IIE Transactions on Healthcare Systems Engineering (2013) 3, 240–253

Copyright 
C “IIE”

ISSN: 1948-8300 print / 1948-8319 online

DOI: 10.1080/19488300.2013.857371

Improving healthcare warehouse operations through 5S

SANJITH VENKATESWARAN, ISABELINA NAHMENS∗ and LAURA IKUMA
Louisiana State University, Dept. of Mechanical & Industrial Engineering, 2508 Patrick F. Taylor Building,
Baton Rouge, LA 70803-6419, USA
E-mail: nahmens@lsu.edu

Received April 2012 and accepted October 2013

Typically, Lean strategies in healthcare aim at improving patient throughput, reducing medication errors, redesigning work flow,
improving patient safety, and reducing cycle time. Documented studies to improve healthcare’s warehouse operations are not common
in the literature. Managing types of medical supplies has always been a priority due to demand uncertainties and the risk of shortages
that would profoundly affect patient safety. This study showcases two implementation approaches of the Lean tool 5S (Hybrid and
Traditional) conducted in three different hospitals’ central warehouses at Ochsner Health System. These warehouses store similar
medical products with over 1,000 types of supplies (e.g., syringes, gloves, primary IV) that supply different departments within
hospitals and clinics. The objective was to compare the impact of implementing Hybrid 5S (integrated with inventory management
techniques and process improvement tools) with Traditional 5S to improve healthcare warehouse operations. Both approaches resulted
in increased inventory turnover (30% increase from Hybrid 5S and 4.0% and 43% increase from the two Traditional 5S). The Hybrid
5S approach had additional improvements including 15.7% space saved and the least non-conformities to the 5S ideals. Hence, by
incorporating industrial engineering techniques such as inventory management, results from Lean tools can be enhanced.
Keywords: Healthcare, warehouse, Lean, 5S, inventory management

1. Introduction Managing types of medical supplies also plays a vi-

Hospitals are struggling due to increased costs, patient in-
juries and deaths caused by preventable errors occurring
far too often, and understaffing, which results in frustrated
hospital employees (Graban, 2008). Hospitals are an essen-
tial part of any society, but according to an administrator
of a prestigious university hospital, “we have world-class
doctors, world-class treatment, and completely broken pro-
cesses” Graban (2008, p. 1). Over the past several years,
researchers have strived to address rising costs of health-
care while improving quality of care by adopting various
industrial engineering (IE) methods and techniques. Many
of the pressing challenges in healthcare fall in the IE arena.
For instance, Koning et al. (2006) described that one of the
significant contributors to healthcare cost is operational in-
efficiency, such as medical service delivery and operation of
the healthcare delivery system. Endsley et al. (2006) consid-
ered output (wrong process, over-production, delay, large
variation in output rate and demand) and flow (waiting, du-
plication of process, rework, work interruptions, and non-
standardized work) as the two main categories of problems
in medical practices.
∗ tory management tools with Traditional 5S (5S only)— was
Corresponding author
tal role in healthcare delivery due to demand uncertain-
ties and the risk of shortages in life-threatening situations.
Even though uncertainties are impossible to be entirely re-
moved in any supply chain, a strategy could be developed to
match the supply and demand (Jones and Mitchell, 2006).
Furthermore, Graban (2008) reported frequent problems
in handling supplies/equipment in healthcare that add to
non-value added activities such as; (i) delays in delivery of
supplies due to improper ordering, (ii) errors in getting the
correct supplies, (iii) returns by departments due to defects,
(iv) difficulties in handling new equipment, and (v) effective
utilization of space. This paper explores the usability of 5S,
a Lean tool, to address a subset of these issues: delays in
delivery due to improper ordering (i), mix ups in getting
supplies (ii), and effective utilization of space (v).
Lean is an approach that can support hospital employ-
ees by improving their processes and reducing costs and
risks while allowing them to focus on providing high-
quality care. An elaborate study, which focuses on improv-
ing healthcare warehouse operations using Lean, has not
been performed in the past. This paper explores the bene-
fits of concurrent use of traditional industrial engineering
strategies, such as inventory management, to enhance the
effectiveness of 5S, a Lean tool. A new concept—Hybrid 5S,
which integrates a set of process improvement and inven-

