Manipal Warehouse Project – Case write up

Roll No: 2011125 Name: Ravindra Sagar Date: 20.07.2021

Overview
The Indian healthcare industry is growing at a phenomenal rate of showing a CAGR of 22.87% between
2015-2020 and has attracted substantial private investments. This growth can be attributed primarily to two
factors: 1) Demographic changes (Raising income levels, lifestyle changes, etc.) and 2) Medical tourism
(World-class service at a fraction of the price offered in western countries). The top three private health care
providers in India include Fortis, Apollo and Manipal chain of hospitals.
Manipal hospitals Bangalore (MHB), a very reputed organisation accredited with NAHB and ranked among
the top 10 multidisciplinary hospitals in India, is a cluster of four hospitals in Bangalore. Owing to its
NAHB accreditation, reputation, expertise, and high-end appeal, the demand for MHB healthcare kept
growing. To keep up with the growing demand and maintain the quality associated with its brand, MHB had
to streamline its operation and expand its capacity.
Sunil Kumar, the protagonist of the case, realised that there was a huge scope of improvement with the way
inventory, warehousing and related supply chain was handled. As a result, substantial changes were
implemented. The subsequent intended and unintended consequences are discussed in the case.
Question 1: a) Why was the warehouse consolidation project undertaken?
The need for warehouse consolidation project was five-fold:
1) As mentioned above, because the demand for health care services in India has been growing and
MHP being a hotspot for healthcare service as well as the need to maintain the service quality
associated with the Manipal Hospital brand, meant that the capacity among the three hospitals must
be increased by streamlining their operations to meet the growing demand.
2) Optimizing available space in hospital is very important. As the hospitals are located in prime
locations in Bangalore the rent and amortization costs are very high. The stores where inventory is
stored, are of particular importance as they do not directly contribute to the revenue but add up to the
costs.
3) Due to sub optimal delivery system of pharmaceuticals and consumables, there were long delivery
queues by suppliers. This interrupted with the regular operations of the hospital which led to
increased delivery delays and lower customer satisfaction
4) The inventory purchase and tracking were done though a system of excels which had many problems
like lack of naming convention, lack of discipline and generally suboptimized leading to problems
like repeated request for same item and redundant requests.
5) The existing model had a low service level, leading to higher safety stocks which further exacerbated
the existing problems
Question 1: b) What the material and information flows in the consolidated warehouse model?
Components in consolidated warehouse model:
1) IT system: kept track of purchases from suppliers, current inventory levels and delivery requests
from hospitals. It also streamlined the delivery approval process based on availability of inventory
2) 3PL: Third party logistic were responsible for delivery of commodity from suppliers to warehouse as
well as from warehouse to local hospitals. They worked based on the requirements as given by IT
system.
3) BPO: Responsible for getting quotes form suppliers and placing orders

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 4) Central warehouse: Temporary storage locations from commodities. Commodities are then
transferred to the stores in hospital based on requirements
5) Hospitals: Requests made by nurses and laboratories are sent to the central warehouse to TACs.
Which are then given to the nurses and laboratories
Question 1: c) What were the expected benefits?
1) Since logistics is repetitive and not a competitive advantage to MHB, the dealt in a cost-effective
manner by outsourcing
2) The implementation of IT system enabled to supply chain to be more streamlined and addresses the
previously mentioned problems of redundant and repeated orders
3) The implementation of central warehouse reduced the real estate costs. This leads to freeing up of
space previous occupied by hospital stores. Moreover, since the orders are consolidated leading to
higher volumes, economies of scales and higher bargaining power is achieved
4) Since the delivery to hospital are made in milk runs and through TAC, congestion in the hospital area
is reduces. This leads to lower delays, increased customer satisfaction and reduced fuel costs.
5) By having different inventory management strategies for different SKUs, the inventory is managed
more efficiently.
Question 2: What are the issues faced by stakeholders in the new model?
1) Nurses and Laboratories
a. Difficulty in adopting the new system
b. Mismatch between the start of the day of nurses and labs (8 AM) and start of the day for
TACs (9 AM).
c. Delays in delivers
d. Unavailability of commodities
e. Multiple follow up requests required
2) TACs:
a. Since the TACs start the day at 9 AM compared to labs and nurses who start they day at 8
AM, the requests are queued up at the start of the days
b. Erratic arrival times of delivery trucks
c. Mismatch in supply and demand
d. Morale in the department is low
3) Warehouses
a. Packing is done only by 10.30 AM; hence the delays are causes
b. Deliver done twice a day, thereby increasing workload
c. Uncertainty in the level of traffic
d. Incorrect priority of indents
e. Delivery receipts go unacknowledged, leading to improper monitoring
f. Unpredictability of order quantity
Question 3: What further steps need to be taken?
1) Conducting more workshops and educating nurses on the importance of acknowledging delivery
receipts
2) Making the UI of IT systems more user friendly so that easier for the nurses to use
3) Earlier opening times of Warehouses and deliver trucks, thereby reducing the queue size
4) Proper estimation of order quantity every day, and packing them in the previous day evening
5) Scheduling delivery times time early in the morning based on estimated requirements, thereby
reducing traffic uncertainty, only extra requirements are delivered during working hours
6) Matching the opening time of TACs and start of the day of nurses (8AM)

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