We are all looking for an edge in our workplace that will continually improve our supply chain performance and keep us one step ahead of our competition. But sometimes we need proof or evidence that a technique such as Key Performance Indicators (KPIs) can actually meet this potential. To this end, here are three proofs or evidence we have observed that KPIs really will work to improve your supply chain performance:
How KPIs Improve Your Healthcare Supply Chain Performance
1. Reveal What Is Hidden From Your View: It is impossible to know, for instance, that there is an $85,000 savings with your orthopedic bone cement utilization cost per case (or any other supply chain expense) unless you are trending, tracking, and comparing your KPI metrics to your healthcare organization’s cohort group. Yet, it will become crystal clear to you if you do!
2. Confirm Where You Are Best-In-Class: Just as important, you should know what categories of purchase you are best-in-class such as a client of ours who outshone their peers on their DaVinci supplies utilization by 34%. Thereby enabling this hospital supply chain team to focus on other supply categories that need to be addressed and give their supply chain team some bragging rights!
3. Predict Savings, Quality, or Safety Gaps: By extrapolating your KPIs over time you can determine that a supply or a purchased service category of expense is increasing at a rate that will jeopardize your budget projections. This happened to one of our clients who saw their waste management expenses projected to increase by 29% year-over-year or $190,000 if they didn’t address this performance gap immediately. This KPI feature enables you to have an early warning system that can alert you to costly overruns before they become unmanageable or embarrassing.
As you know, it is impossible, nor feasible, to speculate where your savings, quality, or safety issues are in your supply streams. Yet, it is possible to measure changes, variations, and anomalies in your supply streams with KPIs to determine areas that you need to concentrate your improvement efforts. The use of KPIs is the enlightened way for supply chain professionals to do business in the 21st century as opposed to just letting things happen.
P.S. If you would like to know more about KPIs and how they can make your supply chain operation better than just good, send me an email at [email protected] and I will send you a copy of our new ValueKPI White Paper.
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