Australian Red Cross

The Australian Red Cross Blood Service is responsible for the collection and supply of the nation’s blood and blood products. A division of the Australian Red Cross organisation, the 3,800 person Blood Service is wholly government funded and has an obligation to provide a safe and secure supply of blood for all Australians.

The Australian Red Cross Blood Service faces a unique set of supply chain challenges; it can’t procure raw material, relying instead on non-remunerated Australian donors. Additionally, each product has a different shelf life, storage method, and packing and shipping method.

By far the greatest variable affecting the supply chain is the steady flow of Australian donors who, like many of their colleagues overseas, are time poor and struggling to keep up with the day to day demands of a busy life.

The Blood Service uses contemporary marketing techniques to keep the importance of blood donation ‘top of mind’ for Australians and the organisation is continually striving to improve the donation experience to ensure access to donor centres is easy and relatively quick.

There have been periods in history, when there have been too many donors to meet demand: having too much blood means that blood components would need to be stored longer, affecting shelf life and value for money. Having too little means the Blood Service needs to appeal for donors. Neither situation is ideal.

Faced with these challenges, the Blood Service reviewed its supply chain and recruited Jacqui Caulfield, now its Executive Director of Manufacturing, to implement change.

Coming from a commercial background, Caulfield had strong experience in Integrated Business Planning (IBP) – otherwise known as advanced sales and operations planning (S&OP) – a process she believed could greatly benefit the Blood Service.

Aligning Supply with Demand

The Blood Service introduced a new program called Aligning Supply with Demand, tailored by Oliver Wight IBP. Whilst there are many similarities between the two, the Blood Service doesn’t call its process sales and operations planning because it doesn’t actually ‘sell’ blood.

Implementation is still ongoing; nevertheless the results have been quick to arrive. Demand forecasts have been established and accuracy has improved significantly, inventory levels have stabilised and planning accuracy has increased. The process has also had a positive impact on order fulfilment rates.

It has not been an easy journey however. “Most of the staff had worked in the Blood Service and health industry for a long time and were unfamiliar with the concept of IBP. It was difficult for them to see how it could assure we have the right blood in the bank,” Caulfield says.

Oliver Wight consultant, Mike Reed, was engaged to explain the relevance of S&OP to the Red Cross Blood Service. He spoke to the Executive team, ran a discovery workshop, and facilitated a two-day Q&A session.

Project Manager, Shannon Gibson, was also hired, and Caulfield is quick to recognise the credibility Gibson brought with her. “Coming from CSL, who fractionate (manufacture) plasma and plasma-derived therapeutics, Shannon had industry experience. She had also implemented S&OP there – so she had immediate credibility – and people were willing to go along with what she said.”

The project focussed on three streams: demand, supply and products and services. The project logically began with the demand group, who created a red cell forecast to pass on to the supply stream.

The supply group was further sub-divided in to two clear steps: the first and most complex was collection; the other, manufacturing. “The collection process is not only quite involved, it is also quite different to other industries because these steps would normally fall under the role of procurement,” explains Caulfield.

“Manufacturing involves processing, testing, inventory management and packing the final product for distribution.”

Paving the way for integration

As part of the Aligning Supply and Demand program, a stage and gate methodology has been introduced, and the process has helped identify and deliver high value initiatives as well as aligning product and services with the organisation’s strategic objectives.