Hospital Back-of-House Logistics and Optimising Physical Design of Spaces

July 25, 2024

The Role of Hospital Back-of-House Logistics and Optimising Physical Design of Spaces

In the demanding environment of healthcare, the efficiency of back-of-house logistics is critical. This aspect of hospital operations often goes unnoticed but is crucial in ensuring that front-line staff can deliver high-quality patient care. From the design of consumable stores, central stores, and loading docks to production kitchens, linen stores, and waste stores, the physical spaces and their associated operating models play a significant role in the overall functionality and efficiency of healthcare facilities. This article explores the importance of these elements and how optimising them can enhance hospital operations. Additionally, it highlights how Trace Consultants can work alongside architects and project manager firms to ensure development projects deliver on the desired outcomes for government agencies, hospitals, clinicians, and patients.

The Importance of Back-of-House Logistics

Enhancing Operational Efficiency

Back-of-house logistics encompass all the activities that support the front-line healthcare staff, including inventory management, procurement, and supply chain operations. Efficient logistics ensure that medical supplies, equipment, and other necessary items are available when needed, reducing delays and improving patient care.

Reducing Operational Costs

Optimising logistics can significantly reduce operational costs. By streamlining processes, hospitals can minimise waste, reduce excess inventory, and improve the utilisation of resources. This not only lowers costs but also ensures that funds can be redirected towards patient care and other critical areas.

Improving Patient Care

Effective logistics directly impact patient care by ensuring that healthcare providers have the necessary tools and supplies at their disposal. This reduces the time spent searching for items, allowing more time for patient interaction and care. Additionally, well-organised logistics help prevent errors and ensure the timely delivery of services.

Optimising the Physical Design of Spaces

Consumable Stores

Consumable stores must be designed to facilitate easy access and efficient inventory management. Shelving, labelling, and storage systems should be optimised to ensure that items are easy to find and retrieve. This reduces the time staff spend searching for supplies and minimises the risk of errors.

Central Stores

Central stores are the hub of hospital logistics. They should be strategically located and designed to support the efficient flow of goods throughout the hospital. This includes adequate space for receiving, storing, and distributing supplies. An optimised central store layout reduces the time and effort required to move items to their final destinations.

Loading Docks

Loading docks are the entry points for supplies entering the hospital. Their design should facilitate the smooth and efficient unloading of goods. This includes considering factors such as dock height, access for delivery vehicles, and proximity to storage areas. An efficient loading dock design minimises delays and ensures a steady flow of supplies.

Production Kitchens

Production kitchens must be designed to support the efficient preparation and delivery of meals to patients. This includes optimising the layout for workflow, ensuring adequate storage for ingredients, and implementing systems for managing dietary requirements and food safety. A well-designed production kitchen improves meal service efficiency and patient satisfaction.

Linen Stores

Linen stores should be organised to facilitate easy access to clean linens and efficient collection of soiled items. This includes considering factors such as shelving, labelling, and cart systems for transporting linens. An optimised linen store design reduces the time and effort required to manage linens and ensures that clean items are always available when needed.

Waste Stores

Waste stores must be designed to support the safe and efficient disposal of medical waste. This includes providing adequate space for different types of waste, implementing systems for segregation and disposal, and ensuring easy access for waste collection services. An efficient waste store design improves safety and compliance with regulations.

Operating Model Design

Inventory Management

Effective inventory management is crucial for ensuring that supplies are available when needed without overstocking. This includes implementing systems for tracking inventory levels, forecasting demand, and automating reordering processes. Optimising inventory management reduces costs, minimises waste, and ensures the timely availability of supplies.

Demand Planning

Accurate demand planning is essential for matching supply with demand. This includes analysing historical data, monitoring current usage patterns, and forecasting future needs. Effective demand planning helps prevent shortages and overstocking, ensuring that resources are used efficiently.

Stocking Policy

A well-defined stocking policy ensures that critical items are always available while minimising excess inventory. This includes setting minimum and maximum stock levels, implementing systems for monitoring stock levels, and establishing procedures for reordering supplies. An optimised stocking policy improves inventory management and reduces costs.

