and face
escalations for factors which are not in our control. We are also at the receiving end from
the warehouse. They hold us accountable for any mismatch in transfer posting and
material supplied which is sometimes unavoidable. Second delivery truck is usually late
and we have to work overtime. It’s a stressful, thankless job with no satisfaction.

Warehouse

Before the warehouse consolidation project, the stores and purchase were handled by a single team but
these were decoupled after the centralization and outsourcing exercise. The new centralized warehouse
received indents, raised purchase requests (PR) in ARIBA, and prepared goods received notes (GRN),
and delivered orders to TACs twice a day. The stores opened at 9 am, packed and loaded orders for the
first truck by 10:30 am, which would then deliver the material to hospitals anywhere during 11:30 am to
2:00 pm depending on traffic conditions. It was the stores’ responsibility to ensure that fulfilled orders are
closed in the system, so that it can monitor and maintain its service level agreement. The stores operations
team played a pivotal role of intermediating between the purchase team and the internal customers (nurses
and laboratories). There were challenges in managing both the stakeholders. On the internal customer
side, the store’s manager said:

We often can’t deliver the right items as indents themselves are incorrect to start with.
Indents come at any time, many of them are classified as urgent, and there is no
predictability in the quantity ordered. This leads to higher inventory as we try to meet our
service level. At the same time, nurses don’t acknowledge the receipt of orders delivered
and we have a large and erratic queue of unfulfilled orders in the system. This further
hinders proper monitoring. We tried to improve our services by packing delivery boxes
on the previous evening, but for this we need indents latest by the afternoon. This helps in
reducing the delivery truck dispatch time. We meanwhile pack for the new indents which
we send in the second truck in the afternoon. Since the truck return time is uncertain, our
personnel wait for it which reduces both productivity and morale.

The stores also had a new system to deal with, both in terms of processes and technology. Being a new
team, they were not aware of all the products and their utility. There were 16,000 unique product codes in
the system, which further increased whenever an indent for a ‘‘new’’ item was raised. Owing to this,
stores personnel were not able to tell whether a substitute was available in the inventory which can be
used to fulfil the need immediately. The store manager further added:

We can improve our service level if the end user is disciplined, if there is a check on the
indents being raised, and if fulfilled indents are closed properly. At our end, we can do
better inventory management by rationalizing the codes and classifying them according
to demand and then focusing on fast moving items. By the 80:20 rule, this alone can help
 in decreasing the number of complaints received. Further, by having a certain clarity on
demand forecasts, we can plan our task in advance to better meet demand. Though we
provide stock reports every day, no one reads them and the current system doesn’t
provide an accurate view of the inventory available to end users. They end up creating
manual indents with new SAP codes for material that is already available with us, thus
leading to duplication. Therefore, we need better integration of HIS and SAP. All these
measures are easier said than implemented, our people are also new to the system and
these measures need close coordination across all stakeholders and the breaking of virtual
silos.

MANIPAL’S DECISION

Kumar understood the perspectives of various stakeholders. He knew from his previous operations
experience and MBA education that getting the voice of the user was the first and most important task in
solving any problem. He never expected that this seemingly simple initiative can turn into such a complex
change management problem. The next challenge he faced was to assimilate this new information and
work closely with all stakeholders and navigate the intricacies involved to implement improved processes.
He was aware that the performance of this exercise would determine the continued management support
for these new initiatives. With these feelings, he realized that he had reached the MHB and was just in
time for the meeting where he was supposed to share his action plan to meet the 80% service level target.
Exhibit 1
Location of Manipal Hospitals in Bangalore and the area where the centralized
warehouse is locatedxi

Hospital Warehouse

Source: Google Maps, retrieved on March 18, 2017

Exhibit 2
High-level schematic of patient workflow at MHB

Ward
Pre-Op Post-Op
Registration OPD Doc Surgery Discharge
Tests/Prep recovery
ICU

Source: Interview with Manipal Hospitals Management

Exhibit 3
Room Room Layout of the General Operating Theatre Complex at MHB
Nurse Sterile

OT-1
OT-2
OT-3
Post-
opsOT-9

OT-4
Room
Nurse

OT-5
OT-6
Pre-
ops Store

OT-7
OT-8

Source: Manipal Hospitals Management

Exhibit 4
Sample list of pharmacueticals and consumables

Pharmaceuticals Consumables
Various drugs in tablet, capsule and injection Catheters, syringes, implants, blood tubings,
forms surgical instruments, sutures
Intravenous fluids Lab reagents, vacutainers, urine cans
Stents Aprons, masks, packaged water

Contrast media Jelly ultra sound, electrodes ultra sound

Vaccines Hand sanitizers
Nutrition products Stationary items, forms
House keeping consumables such as garbage bags
cleaning solutions

Source: Manipal Hospitals Management

Exhibit 5
Old way of consumables procurement and delivery

Suppliers Hospital Local Customers

Wards/Nurses

Source: Interview with Manipal Hospitals Management

Exhibit 6
Consolidated warehouse reduces traffic at sites

Suppliers Warehouse Hospital Local Customers

Wards/Nurses

Source: Interview with Manipal Hospitals Management

REFERENCES

i
Healthcare Industry in India, IBEF report http://www.ibef.org/industry/healthcare-india.aspx, Updated July 2016, retrieved on August 17, 2016
ii
Enhancing Urban Safety and Security: Global Report on Human Settlements 2007, United Nations Human Settlements Programme; p. 203
iii
25% of Indians may die of lifestyle diseases before they are 70: Study; Times of India, August 13, 2015, retrieved on August 17, 2016
iv
About Us, Manipal Hospitals https://www.manipalhospitals.com/about-us/, retrieved on August 17, 2016
v
About Manipal Hospitals, https://www.manipalhospitals.com/about-us/, retrieved on February 19, 2017
vi
Hospital chains adopt diverse growth strategies http://www.livemint.com/Companies/r0yP673U4ZNtM73sWY4OKI/Hospital-chains-adopt-
diverse-growth-strategies.html, retrieved August 17, 2016
vii
Manipal Health Enterprises CEO on its asset light expansion strategy, acquisitions & more,
http://www.vccircle.com/news/healthcare-services/2013/03/20/manipal-health-enterprises-ceo-its-asset-light-expansion, retrieved on August
17,2016
viii
TPG invests $146M in Manipal Health for a significant minority stake, http://www.vccircle.com/news/healthcare-services/2015/02/27/tpg-
invests-146m-manipal-health-significant-minority-stake, retrieved on August 17, 2016
ix
List of NABH accredited hospitals in India, http://nabh.co/h-accredited.aspx, retrieved on February 19, 2017
x
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