1948-8300 
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Improving healthcare through 5S
tested in one hospital and presented here. In order to eval-
uate the impact of the Hybrid 5S, a comparative analysis
was performed with results from two other warehouses that
adopted Traditional 5S. The comparison analysis focused
on the 5S audit and percentage improvement on inventory
turnover as the evaluation metrics to determine the best
approach.
2. Lean in healthcare
Lean was originally an approach to improve manufacturing
efficiency and product quality. Beginning with the Toyota
Production System (TPS), Lean is the result of decades
of development by automotive manufacturers, resulting in
improved productivity, quality, and safety (Ohno, 1988).
Other industries have followed the automotive industry’s
lead in changing their production culture by implementing
the principles of Lean and have achieved similar results, in-
cluding banks, educational institutes, police departments,
and construction (Graban, 2008; Koskela, 2000). Accord-
ing to King et al. (2006) one of the main aspects of Lean
thinking is the understanding of a complex process instead
of starting with an assumed solution. In practice, Lean
means getting the right things, to the right place, at the
right time, in the right quantity while minimizing waste and
being flexible and open to change (Womack, 2005). Lean
implementation is based on five fundamental principles: (i)
identifying what the customer values; (ii) identifying the
value stream and challenging all wasted steps; (iii) pro-
ducing the product when the customer wants it and, once
started, keeping the product flowing continuously through
the value stream; (iv) introducing pull (waiting to act until
there is demand for that action) between all steps where
continuous flow is impossible; and (v) managing toward
perfection (Womack and Jones, 1996). Hence, Lean offers
a systematic approach to change a company’s culture to
one that is proactively productive and safer.
The demand for Lean in healthcare is growing due to
its systematic approach to improving quality, safety, and
efficiency (Kim et al., 2006), although the use of Lean in
the healthcare sector is not new. The literature offers evi-
dence that some hospitals started experimenting with Lean
in the 1990s (Graban, 2008). Today, there are many ex-
amples of the positive impact Lean is having in hospitals
throughout the world (e.g., 60% reduction of turnaround
time for clinical laboratory results, 60% reduction in the cy-
cle time of instrument decontamination and sterilization,
95% reduction on patient deaths related to central-line-
associated blood stream infections, reduced waiting time
from 14 weeks to 31 hours—from first call to surgery)
(Graban, 2008). Furthermore, Jones and Mitchell (2006)
argue that implementing Lean has the potential to bring
four waves of benefits: improved quality and safety—fewer
mistakes, accidents and errors, resulting in better patient
241
care; improved delivery—better work gets done sooner; im-
proved throughput (amount of work completed)—the same
people using the same equipment find they are capable of
achieving much more; and accelerated momentum—a sta-
ble working environment with clear, standardized proce-
dures creates the foundation for improvement.
The main purpose of implementing Lean is to reduce
the seven wastes: defects, over-processing, over-production,
excess motion, travelled distance, inventories, and wait-
ing time. Zidel (2006) argued that hospitals cannot con-
tinue to operate as they have in the past because insur-
ance companies are not willing to pay for the non-value
added activities or inefficiencies associated with hospital
processes. While competing against external problems such
as reimbursement issues, staffing shortages, rising costs,
and the increase of physician-owned ambulatory care facil-
ities, hospitals should take necessary measures to address
these wastes (Zidel, 2006). Past Lean implementation in
healthcare has proven to alleviate some of these inefficien-
cies. For instance, Weinstock’s (2008) studies on Lean prac-
tices resulted in reduced patient wait times, increased room
turnover, increased charting accuracy, improved inventory
control, and increased revenue. A study performed by Wo-
jtys et al. (2009) showed an improved patient scheduling
process with the use of Lean. Zidel (2006) reported that
hospital quality levels improved significantly, and cost sav-
ings were realized by reducing the percentage of non-value-
added work. Cooper and Mohabeersingh (2008) acceler-
ated patient throughput after Lean implementation. These
studies showed Lean as an effective strategy to resolve inef-
ficiencies, reduce cost and achieve faster turnaround while
using the same level of resources (e.g., staff).
One of the seven wastes that Lean seeks to reduce or
eliminate is excess inventory. Other approaches to reduce
excess inventory in hospital settings include the success-
ful use of supply chain management (Rivard-Royer et al.,
2002; Samuel et al., 2010) or inventory management (Del-
laert et al., 1996). However, in the Lean literature related to
healthcare, excess inventory is poorly addressed. In prac-
tice, inventory of traditional healthcare systems has been
politically driven or by an individual’s experience rather
than relying on historical data (Nicholson et al., 2004).
Even though past studies (Fine et al., 2009; Smith, 2003)
discussed the role of Lean in reducing excess inventory, they
fail to mention specific practices that can effectively man-
age inventory levels and provide a suitable environment that
can be sustained for the future.
3. Lean and inventory management in healthcare
Inventory management is a critical function to any busi-
ness due to the potential implications of inadequacies
of inventory control, which can result in delays, dissat-
isfied customers or reduction of working capital. This
is also true in healthcare. Several inventory management
242
techniques are in practice today and are either determinis-
tic or probabilistic. The ABC classification is a widely used
inventory management tool to classify supplies that enables
the identification of critical and least important supplies.
The original ABC classification was developed at General
Electric during the 1950s and is based on the Pareto prin-
ciple that 20% of the people controlled 80% of the wealth
(Guvenir and Erel, 1998). Guvenir and Erel suggested that
companies dealing with the burden of a large number of
supplies must classify them and develop suitable inventory
control policies for each classification. The classification
