Canadian Blood Services may have a fixed annual budget of $800 million, but that doesn’t mean it can afford any red ink on its balance sheet.
The not-for-profit organization is in charge of products that can save lives: plasma, platelets and the red blood cells it collects from blood donors. It needs blood components for roughly 600,000 transfusion recipients every year, such as cancer patients and burn victims. But while the organization has 1.2 million donors in its database, only 447,000 are active. Of its $800 million budget, it only has about $2 million to play with.
“If you’re hit by an ice storm or a strike, you’re hurting,” Alex Reyes, the organization’s manager of cost accounting, speaking at this week’s Better Management conference.
Using activity-based management in its supply chain, Canadian Blood Services can predict costs for donor recruitment, collections, production, testing, distribution and support services. Models can be developed that allow the organization to determine how much they’re spending in these areas, as well as labour hours, materials and assets.
Measurements include how much it costs, for example, to call donors or collect blood at a certain location, said Reyes. The organization has been using SAS Institute Inc.‘s ABM (Activity-Based Management) software for the past two years to provide reporting capabilities for predictive cost and resource planning. Calling volume, for instance, leads to time metrics, which leads to hours of work, which leads to the number of staff members needed for certain call volumes.
It also uses a data mining tool called SAS Customer Segmentation to run models that define its most valuable donors (in terms of blood type). For example, it might have a shortage of a certain blood type and needs to target specific donors.
The organization is funded by regional health authorities and regulated by Health Canada. It operates in 732 hospitals in all provinces and territories in Canada except Quebec, which has its own blood collection agency. It has 4,450 employees, 42 permanent sites, 12 manufacturing centres and three blood testing centres (to test for transmittable diseases such as HIV and West Nile), as well as 15,600 annual collection clinics.
The organization previously used spreadsheets to predict costs, he said, and as a result it wasn’t doing a good job of forecasting. “Information has a shelf life,” he said. “Decisions are not going to wait for information.”
With ABM, it can use past data to figure out what they’re going to be spending in the next quarter. As a result, the decision-making process is improving, said Reyes, as are budgetary cycles. “I don’t think we could do this in Excel,” he said.
Activity-based management software is being used for capacity planning and management, as well as profitability. “It’s about quantities of resources,” said Daniel Dube, CEO of Synerma Inc. in Hull, Que., a partner with SAS and BetterManagement. If you’re an insurance company, for example, how many people do you need to process 5,000 claims per year?
He’s seeing more interest in ABM in the public sector, where he’s getting reverse cold calls from government organizations wanting to find out more. But they’re worried that it’s a big undertaking. And program managers are not used to forecasting.
“If governments just did (ABM), it would be a major pay-off,” he said, adding it would bring some rationale to their budget processes. If you have a resource problem, that creates a crisis in your organization, he said. But if you know in advance there’s going to be a crisis, you can plan for it.
This is not rocket science, he added. “No one’s going to go to the moon with us – it’s logic.”