Procurement Processes

Efficient procurement processes ensure that supplies are purchased at the best possible prices and delivered on time. This includes negotiating contracts with suppliers, implementing systems for managing orders, and monitoring supplier performance. Optimising procurement processes reduces costs and ensures the timely availability of supplies.

Labour Planning

Effective labour planning ensures that the right number of staff are available to meet demand. This includes forecasting staffing needs, scheduling shifts, and implementing systems for managing attendance and performance. Optimising labour planning improves efficiency and reduces labour costs.

Asset Management

Efficient asset management ensures that equipment and other assets are properly maintained and utilised. This includes implementing systems for tracking assets, scheduling maintenance, and managing asset lifecycles. Optimising asset management reduces costs and improves the availability and reliability of equipment.

Dock Scheduling and Management

Effective dock scheduling and management ensure that supplies are delivered and unloaded efficiently. This includes implementing systems for scheduling deliveries, managing dock operations, and monitoring performance. Optimising dock scheduling and management reduces delays and ensures a steady flow of supplies.

How Trace Consultants Can Help

Collaboration with Architects and Project Managers

Trace Consultants can work alongside architects and project manager firms to ensure that development projects deliver on the desired outcomes for government agencies, hospitals, clinicians, and patients. This includes:

Strategic Planning

Trace Consultants can assist with strategic planning to determine the core requirements of a project. This includes conducting feasibility studies, developing business cases, and engaging with stakeholders to ensure that the project meets the needs of the organisation.

Clinical and Infrastructure Asset Audits

Trace Consultants can conduct clinical and infrastructure asset audits to assess the current state of facilities and identify areas for improvement. This includes reviewing compliance with regulations, assessing the condition of assets, and identifying opportunities for optimisation.

Concept Brief Development

Trace Consultants can assist with developing concept briefs to inform master plans. This includes defining the scope of the project, identifying key objectives, and outlining the requirements for facilities and services.

Master Plan Strategic Advisory

Trace Consultants can provide strategic advisory services for master plans. This includes analysing data, assessing the feasibility of different options, and providing recommendations for optimising facilities and services.

Service Delivery Model Documentation

Trace Consultants can assist with documenting service delivery models. This includes defining the operational model, identifying key processes, and developing procedures for managing services. This helps ensure that the project meets the needs of the organisation and delivers the desired outcomes.

User Group Facilitation

Trace Consultants can facilitate user group meetings during all aspects of planning and design. This includes engaging with stakeholders, gathering feedback, and resolving issues that arise during the planning and design process. This helps ensure that the project meets the needs of the organisation and delivers the desired outcomes.

Facility and Operational Commissioning

Trace Consultants can assist with facility and operational commissioning. This includes developing commissioning plans, coordinating activities, and ensuring that facilities and services are ready for operation. This helps ensure that the project meets the needs of the organisation and delivers the desired outcomes.

Post Occupancy Evaluation

Trace Consultants can conduct post-occupancy evaluations to assess the performance of facilities and services. This includes gathering feedback from users, analysing data, and identifying opportunities for improvement. This helps ensure that the project meets the needs of the organisation and delivers the desired outcomes.

Case Studies

Case Study 1: Optimising a Central Store Layout

A large hospital in Australia faced challenges with its central store layout, leading to inefficiencies and delays in the delivery of supplies. Trace Consultants were engaged to redesign the layout and optimise inventory management processes. By implementing a new shelving system, improving labelling, and reorganising the flow of goods, the hospital was able to reduce the time taken to retrieve items and improve overall efficiency. The project resulted in significant cost savings and improved staff satisfaction.

Case Study 2: Enhancing Linen Store Management

A regional hospital struggled with managing its linen stores, leading to frequent shortages and increased operational costs. Trace Consultants were engaged to optimise the design of the linen stores and implement new management processes. By introducing a new cart system, improving labelling, and implementing a just-in-time inventory system, the hospital was able to reduce costs and ensure the timely availability of clean linens. The project improved efficiency and enhanced patient care.

