Andon: Simplifying Your Dental Practice Reordering
In this article, we will explore how we can deploy the concept of visual indicators to manage re-stock levels. This proven system is an effective way to avoid running out of inventory, but also, avoiding holding too much. Manufacturers have used this system for years to avoid running out of critical stock whilst avoiding having cash invensted in unused inventory.
Let's look into how Dental Practices can benefit from this system.
What are Andon Indicators?
Andon indicators are a visual management tool used in inventory control systems. Derived from lean manufacturing principles, Andon uses color-coded signals (usually green, amber, and red) to communicate the status of inventory levels at a glance.
At a glance, when inventory levels are ‘green’ it indicates that stock levels are optimal and no immediate action is required. When the inventory level fall in ‘amber’, it signals that stock levels are getting low and replenishment should be considered soon. And lastly, when inventory levels fall in ‘red’ it warns that stock levels are critically low and immediate replenishment is necessary.
How will this system work? In a nutshell, the colour coding will become a simple visual display for managing stock levels. When the stock levels fall in ‘amber’, the staff member becomes responsible for taking the ‘stock card’ (i.e. a business size card indicating the stock name and SKU) to the person in charge of inventory management.
They say a picture paints a thousand words. Below is an Andon Visual Managment used on warehouse racking - (courtesy of Algan Tezel). As it can be seen - the system is very straightforward but effective.
Importance of Andon Indicators:
Prevents Stockouts: By providing a clear, visual signal when stock levels are low, Andon helps prevent stockouts that can disrupt operations.
Reduces Overstocking: Helps in maintaining optimal stock levels, thereby reducing the costs associated with overstocking. If you have more inventory than the allocated space can hold, then it becomes a sign that there is ‘too much’.
Enhances Efficiency: Streamlines inventory management, making it easier for staff to monitor and manage stock levels.
Implementing Andon Indicators in Dental Practices
The steps to implement the Andon systems are relatively straightforward. However, unlike the FIFO system, the Andon system requires a little more setup when it comes to calculating ‘stock reorder levels’. To make this implementation simpler, you can break this work into phases. You can start off with any of the following (1) your most critical stock (2) the stock with the largest lead time (3) stock that has historically had large inventory levels to prevent running-out issues.
Steps to Implement Andon Indicators:
Assess Current Inventory System:
Evaluate your existing inventory management practices.
Identify key items that require close monitoring (e.g., high-turnover consumables).
Determine Reorder Points:
Calculate reorder points and safety stock levels for each item.
Use historical usage data and lead times to set these levels accurately – here is the formula you can use:
[Average Daily Usage] x [ Days of Average Lead Time] + Safety Stock
Lead Time in Days: This is the amount of time it takes from placing an order to receiving the goods. If there is an ‘expedite option’ – that’s great in case of emergency, but don’t use this figure.
Average Daily Usage: This is the average number of units used per day. You can calculate this by taking the total units sold over a specific period and dividing it by the number of days in that period. We suggest looking at a period of a month to get a good average – make sure the month is representative.
Safety Stock: This is your buffer stock, kept aside to account for variability in lead time or demand. It's essentially your safety net in case things don't go as planned. For example: spike in demand, new patient offers, open days, new dentist dropping and breaking inventory!
Set Up Andon Indicators:
Assign color codes to stock levels:
Green: Above reorder point and sufficient for operational needs.
Amber: At or near reorder point, indicating it’s time to prepare for replenishment. An idea: just above the safety stock level.
Red: Below reorder point, requiring immediate restocking. An idea: just below the safety stock level.
Label Inventory Storage Areas:
Place visual indicators in storage areas to show current stock status. One of the cheapest and easiest way of doing this is through electrical tape.
Ensure these indicators are easily visible and understandable by all staff.
Create a card (think business size card) and write it to indicate the stock name. You could even go as far as creating a QR code for it.
Train Staff:
Educate your team on the Andon system and its importance.
Provide training on how to interpret and respond to the indicators.
The idea is that when the stock fall in amber, the label card is taken to the person in charge of stock management. This will act as a flag indicating that new stock is required.
Integrate with Inventory Management routine:
Integrate stock check with your ordering routine.
Regular Monitoring and Audits:
Conduct regular audits to ensure the Andon system is being followed.
Adjust reorder points and safety stock levels based on changing usage patterns and lead times.
Maintaining the Andon System:
Daily Checks:
Assign staff to check Andon indicators daily. Here you have two options:
Staff members take the ‘re-order card’ to the person in charge of re-ordering.
Staff members scan a QR code that creates a re-order list.
Update the status of inventory levels and take necessary actions based on the color-coded signals.
Cards are returned to the original locations.
Weekly Reviews:
Conduct weekly reviews to assess the effectiveness of the Andon system.
Address any issues or inconsistencies in stock levels.
Monthly Audits:
Perform detailed monthly audits to ensure all items are correctly categorized and reorder points are accurate.
Adjust the system as needed based on audit findings and feedback from staff.
Continuous Improvement:
Encourage feedback from staff to improve the Andon system.
Stay updated with best practices in inventory management and incorporate them into your system.
Final Thoughts
Implementing an Andon Visual System for your stock level doesn't need to be a time-consuming task. As mentioned in the introduction of this article, start with the most important stock to your practice. It will help your practice achieve positive results quickly, gain buy off from your teams, and help your team to adopt the system.
Don't forget, your team will have great ideas on how to improve the system further. So listen to them!