is based on percentage of annual usage, calculated based
on annual consumption and the average unit price of each
supply. Then, the percentage of annual usage is ranked
to appropriately assign a location in the warehouse for
each supply, based on the supply rate of consumption and
cost.
The ABC classification states that the relatively small
number of supplies at the top of the list controls the major-
ity of the total annual dollar usage and forms the class ‘A’
category (e.g., 20% of the supplies that constitute 80% of
the overall inventory value is represented by class ‘A’). The
majority of supplies at the bottom that controls a relatively
small portion of total annual dollar usage constitute class
‘C’. The supplies in between constitute class ‘B’. The out-
come of ABC classification enables companies to provide
effective means of control in ordering procedures and to
focus on the demand forecast class ‘A’ supplies. In contrast
class ‘C’ supplies receive the least importance, and class
‘B’ supplies a moderate importance in the control mea-
sures, and the outcome could lead to substantial savings
(Guvenir and Erel, 1998). Previously in healthcare many
researchers have used ABC as a strategy to classify drug
inventory in pharmacies (Devnani et al., 2010; Vaz et al.,
2008). Implementing ABC helped effectively control drug
inventory, in particular maintaining the required items in
the A category, but it could compromise the availability
of items of vital nature from B and C categories (Devani
et al., 2010). Therefore, Devani et al. (2010) recommended
the use of ABC concurrently with VED (vital-essential-
desirable analysis, which categorizes based on critical val-
ues and shortage cost of the item) to identify the drugs
requiring stringent control for optimal use of funds and
elimination of out-of-stock situations in the pharmacy. In
the current study, ABC analysis was used to improve the
delivery of the supplies to the patient at the right time.
The purpose of the current study was to improve the de-
livery of the supplies to the patient at the right time. ABC
analysis is more appropriate because it looks into the rate
of consumption and monetary values. ABC analysis helps
to establish a flow whereas VED does not look into the
flow, it only focuses on the criticality of the items. Further-
more, the ABC inventory management technique applied
to healthcare supplies, aids in determining the optimal par
level of each item and help in the redesign of the warehouse
by grouping frequent items.
Venkateswaran et al.
The use of inventory management techniques in the
healthcare industry poses challenges both from manage-
rial and operational perspectives (Kelle et al., 2009). The
major issue that healthcare faces is the identification of the
actual demand for a supply. Traditional forecasting tech-
niques may not prove to be worthy due to uncertainty and
seasonal demand. Healthcare industry can only project
production outputs based on their daily schedule rather
than a forecasted data (Martinelly, 2008). Martinelly also
suggested that healthcare must maintain distribution and
inventory systems similar to those in the manufacturing in-
dustry since the major issue in par levels (exact amount of
supplies that must be stocked to meet demand) is that these
levels tend to reflect the desired inventory levels of patient
caregivers instead of the actual inventory levels needed in a
department. Furthermore, Kelle and colleagues concluded
that healthcare, unlike other industries, has not given nec-
essary detailed attention to inventory management in ad-
dition to ensuring patient safety and reduction of overall
healthcare costs. Kelle et al. recognized that the stakeholder
relationships, product consideration, and managerial and
regulatory policies were unique in healthcare. The outcome
of maintaining excess inventory could lead to other issues
such as holding costs and space constraints. Martinelly
(2008) argues that hospitals in most cases are space con-
strained forcing them to order supplies selectively, which
is also an experience-based or politically driven inventory
control practice that leads to overstocking some supplies.
4. Lean Tool: 5S applied to healthcare
5S, a foundation tool of Lean, is the simplest to imple-
ment for organizing and standardizing the workplace (Kil-
patrick, 2003). Ho (1999) described 5S as a technique to
establish and maintain a quality environment in an organi-
zation. 5S is a team-based process improvement tool that
focuses on creating order in the work environment, and
in turn supports error proofing, visual management, and
preventive maintenance. Each S, sort, set to order, shine,
standardize, and sustain, represents actions needed to cre-
ate the desired work environment. The outcome of 5S is
a well-organized department, where employees can easily
distinguish common and uncommon conditions to ensure
a reduction of defects and costs, and to maintain a safe
work environment. Furthermore, most Japanese 5S pro-
fessionals maintain that 5S not only improves the physical
environment but also thinking processes (Ho, 1999).
Most recently, this tool is successfully propagating
throughout the healthcare industry. Some of the major
benefits of using 5S in the healthcare setting include the
creation of space for revenue-generating functions rather
than storage, time saved in travel and search, and assurance
that work areas are HIPAA (Health Insurance Portability
and Accountability Act) and TJC (The Joint Commission
on Accreditation of Healthcare Organizations) compliant
Improving healthcare through 5S
through proper organization, safety, and hygiene (Nah-
mens et al., 2011). 5S greatly improves housekeeping prac-
tices in healthcare and makes employees more aware of
potential issues. For example, Kim et al. (2009) showed
that after standardizing the layout and content on supply
carts through 5S, nurses could more easily identify safety
or quality problems. Other 5S projects with similar results
have been successfully applied to many areas of health-
care, such as wards of acute patient facilities, finance, in-
formation technology, laboratories, and community offices
(Esain et al., 2008). More specific results include Laing and
Baumgartner (2005), who reported savings of $7,000 on
linens and inventory, $1,000 on suture supplies, a decrease
of two-thirds of on-hand inventory, elimination of 0.8 full
time equivalent (FTE) and reduced cycle time by 17 minutes
in an endoscopy unit in a community hospital.
Rutledge and colleagues (2010) considered 5S as a nec-
essary component to an overall Lean transformation. Pre-
