Revolutionizing blood bank inventory management using the TOC thinking process: An Indian case study

• Published in: International journal of production economics Vol. 186; pp. 89 - 122
• Main Authors: Lowalekar, Harshal, Ravi, R. Raghavendra
• Format: Journal Article
• Language: English
• Published: Elsevier B.V 01.04.2017
• Subjects: Blood banks; Inventory management; Theory of Constraints (TOC); Thinking Process; Inventory management; Thinking Process; Theory of Constraints (TOC); Blood banks
• ISSN: 0925-5273; 1873-7579
• DOI: 10.1016/j.ijpe.2017.02.003

The purpose of this research is to demonstrate an application of TOC's thinking process (TP) in a blood bank environment. We take an example of a real-life blood bank which is struggling with the problems of high shortage and wastage of blood products, large inventory levels, poor and erratic blood collection, limited product variety, high error rate, high turnover of technicians, high operating expenses and low revenue levels. We show using the TOC approach how these seemingly unrelated problems faced by the bank are in fact highly inter-related and how they all originate from a single root-cause. A current reality tree (CRT) is used to identify the root cause responsible for all the major blood bank problems. A conflict resolution diagram (CRD) is constructed to identify the core-conflict(s) responsible for the blood bank's poor performance. A simple yet powerful solution is generated for the given bank by breaking the core-conflict resulting from a paradigm constraint in blood banking. A future reality tree (FRT) is then constructed to show how the TOC approach will help the blood bank in lowering its shortage and wastage levels in spite of collecting lesser number of units in blood donation camps. The bank will be able to significantly cut down its inventories and can issue fresher units to the patients. Blood bank's revenue levels will increase while its operating expense will decrease due to the TOC approach. The error rate as well as the turnover of technicians in the blood bank laboratory will also reduce considerably. A simulation model shows that the proposed TOC solution will reduce the annual shortage of red blood cells by 66% and platelets by 82% at the bank. Similarly, the wastage of red blood cells will decrease by 93%, plasma by 99% and platelets by 98%. The average inventory level of the red blood cells will drop by 41%, plasma by 95% and platelets by 10%. The major contribution of this research is to show that TP tools can be extremely powerful in constructing win-win solutions for complex systems like blood banks by addressing their major problems in an integrated fashion. The TOC approach reveals how one widely-held belief in the blood banking world is the main reason behind the blood banks' poor state of affairs. The solutions presented in this research should be readily applicable to other blood banks which are struggling to improve their operational and financial performance.