Case Study 3: Improving Waste Management Systems

A metropolitan hospital faced challenges with its waste management systems, leading to compliance issues and increased costs. Trace Consultants were engaged to redesign the waste stores and implement new management processes. By improving the layout of the waste stores, introducing new segregation systems, and implementing a waste tracking system, the hospital was able to improve compliance and reduce costs. The project resulted in a safer and more efficient waste management system.

Optimising hospital back-of-house logistics and the physical design of spaces is crucial for improving operational efficiency, reducing costs, and enhancing patient care. By focusing on areas such as consumable stores, central stores, loading docks, production kitchens, linen stores, and waste stores, hospitals can ensure that they are well-equipped to meet the demands of healthcare delivery. Additionally, effective operating model design in areas such as inventory management, demand planning, stocking policy, procurement processes, labour planning, asset management, and dock scheduling and management is essential for ensuring the smooth and efficient operation of hospital logistics.

Trace Consultants, with their expertise in supply chain consulting, can work alongside architects and project manager firms to ensure that development projects deliver on the desired outcomes for government agencies, hospitals, clinicians, and patients. Through strategic planning, clinical and infrastructure asset audits, concept brief development, master plan strategic advisory, service delivery model documentation, user group facilitation, facility and operational commissioning, and post-occupancy evaluation, Trace Consultants can help optimise hospital logistics and physical design, ultimately leading to improved healthcare outcomes.

In conclusion, the importance of hospital back-of-house logistics and optimising the physical design of spaces cannot be overstated. By focusing on these critical areas and leveraging the expertise of Trace Consultants, hospitals can achieve significant improvements in efficiency, cost savings, and patient care.

How can your hospital benefit from optimising its back-of-house logistics and physical design?

Related Insights

Strategy & Design
January 2, 2024

Qualities of a Top Supply Chain Consultant

Explore the critical attributes of a great supply chain consultant, including their approach to data analysis, insight-led strategies, and examples of cost reduction opportunities across various supply chain components.

Qualities of a Top Supply Chain Consultant

In the complex and rapidly evolving world of supply chain management, consultants play a crucial role in guiding businesses through challenges and opportunities. A great supply chain consultant brings a unique blend of skills and expertise that can significantly impact an organisation's efficiency, profitability, and competitive edge. This article explores the essential attributes of a top-tier supply chain consultant, including their approach to fact-based analysis, data-driven insights, and tangible value delivery, with examples of how they can drive substantial cost reductions across various supply chain components.

Core Attributes of an Effective Supply Chain Consultant

Deep Industry Knowledge

Great supply chain consultants possess extensive knowledge of the industry's best practices, trends, and regulatory requirements. They are well-versed in the intricacies of transport, warehousing, manufacturing, and inventory management, enabling them to provide relevant and up-to-date advice.

Fact-Based and Data-Driven Approach

A fact-based, data-driven approach is fundamental in supply chain consulting. These professionals rely on quantitative analysis to understand problems, identify opportunities, and measure performance.

Utilising Data Analysis

They use advanced data analysis tools to dissect supply chain dynamics, forecast trends, and provide insights that help businesses make informed decisions.

Insight-Led Strategies

The best consultants don't just present data; they deliver actionable insights. They translate complex information into strategic recommendations that drive sustained, lasting change.

Providing Tangible Value

Their focus is on creating tangible value for the organisation. This means not only identifying areas for improvement but also implementing solutions that lead to measurable results.

Driving Sustained, Lasting Change

Holistic View of the Supply Chain

Great consultants understand that change in one area of the supply chain can impact the entire system. They take a holistic view, ensuring that improvements are balanced and beneficial across all components.

Change Management Skills

Implementing change is as much about managing people as it is about managing processes. Top consultants are adept at guiding organisations through the transition, addressing concerns, and fostering a culture of continuous improvement.

Identifying and Implementing Cost Reduction Opportunities

Transport Optimisation

Good consultants can significantly reduce transportation costs by optimising route planning, consolidating shipments, and negotiating carrier contracts. They employ advanced logistics software and analytics to identify the most efficient transport methods.