vious research has combined 5S with other improvement
tools with success. For example, Guimaraes and Carvalho
(2012) presented the implementation of traditional Lean
tools (such as 5S, VSM and gemba) as part of a Kaizen
event. They implemented a 10-month Kaizen event at a
radiology department (including back-office area, radiol-
ogy rooms, front office, and warehouse), which resulted in
improved staff morale and time reductions (e.g., customer
waiting times and process times).
4.1. 5S Traditional
The traditional 5S stands for five Japanese words: Seiri,
Seiton, Seiso, Seiketsu and Shitsuke. After its immense
popularity in Japan, its benefits spread across the west-
ern countries and translated in English (sort, set to order
shine, standardize, and sustain). Nahmens et al. (2011) de-
scribed in detail the 5S tool as it is applied in healthcare
organizations.
In practice, hospitals have tailored the implementation
of the traditional 5S to meet their needs, resources and
timelines. For example, the observed health system in the
current research has adopted a three-phase implementa-
tion of 5S which includes pre-work, implementation, and
post-analysis. Pre-work entails 5S team selection and train-
ing, and baseline data collection and analysis. Implementa-
tion involves the performance of the 5S, and then the post
analysis, which evaluates the outcome of the improvements
implemented.
4.2. 5S Hybrid
The Hybrid 5S model was developed using the implementa-
tion structure of a Kaizen event (Kanji, 1996) and the inte-
gration of process improvement tools and inventory man-
agement techniques. Figure 1 displays the four phases of
the Hybrid 5S model: Observation and preparation, Plan-
243
ning Lean initiatives, Implementation, and Measurement
of improved process.
4.2.1. Phase I
This phase involves observing the current process to iden-
tify problem areas (e.g., areas of delay, inefficiencies and
waste) and making needed preparations for the Lean ini-
tiative. Value Stream Mapping (VSM) is the first step to
identify problem areas affecting value from the perspective
of the customer (Womack et al., 1996). VSM documents all
activities in the current process, including material and in-
formation flow. Pyzdek (2003) highlighted the role of VSM
in the overall context of Lean philosophy as (i) defining
value from the customer’s view, (ii) mapping the current
state of the value stream, (iii) applying the Lean tools to
identify waste in the current value stream, (iv) mapping
the future-state process, (v) developing a transition plan,
(vi) implementing the plan, and (vii) validating the new
process. VSM is an effective tool to identify opportunities
for improvements and distinguish between the value added
and non-value added activities (Kumar et al., 2006). VSM
allows Lean teams to brainstorm ideas for improvement,
propose new ideas, eliminate waste and improve processes
into value from the customer’s perspective.
4.2.2. Phase II
This phase gathers improvement ideas from phase I and
develops an action plan to carry out those improvements.
It also entails preparing for the Lean initiative (e.g., buy-
ing supplies, requesting permits, etc). For the current study,
planning of the Lean initiatives involved inventory manage-
ment techniques such as ABC classification and estimating
ordering and carrying costs. Another aspect of the Lean
initiative in the planning phase is layout redesign strategy,
which, according to King et al. (2006), helps improve pro-
cess flow in healthcare operations.
4.2.3. Phase III
This phase entails implementation, including the execution
of the first four S’s. In order to carry out the 5 S’s, an in-
ventory model needs to be developed to estimate inventory
levels and required space (e.g. shelves).
4.2.4. Phase IV
This phase measures the improved process evaluating its ef-
fectiveness, efficiency, relevance and impact (Wilson, 2000),
including the execution of the last S- sustain. Fine et al.
(2009) pointed out that sustaining a Lean initiative is the
most challenging phase and needs to be addressed by treat-
ing it as a long-term commitment. To ensure the effective-
ness of the Hybrid 5S performance metrics such as the
5S audit tool developed by Ho (1999) are utilized. Also,
in order to determine the impact on the inventory of the
warehouse, inventory turnover is documented.
244
Fig. 1. 5S Hybrid model (color figure available online).
The 5S Hybrid extends and enhances traditional Lean
tactics because inventory levels and ordering frequency of
supplies, are concurrently addressed while creating a clutter
free space. By integrating inventory management concepts
and implementing them concurrently, allows for a timely
evaluation of the process or ordering supplies, quantity and
frequency of delivery and usage to optimally reorganize and
streamline a warehouse. Whereas, if a traditional 5S is carry
out first and then inventory management concepts, there is
a missed opportunity for adjusting proper inventory levels
and optimizing the storage space. Hence, expanding the
improvements of the 5S beyond the space being 5S into the
management of supplies.
Venkateswaran et al.
5. 5S audit
An audit tool is essential to identify whether the imple-
mentation has been undertaken correctly and enables de-
tection of issues that can be immediately dealt with. Several
5S audit tools are available in the literature that provides
a quick check on the 5S implementation process. For in-
stance, Khamis et al. (2009) focused on developing a 5S
practice checklist for the manufacturing industry by sur-
veying two companies on their housekeeping, environmen-
tal performance, health and safety. Ho (1999) developed
a 5S audit tool that effectively deals with identifying the
non-conformance in an organization. This tool has been
Improving healthcare through 5S
designed to suit any organization, by means of 50 questions
for the five stages of 5S. The scoring technique considers an
evaluation of a total number of non-conformance activities
for a total score of 50 (e.g., higher scores are associated with
worse performance) (Ho, 1999).
6. Methodology
This study showcases two implementation approaches of
5S: Traditional and Hybrid, conducted in three different
hospitals’ central warehouses at Ochsner Health System.
The objective was to compare the impact of implement-
ing the Hybrid and Traditional 5S to improve healthcare
warehouse operations. To evaluate improvements of each
5S model, a hypothesis was framed as follows:
6.1. Null hypothesis
H0 : There is no significant change in the inventory turnover
