The Healthcare Manager's Playbook

This post digs deeper into the “set in order” step of 5S by introducing kanban. The term kanban comes from Lean/TPS principles and refers to a system for managing inventory. In this post, I use an operating room (OR) as an example of how kanban can help manage inventory effectively. The benefits of kanban include avoiding stockouts (which lead to frustration and delays) and preventing excess inventory (which leads to added expense and wasted space). While this example focuses on an OR, kanban can be applied to any department that manages and maintains supplies.

One of the strengths of kanban is its reliance on visual controls and real-time consumption to trigger reorders. The goal is to order only what is needed, in the quantities needed, at the time it is needed. Making the system visual helps avoid missed reorders and reduces the risk of stockouts. Examples of visual controls include empty containers (bins, boxes, or shelves – photo A below), reorder lines (photo B), and reorder cards (photo C). As containers are emptied, visual signals are revealed indicating it is time to reorder.

In many applications, kanban can be simple and straightforward. A two-bin system is often all that is needed for effective inventory control. For example, surgical gloves come in boxes. By stocking two boxes, the system works as follows: when one box is emptied, it serves as the signal to reorder another box. When the new box arrives, it is stocked behind the current open box, and this cycle continues. This two-bin system works well when items are easy to order, quick to restock, and consistently delivered on time.

Not all applications, however, are this straightforward. In an OR supply room—with thousands of items—factors such as cost, ordering complexity, and variability in usage often require a more structured approach.

For more complex kanban applications, consider the following areas:

• Usage rate includes how fast items are used and how much variation or spikes may occur. For example, based on a review of last year’s orders, suture A1 is used at an average rate of 10 per day with minimal variation.
• Container size refers to both the size and shape of the storage location. Larger, box-like items are ideal for stacking on open shelves (photo D). Narrower or flatter items typically store better side-to-side (like books on a shelf (photo F)) or front-to-back (like files in a cabinet (photo E)). Smaller or irregularly shaped items are usually better suited for bins (photo G). In this example, suture A1 comes in boxes containing 40 individual sutures and is easily stored on open shelves. Based on usage and ordering patterns, two boxes are kept on the shelf at any given time.

• Order details include ordering frequency, fill time, variation, and minimum order quantities (MOQ). In this example, sutures are ordered once per week, take approximately 5 days to arrive, have minimal variation in delivery time, and have a MOQ of one box. Overall, the ordering process is predictable and reliable.
• Safety stock is the additional inventory held to protect against stockouts. It is influenced by the consequences of running out (e.g., canceled surgery), variation in usage or lead time, and risk of expiration. In this example, suture A2 can substitute for A1, A1 is not expensive, and expiration is not a concern (4+ years). Because of this, safety stock is determined to be nominal and built into ordering frequency and box size.
• Reorder point (ROP) is the inventory level at which a new order should be placed. The goal is to reorder early enough to avoid stockouts, but not so early that excess inventory builds up. ROP is driven by usage rate, lead time, and safety stock. In this example, with minimal variability and substitution available, the reorder point is set at 1 box.
• Visual controls create clear, easy-to-see signals that make it unlikely to miss reorder points. Examples include empty bins, bare shelves, red lines, or cards. In this example, a empty box is used to indicate the reorder point for suture A1.
• Maintenance. Sustaining the system requires standardized work and clear ownership. A specific role or individual should be responsible for placing orders, maintaining stock levels, and replacing reorder signals as needed. Regular check-ins by supervisors can help ensure consistency and reinforce accountability.

Whether using a simple two-bin system or a more structured approach, kanban helps reduce the frustrations associated with stockouts while also preventing overstocking and wasted resources. The goal is to give clinicians confidence that the supplies they need will be available when and where they need them. With fewer concerns about inventory, clinicians can focus more energy on patient care and outcomes.

About the Author: Shane Haas serves as the National Director of Outpatient Services at Ernest Health, a leading provider of inpatient and outpatient rehabilitation. He enjoys learning and sharing leadership and management principles. His backgrounds in Physical Therapy (UF ’96) and Industrial Engineering (TTU ’02) provide a balanced heart and head perspective that shapes the Healthcare Managers’ Playbook.

Additional Resources:

Rother, M., & Shook, J. (2003). Learning to see: Value stream mapping to create value and eliminate muda (Version 1.4). Lean Enterprise Institute.

Womack, J. P., & Jones, D. T. (2003). Lean thinking: Banish waste and create wealth in your corporation (2nd ed.). Free Press.

Liker, J. K. (2004). The Toyota way: 14 management principles from the world’s greatest manufacturer. McGraw-Hill.