Case Example: Reducing Kilometre Reimbursement

By analysing route efficiency and driver performance, consultants have helped businesses cut down on unnecessary travel, transport provider costs, kilometre reimbursements (for service clients) and fuel costs.

Warehousing Efficiency

Consultants look at various factors in warehousing operations, such as layout, automation, and workforce management, to enhance efficiency and reduce costs.

Case Example: Warehouse Layout Optimisation

By redesigning the warehouse layout and implementing better inventory management practices, consultants have helped organisations reduce waste, improve picking efficiency, and decrease storage costs.

Manufacturing Process Improvements

In manufacturing, consultants focus on streamlining operations, reducing cycle times, and implementing lean manufacturing principles to reduce waste and improve throughput.

Case Example: Lean Manufacturing Implementation

By introducing lean manufacturing techniques, consultants have helped manufacturers significantly reduce waste, improve product quality, and lower production costs.

Inventory Management

Effective inventory management is crucial for reducing costs while maintaining service levels. Consultants use sophisticated forecasting and inventory optimisation tools to balance stock levels, reduce carrying costs, and minimise stockouts.

Case Example: Safety Stock Optimisation

Consultants have assisted businesses in recalibrating their safety stock levels using advanced statistical models, leading to reduced inventory holding costs without compromising product availability.

Leveraging Technology and Innovation

Staying Ahead with Technology

Great supply chain consultants are always on the cutting edge of technology. They understand how to leverage automation, AI, machine learning, and other innovations to enhance supply chain efficiency.

Implementing Customised Solutions

They don't offer one-size-fits-all solutions; instead, they tailor their technology recommendations to fit the specific needs and capabilities of the business.

Building Partnerships and Trust

Long-term Relationship Focus

The best consultants view their role as a long-term partnership, working alongside the business to continuously identify and implement improvements.

Gaining Trust through Results

They gain trust not through promises but through delivering measurable results that positively impact the bottom line.

A great supply chain consultant brings a unique set of skills and attributes that can transform an organisation's supply chain into a strategic asset. With their deep industry knowledge, data-driven approach, insight-led strategies, and focus on tangible value, they can identify and implement substantial cost reductions across transportation, warehousing, manufacturing, and inventory. By staying current with the latest technologies and maintaining a focus on lasting change and continuous improvement, these consultants are invaluable partners in navigating the complex and ever-changing landscape of supply chain management.

Strategy & Design
January 25, 2025

Reclaiming the Long View: How Network Optimisation and Scenario Modelling Drive Strategic Investments in 2025

After a challenging 2024 marked by short-term survival strategies, business leaders in 2025 are reorienting towards medium and long-term investments. Network optimisation and scenario modelling have emerged as critical tools for reducing operating costs and improving efficiency across warehouse labour, freight, rent, and inventory.

Reclaiming the Long View: How Network Optimisation and Scenario Modelling Drive Strategic Investments in 2025

Introduction: A Shift in Perspective

2024 was a year of firefighting for many organisations, with leaders focused on managing immediate pressures such as supply chain disruptions, inflation, and geopolitical uncertainty. As the dust settles, 2025 is shaping up to be a year of recalibration. Companies are once again exploring medium to long-term investments to secure a competitive edge in an evolving landscape.

Network optimisation and scenario modelling are pivotal in this shift. These tools allow organisations to analyse, predict, and plan their supply chain strategies more effectively, unlocking cost savings and operational efficiencies across multiple areas.

This article delves into how network optimisation can drive tangible benefits across warehouse labour, freight, warehouse rents, and inventory, enabling organisations to achieve a balance between short-term agility and long-term sustainability.

Understanding Network Optimisation and Scenario Modelling

Network Optimisation involves evaluating an organisation's supply chain and logistics networks to determine the most efficient configuration. This might include decisions about warehouse locations, transport routes, and inventory placement, all aimed at minimising costs and maximising service levels.