for the warehouse after the implementation of the Hy-
brid/Traditional 5S.
6.2. Alternative hypothesis
H1 : There is a significant change in inventory turnover
for the warehouses after the implementation of the Hy-
brid/Tradition 5S.
In order to test the above hypothesis, inventory turnover
data was documented for at least six months before and
after the 5S implementation for each hospital. Inventory
turnover is the ratio of the cost of the goods sold to the
average inventory. This results in an interrupted time series
design, which is a type of quasi-experimental design. To
determine if inventory turnover changes after the Hybrid
or Traditional 5S and to determine if any differences be-
tween the Hybrid and Traditional 5S, regression analysis
(α = 0.05) was used (SPSS v. 20). Because Traditional
5S has been used previously in the healthcare system,
these two hospitals were considered the control group of
the experiment, and the Hybrid 5S was the experimental
group.
In addition, a modified 5S audit tool (Ho, 1999) was
used to evaluate the sustainability of each 5S approach. The
5S audit identifies non-conformities that are a setback for
successful 5S implementation. The 5S audit was modified
to suit hospital warehouses where 0–5 of non-conformities
were depicted as 0 – 5 as ‘excellent’, 6–10 as ‘good’, 11–15 as
‘average’, 16–20 as ‘marginal, and non-conformities greater
than 20 depicted as ‘poor’. The final comparison of mod-
els was based on the performance metrics of the monthly
inventory turnovers and the 5S audit scores.
245
7. Case study: Implementing 5S in healthcare
7.1. Setting
The three hospital warehouses each stored over 1,100 types
of medical supplies (e.g., syringes, gloves, primary IV) for
different departments within each hospital and other clin-
ics. The process of ordering supplies to and from the central
warehouse is carried out electronically by using an appli-
cation called LAWSON. LAWSON contains a complete
history of each item such as the demand of each month,
item cost, current stock, and also the vendor supplying the
item. LAWSON also has the provision to maintain the in-
ventory of each item and has the ability to calculate the
economic order quantity (EOQ) and re-order level (ROL)
using pre-defined formulas. Despite these features, inven-
tory control practices were purely based on the experience
of employees in all of the warehouses. All three warehouses
had the LAWSON, but was not fully utilized as an inven-
tory management software. This system facilitated access
to inventory turnover data before, during, and after im-
plementing the Hybrid 5S and Traditional 5S. However,
prior to the implementation all three hospitals were man-
aging their inventory through their staff experience. After
the implementation, only the hospital that implemented
the hybrid 5S extended their use of Lawson by adopting
the functionality of economic order quantities (EOQ) and
re-order level (ROL) calculations.
In order to assess the efficiency of the warehouses after
the implementation of both 5S models, the directors of each
warehouse completed the 5S audit. These directors actively
participated in the process improvement initiatives.
7.2. Traditional 5S implementation
In order to evaluate the impact of Traditional 5S, the im-
plementation was carried out in two central warehouses at
Ochsner Health System. This implementation was carried
out over a period of four months with a small team of
warehouse workers including the department director and
a Lean leader (employee in charge of implementing Lean
across the hospital).
7.2.1. Phase I: Pre-work
During this phase 5S teams were created and trained with
Lean basic concepts and tools. Then the 5S teams doc-
umented a baseline of the current warehouse operations
and determined the actual inventory needs by manually
adjusting on-hand quantities to reflect true demand from
the hospital and clinics. Spaghetti diagrams were used to
assess the time spent and the distance travelled by work-
ers in searching for supplies. After a brainstorming session
and interview with hospital workers, the teams drafted a
plan for required resources including tools and equipment
and evaluated areas for opportunities to use visual and er-
gonomic enhancement to improve warehouse operations.
246
The outcome of this phase was the identification of issues
such as that the current system failed to address the distance
travelled by employees for picking up supplies, and that the
supplies were grouped based on functional aspects rather
than frequency of usage.
7.2.2. Phase II: Implementation
During this phase the 5S team implemented the 5 S’s, sort,
set-to-order, shine, standardize, and sustain. During sort-
ing the team eliminated all obsolete items based on usage
reports. Then, the team set in order by grouping similar
items followed by visual enhancement techniques such as
labeling shelves and aisles. The team took provisions to en-
sure each item had a single location. A cleaning mechanism
was enforced between the groups to monitor the tidiness of
the warehouse. An audit plan was created for sustain and
standardize phases. The implementation phase was carried
out over a period of two days, during a weekend. Figure 2
displays the outcome of implementing the 5S.
7.2.3. Phase III: Post-analysis
A 30-day action plan was developed for sustaining the im-
provements of the warehouse which reflects any issues en-
countered, action taken, and the status of completion.
Fig. 2. Before and after implementing the Traditional 5S (color figure available online).
Venkateswaran et al.
8. Hybrid 5S Implementation
Ochsner Health System – Baton Rouge Central Supply, was
chosen for the study to implement the Hybrid 5S. This im-
plementation was carried out for a period of four months
with 15 warehouse workers including the director and a
Lean leader. Their current practice for inventory manage-
ment was driven by the experience of one single employee.
The warehouse was facing problems such as over-/under-
stocked supplies, increase in time due to look-up of sup-
plies, space constraints, and no standardized process in the
arrangement of supplies. To address these problems, the
Hybrid 5S model was implemented (Figure 1). The Hybrid
5S was carried out in four phases, with the objective of
standardizing supply chain processes and optimizing ware-
house operations.
8.1. Phase I: Observation and preparation
The materials management director and 5S team conducted
a brainstorming session, and the outcome of this effort was
a draft of the current state value stream map (Figure 3) of
the warehouse operations.
Improving healthcare through 5S 247

Fig. 3. Current state value stream map (Hybrid 5S) (color figure available online).

The plan included assessing their current inventory,
space utilization and the distance travelled by employees
while picking items. Spaghetti maps were used to determine
distance travelled for picking various clinic and department
orders. For instance, the travel pattern for picking up sup-
plies for Telemetry department in the hospital is shown
in Figure 4. Bottlenecks were observed during the daily
routine of picking orders resulting in excess travel for the
warehouse personnel, thus increasing the time picking of
each order.
The outcome of this phase revealed inaccuracies in deter-
mining re-orders levels and order quantities. This resulted
in excess inventory, which in turn lead to inefficiencies on
space utilization.
8.1.1. Phase II: Planning Lean initiatives
During this phase the ABC inventory management tool
was implemented, an inventory model was developed and
the warehouse layout was redesigned. ABC classification

Fig. 4. Spaghetti map (example: travel pattern-supplies for telemetry).

248 Venkateswaran et al.

Fig. 5. Warehouse layout redesign strategy (color figure available online).

helped categorize the most critical supplies as ‘A’, moderate employees, who were involved in redesigning the warehouse
supplies as ‘B’ and least effective supplies as ‘C’ category. layout and allocating supplies to their designated shelves.
The warehouse stored 1,100 different items. The outcome The redesigned layout focused on reducing the distance
of the ABC classification resulted on 149 items classified travelled by employees for picking supplies. This was made
as Category A, which represented 13% of the items and possible by classification of the supplies based on results
constituted 82% of the inventory value. from the ABC classification that limits the frequency of
In order to develop a deterministic inventory model, the employee travel to ‘A’ and ‘B’ class supplies (Figure 5). The
ordering cost and the holding cost were estimated to estab- before layout had 344 square feet of storage space (171
lish the Economic Order Quantity (EOQ) and Re-Order storage racks), whereas the after layout had 288 square
Level (ROL), and then updated into LAWSON. The ba- feet of storage space (144 racks). The driving force of this
sic inventory model for calculating EOQ and ROL are as reduction was twofold: the 5S provided opportunities to
follows. purge items through the sorting step, and the ABC pro-
 cess allowed for the identification of items that required
EOQ = 2AD/H (1)
adjustments on their ordering levels.
Where, A spaghetti map was created using the same Telemetry
supply list from Figure 4. Figure 6 shows the anticipated
A = Ordering Cost, pattern of picking under the improved warehouse layout
D = Annualized Demand, (after implementing the ABC).
H = Holding Cost.
The Reorder Level (ROL) is expressed as;
ROL = LD/365 (2)
Where,
L = Lead Time
D = Annualized Demand
Equation (1) represents a deterministic inventory model,
which assumes that a uniform demand exists throughout
the cycle. Currently, LAWSON supports the use of EOQ
and ROL as expressed in equations (1) and (2). Benchmark-
ing was used as a substitute for inaccessible information.
Specifically, results from the Association for Healthcare Re-
source & Materials Management (www.ahrmm.org) were
used to determine the holding costs (H) of each supply in
the hospital warehouse.
Another important aspect of this phase was the redesign
of the layout based on the new inventory levels estimated. Fig. 6. Anticipated picking pattern on improve layout (example:
Brainstorming and interviews were conducted among 10 travel pattern-supplies for telemetry).
Improving healthcare through 5S
8.1.2. Phase III: Implementing Lean strategies
Includes the implementation of the inventory model and
first four steps of 5S- sort, set to order, shine and stan-
dardize. The implementation phase was carried out over
a period of two days, during a weekend. The implemen-
tation of “sort” resulted in removal of obsolete supplies
and a space reduction of 15.7%. In the “Set to Order”
step, participants labeled each supply and aisles follow-
ing the ABC classification. The racks were rearranged and
placed in their designated area, based on the results from
the spaghetti diagram. Space was allocated for each supply
based on the formula, 75% of the sum of its EOQ and ROL
values. The materials management director selected 75%
based on personal experience to account for fluctuations in
demand. Shelf and rack height were standardized following
OSHA (Occupational Safety and Health Administration)
guidelines. “Shine” entailed cleaning the floors and aisles
from oil and dust, cleaning the racks and providing suf-
ficient lighting to each aisle. “Standardize” included the
adoption of a reorder report, at the end of each day, by
warehouse employees using the LAWSON software. Visual
management techniques were introduced to alert employ-
ees when supplies exceed the space allocated or need to be
reordered.
8.1.3. Phase IV: Post-analysis
A 30-day action plan was formulated to “sustain” (the fifth
S) the improvements, which included a periodic quantity
check on category ‘A’ supplies to ensure proper supplies
levels.
20
18
16
14
Inventory Turnover
12
10
8
6
4
2 5S
0
1 2 3 4 5 6 7 8
Hospital 1
Fig. 7. Inventory turnover before and after 5S for 3 hospitals.
249
9. Results
After collecting data and documenting the case studies,
results were evaluated to assess the impact of the two 5S
methods on warehouse operations. Inventory turnover for a
year was considered and compared six months before and
after the implementation of the two traditional 5S (Fig-
ure 7). For the Hybrid 5S the inventory turnovers were
taken for eleven months before and eleven months after the
5S initiative (Figure 7).
Inventory turnover of the Hospital 3, where the Hybrid
5S was implemented improved by 30% on average (from
7.74 to 10.1 turns on average); compared to the Traditional
5S at 4.0% for Hospital 1 (from 15.4 to 16.0 turns) and
43% for Hospital 2 (from 6.60 to 9.43 turns). In addition,
Hospital 3 improved inventory operations by saving 16%
space through reducing the number of steel racks from 171
to 149. Warehouse space reduction was not observed for
either Traditional 5S.
The regression analysis used several variables to deter-
mine differences before and after 5S and between the Tradi-
tional and Hybrid versions of 5S for the current study. The
following regression equation (3) and variables are defined:
Y1 = b0 + b1 T + b2 D + b3 P + b4 G + b2 GT
+ b6 GD + b7 GP (3)
Where, Yt is the turnover in month t
b0 , b1 , b2 , b3 , b4 , b5 , b6 , and b7 are constants determined by
the regression analysis
T represents change in turnover by month over the entire
study period
D represents before or after the 5S for all hospitals
9 10 11 12 13 14 15 16 17 18 19 20 21 22
Months
Hospital 2 Hospital 3 (Hybrid 5S)
250 Venkateswaran et al.
Table 1. Regression analysis results