Scenario Modelling complements optimisation by allowing businesses to simulate different conditions, such as changes in demand, costs, or constraints. This proactive approach helps leaders make informed decisions in an uncertain environment.

In 2025, organisations leveraging these tools gain the ability to:

  • Reduce costs through efficiency improvements.
  • Enhance customer satisfaction by improving service reliability.
  • Build resilience by stress-testing networks against potential disruptions.

Key Areas of Cost Optimisation

1. Warehouse Labour Spend

Labour remains one of the most significant operating costs in supply chains. Network optimisation identifies opportunities to reduce labour spend by:

  • Consolidating Warehouses: Reducing the number of facilities while maintaining service levels can eliminate redundant labour requirements.
  • Improving Labour Utilisation: Optimising workflows and scheduling can ensure the workforce is deployed efficiently.
  • Leveraging Automation: Network analysis can highlight where investments in automation, such as robotics or advanced WMS (Warehouse Management Systems), could deliver a strong ROI.

Example:
A major FMCG company used network optimisation to consolidate three regional warehouses into one strategically located distribution centre. This move reduced labour costs by 20%, as fewer workers were needed to manage inventory and fulfil orders.

2. Freight Spend

Freight is another high-impact area where optimisation delivers results. By evaluating transport routes, carrier options, and modal choices, organisations can:

  • Minimise shipping costs through efficient routing.
  • Improve load utilisation, reducing the number of trips required.
  • Shift to cost-effective transport modes where feasible, such as rail or sea freight for long distances.

Scenario Modelling in Action:
Businesses can use scenario modelling to assess the impact of fuel price increases or changes in carrier rates, allowing them to secure better contracts or adjust pricing strategies.

Case Study:
A retailer in ANZ re-evaluated its distribution network, switching from road to rail for inter-state deliveries. This reduced freight costs by 15% and lowered carbon emissions, aligning with sustainability goals.

3. Warehouse Rents

In 2025, skyrocketing commercial property prices and rising rental rates are pressing issues for businesses. Network optimisation can help mitigate these costs by:

  • Identifying underperforming warehouses that could be closed or relocated.
  • Assessing lease agreements and exploring renegotiation or alternative options.
  • Exploring shared warehousing models or co-location with partners to reduce fixed costs.

Data-Driven Lease Decisions:
Scenario modelling can simulate the long-term financial impact of staying in a high-rent facility versus moving to a more affordable location, considering factors like transport cost implications and service levels.

4. Inventory and Working Capital

Inventory optimisation is a cornerstone of working capital management. Excess stock ties up capital and increases carrying costs, while stockouts can damage customer relationships. Network optimisation addresses this by:

  • Balancing inventory levels across the network to minimise overstocking and understocking.
  • Positioning inventory closer to demand centres to reduce lead times and safety stock requirements.
  • Improving demand forecasting to align inventory with actual market needs.

Advanced Tools:
AI-powered forecasting and optimisation tools can further enhance accuracy, helping businesses dynamically adjust inventory in response to changes in demand or supply.

Real-World Impact:
A healthcare company used network optimisation to centralise its inventory at a regional distribution hub. This reduced inventory holding costs by 25% while maintaining 98% service levels.

Why 2025 is the Year for Medium to Long-Term Investments

Several factors are driving the renewed focus on long-term planning and network optimisation in 2025:

  1. Economic Stability:
    After navigating economic turbulence in 2024, businesses now have a clearer outlook for growth and investment opportunities.
  2. Technological Advancements:
    The proliferation of digital tools, such as AI-driven analytics, cloud-based platforms, and low-code/no-code solutions, makes it easier and more cost-effective to implement network optimisation projects.
  3. Sustainability Pressures:
    Regulatory and consumer demand for sustainable practices are pushing organisations to optimise their supply chains to reduce emissions and waste.
  4. Competitive Advantage:
    Companies that proactively invest in their networks can position themselves ahead of competitors, particularly as supply chain resilience becomes a key differentiator.