Unstandardized Coefficients
Standardized Coefficients
Model Beta Std. Error Beta t-statistic p-value

(Constant) 25.773 2.159 11.936 .000

T −.488 .165 −.678 −2.956 .005
D 1.600 1.389 .220 1.152 .257
P .794 .345 .671 2.303 .027
G −6.914 .683 −1.581 −10.126 .000
GT .894 .156 1.776 5.730 .000
GD −.187 2.012 −.022 −.093 .927
GP −1.339 .381 −1.100 −3.514 .001

P represents the change in trend of turnover after the 5S
for all hospitals
G represents the hospital
GT represents the difference in trend between Traditional
and Hybrid 5S before the 5S
GD represents the difference between Traditional and Hy-
brid 5S immediately after the 5S
GP represents the change in trend between Traditional and
Hybrid 5S after the 5S.
There was a significant difference in turnover between fa-
cilities (G) over the entire study period, with Hospital 1
(Traditional 5S) having much higher turnover rates than
Hospital 2 (Traditional 5S) or 3 (Hybrid 5S). There was
no significant increase in average turnover (D) overall, but
there was a significant increase in turnover trend overall (P)
after the 5S. This indicates that on average, facilities showed
a positive trend towards increasing turnover ratios after the
5S, regardless of using the Traditional or Hybrid 5S. The
Hybrid 5S hospital (Hospital 3) had a significant increas-
ing trend in turnover prior to the 5S when compared to the
Traditional 5S hospitals (GT). There was no significant dif-
ference in turnover immediately after the 5S events between
hospitals (GD), but there was a significantly lower trend in
turnover for the Hybrid 5S compared to the Traditional
5S hospitals (GP). This indicates that the increasing trend
in turnover after 5S was smaller for the Hybrid 5S hospi-
tal. Table 1 provides the output of the regression analysis.
Note that regression analysis showed significant decrease in
turnover by month (T) over the entire study period, but this
variable is not useful in answering our research questions
since it does not differentiate facility or 5S type.
In Table 2, the 5S audit scores showed a lower number
of non-conformities in the Hybrid 5S hospital (thus better
performing) than the traditional 5S hospital. The Hybrid
5S fell into the “good” category for non-conformities while
both Traditional 5S facilities fell into the “marginal” cate-
gory based on the overall non-conformities scale developed
by Ho (1999).
10. Discussion and conclusions
The results of the study show that while both Traditional
and Hybrid 5S improved inventory turnover trends, the
Hybrid 5S also improved inventory storage space and lay-
out. Even though one traditional 5S witnessed a remark-
able increase in inventory turnover (43% on average), space
in the warehouse was not reduced. The other traditional
5S showed only a 4% increase in inventory turnover. The
difference between these two traditional 5S hospitals may
be explained by two possibilities. First, inventory on-hand
was adjusted manually at both sites, mostly by eliminating
supplies not being used according to usage reports. Other
adjustments were made at this time, but the amount was de-
termined largely by personal experience, so the quality and
accuracy of these adjustments may have varied between the
hospitals. The second potential factor influencing turnover
rate differences may be that the traditional 5S hospital with
high turnover levels had closed after Hurricane Katrina and
was recently re-opened. There may have been some adjust-
ments being made as hospital operations ramped up to full
capacity, particularly during the months prior to the 5S,
which may also explain why the increase at this hospital
was greater than the Hybrid 5S hospital as well.
Hybrid 5S showed a positive influence on the warehouse
after the implementation with an increase in inventory

Table 2. Audit scores after 5S implementation

Hospital Sort Set to Order Shine Standardize Sustain Overall non-conformities

Hospital 1 (Traditional) 2 2 3 6 5 18
Hospital 2 (Traditional) 2 1 3 6 4 16
Hospital 3 (Hybrid) 1 2 2 3 1 9
Improving healthcare through 5S
turnover of 30% on average and nearly 16% space saved.
Martinelly (2008) discussed that hospitals in most cases are
constrained due to lack of space forcing them to order less.
The ABC classification of supplies and the rearrangement
of the aisles in the Hybrid 5S approach resulted in the most
frequently used items (A category) being grouped together
and easiest to access. Although the way orders were picked
did not changed, including number of orders processed and
operators. The improvement was due solely to the layout
changes and removal of unnecessary items (e.g., purging
unnecessary items and adjusting ordering levels). This was
not the case with Traditional 5S, where the supplies were
grouped based on their functionality (e.g., supplies related
to Ophthalmology, Emergency, Rheumatology, Gynecol-
ogy). Clear labeling of supplies was done for both the 5S
strategies, although, Hybrid 5S labeling involved unique
tags for Category ‘A’ supplies. Hence, the Hybrid 5S effec-
tively integrated inventory management tools and strate-
gies.
Contrary to expectations, the implementation of the Hy-
brid 5S did not result in significantly more turnovers than
the Traditional 5S through the integration of inventory
management tools. However, results from the Hybrid 5S
revealed a much better scorecard due to the structured
Kaizen event and continuous involvement of employees
post the Kaizen event by periodically checking quantity
levels of items in the ‘A’ category. The Kaizen event struc-
ture supported the identification of root causes and pro-
vided a systematic procedure to tackle issues and maintain
improvements. Periodically checking quantity levels of the
most used and costly items served as a mechanism to sustain
the improvements. In contrast, the Traditional 5S focused
on financial benefits rather than sustaining the benefits for
the long term. Moreover, the Traditional 5S ignored the use
of inventory techniques and other Lean process improve-
ment tools.
An effective process improvement method needs to ad-
dress the “sustain” of the 5S. This was well observed after
the implementation, where inventory turnover showed non-
uniform distribution rather than a steady increase for all
the three warehouses. Employee training and top manage-
ment involvement needs to be exercised constantly in order
to sustain the improvements. Other factors that influenced
the Hybrid 5S was teamwork and employee and manage-
ment’s commitment. As mentioned by Pheng and Khoo
(2001), for self-sustained progress in a process, employees
should be encouraged to identify and provide solutions for
a problem.
Other challenges in implementing 5S in healthcare in-
clude the complexity in defining value within healthcare
and the lack of guidance on how to avoid unsuccessful 5S
events. There are three perspectives in healthcare: clinical,
operational, and experiential (Young and McLean, 2008)
from multiple stakeholders including payer, patient, clin-
ician, manager, and industry (Gray, 2007). Each of these
perspectives results in different values, which makes defin-
251
ing the goals of a 5S event difficult. The current study
focused on the operational perspective, but future studies
could include the impact on clinical and experiential per-
spectives. In planning 5S events for healthcare, determining
the constraints and features of successful events can be diffi-
cult because the literature tends to focus only on successful
5S events (Mazocatto et al., 2010).
Two limitations of the regression analysis are noted. In
general, when performing an interrupted time series de-
sign, at least twelve data points before and after the treat-
ment are recommended for sufficient power when effect
sizes are moderate (Perrin, 2009). The current study had
eleven points before and after for the Hybrid 5S but only
six points before and after for the two Traditional 5S hos-
pitals. While this does total twelve points for Traditional
5S, having data for a full year of data before and after the
5S event would allow researchers to observe seasonal vari-
ations in demand in addition to improving the power of the
analysis. Also, the current regression equation was devel-
oped only to analyze the current study and is not intended
to predict future turnover rates. However, similar analysis
using time series design could be implemented in the future
with other inventory management systems.
Another limitation in this research was gathering histor-
ical usage data of supplies from the hospital and clinics,
which forced the use of a deterministic rather than prob-
abilistic inventory model. For future research, the imple-
mentation of a probabilistic inventory model will be more
beneficial since it would consider the effects of any seasonal
and uncertain demands. The inventory model implemented
assumed that the demand remained constant throughout
the year. Seasonal demand of supplies during natural or
anthropogenic calamities was not considered. For instance,
given the healthcare system’s location, additional supplies
are stocked annually during hurricane season. Although
these are tracked separately from regular supplies, varia-
tions such as this may influence the daily activities in the
hospital warehouses. These issues ought to be addressed
in order to overcome the limitations in this research. The
influence of the number of beds in a hospital facility was
not considered. The inventory turnover was not normalized
with respect to the number of patients due to unavailability
of patient census. Some of the possible confounding factors
that were not addressed in the 5S Audit survey include the
differences between the raters who audited the warehouse
and influence due to the lack of employee cooperation and
adaptability.
In revisiting Graban’s (2008) list of problems in supply
handling, the strategies employed in this study focused on
the last problem: effective utilization of space. By increasing
the turnover rate of supplies, space is not taken by supplies
that languish on shelves, never being used. This makes the
warehouse area of the hospital more productive and better
utilizes the space. Furthermore, the Hybrid 5S reduced the
space needed for the current supplies by 16%, thereby leav-
ing room for supplies which may have been understocked
252
or simply more space for ease of movement. The reduced
space increases the utilization of space even more. Overall,
the 5S approach, whether Traditional or Hybrid, promotes
the effective utilization of space and successfully address
one facet of supply handling problems in healthcare.
From the success of Hybrid 5S future studies can include
a set of guidelines to serve as a template to replicate Hybrid
5S in other hospital warehouses. Moreover, probabilistic
models can be adopted for inventory management which
can satisfy uncertain or seasonal demand in healthcare.
Process improvement tools and procedures can be studied
for the development of an effective approach or model that
is best suited for an organization.
11. Lessons learned: Healthcare guidelines
Findings from the current study are summarized in the
following set of guidelines for implementing the Hybrid 5S
in healthcare while optimizing warehouse operations.
1. Inventory levels. Inventory levels should be linked to ac-
tual demand. Healthcare operations are subjected to
uncertain demand; therefore, there is the need to incor-
porate probabilistic models in the calculations.
2. Warehouse layout. Organize the location of items based
on annual dollar usage values, calculated based on an-
nual consumption and the average unit price of each
item; rather than grouping based on their functional-
ity (e.g., supplies related to Ophthalmology, Emergency,
Rheumatology, Gynecology). In addition, proper label-
ing of shelves and aisles is key. This approach facilitates
and reduces the picking time.
3. Sustaining benefits. Employee training and top-
management involvement needs to be exercised con-
stantly in order to sustain the improvements.
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