Challenges and How to Overcome Them

While network optimisation offers substantial benefits, it is not without challenges. Common obstacles include:

  • Data Quality Issues: Incomplete or inaccurate data can lead to suboptimal outcomes.
  • Resistance to Change: Employees and stakeholders may resist significant changes to established processes or locations.
  • Cost of Implementation: Upfront investment in technology and expertise can be a barrier for some organisations.

Strategies for Success:

  • Conduct thorough data audits and invest in data cleaning processes.
  • Engage stakeholders early to build buy-in and address concerns.
  • Partner with experienced consultants, such as Trace Consultants, to guide implementation and ensure ROI.

The Role of Scenario Modelling in Resilience

In addition to cost optimisation, scenario modelling enhances resilience by helping businesses prepare for various eventualities, such as:

  • Sudden demand spikes or drops.
  • Disruptions in supply routes.
  • Changes in regulatory or market conditions.

By simulating these scenarios, leaders can develop contingency plans that minimise disruption and maintain business continuity.

The ROI of Network Optimisation

Organisations that invest in network optimisation and scenario modelling typically see a strong return on investment. Benefits include:

  • Cost Savings: Across labour, freight, rent, and inventory.
  • Improved Service Levels: Faster delivery times and higher accuracy.
  • Resilience: Greater ability to navigate disruptions and adapt to changes.

How Trace Consultants Can Help

At Trace Consultants, we specialise in helping businesses navigate complex supply chain challenges. Our expertise in network optimisation and scenario modelling enables organisations to unlock cost savings and build resilient, efficient networks.

We work closely with clients to:

  • Assess current network performance.
  • Develop data-driven optimisation strategies.
  • Implement solutions tailored to business needs.

As 2025 unfolds, business leaders are seizing the opportunity to pivot towards strategic, medium to long-term investments. Network optimisation and scenario modelling are essential tools in this journey, enabling organisations to reduce costs, enhance efficiency, and build resilience.

The question is: Are you ready to optimise your network and secure a competitive advantage for the future?

Strategy & Design
October 16, 2023

Supply Chain Visibility

2023 and we are still seeking visibility in supply chains

Unlocking End-to-End Supply Chain Visibility for ANZ Executives

Visibility remains a pivotal aim for supply chain professionals across Australia and New Zealand. The merits, ranging from cost reduction to customer satisfaction enhancement, have been extensively highlighted. So, what impediments are businesses encountering on their journey to achieve full visibility? Here are three prominent reasons:

  1. Incomplete Implementations: Many aim for comprehensive visibility while designing new supply chain processes. However, real-world challenges, such as budget constraints or shifting priorities, lead to only partial solutions being executed. This often leaves teams grappling with less-than-ideal systems.
  2. Prohibitive Integration Costs: It's not uncommon to witness projects where integration expenses – be it among ERP systems, supplier platforms, financial tools, or reporting instruments – skyrocket. This becomes a formidable barrier, making visibility an expensive endeavour.
  3. Fragmented Systems with Siloed Reporting: ERPs might trace inventory up to a point. But, once the inventory moves – say to a warehouse, branch, or vehicle – that traceability diminishes. The item, though dispatched, is no longer under systematic surveillance.

Yet, the landscape is not devoid of practical solutions. For instance, a food and beverage client, striving to amplify supplier performance and enhance DIFOT metrics, sought a system to monitor supplier efficacy. While a comprehensive ERP deployment was on the horizon, they needed an immediate remedy. We, at trace, employed the Microsoft PowerApps suite to craft a tool for their Loading Dock personnel. This tool not only pinpointed delivery discrepancies but also integrated seamlessly with existing systems, presenting real-time supplier performance insights.

Harnessing Pragmatic Solutions with trace

The case mentioned above epitomises how immediate, tactical solutions can fulfil the supply chain vision of unhindered visibility. At trace, our seasoned professionals assist ANZ clients, offering tools and strategies tailored to unique challenges. Rapid benefits can be harvested through platforms like Microsoft PowerApps, with more expansive, investment-heavy solutions considered subsequently.

Intrigued by our approach and keen to delve deeper?

Reach out to the trace team today. Let's explore success stories and how we can collaborate to enhance your supply chain visibility.