A recent survey by Sage Growth Partners documented that 63% of supply chain professionals surveyed said there’s a clear ROI for analytics that can lead the way to additional new savings, quality and safety improvements for healthcare organizations. Here are three specific reasons why more and more value analysis practitioners are leaning in this direction:
- Improve Budget Forecasting Efficiency: Most hospital supply chain professionals apply last fiscal year’s volumes to project their supply chain expense budgets (less anticipate category savings) to forecast their healthcare organizations next fiscal year’s supply chain expense budget. While this methodology seems reasonable, it is very inaccurate. This is because extrapolating supply volume alone, for any given year, doesn’t accurately forecast your supply chain expense budget. For instance, if you are buying surgical staplers from multiple sources you can’t apply a five percent, from one vendor, across the board savings to this category of purchase. Therefore, you will need to employ value analysis analytics to help you to be more precise with your projections.
- Thousands of Transactions That Need to be Analyzed: Your healthcare organization purchases, stores and delivers millions of dollars of products, services and technologies annually. All these transactions need to be analyzed for consistency, reasonableness, and cost cutting on a continuous basis. This can’t be accomplished with your existing ERP systems, since they are transactional, not analytical by design.
- Increase The Reliability of Your Savings Projections: As explained in reason #1, too often we estimate our savings projections by applying last fiscal year’s volumes to our savings equation. This is inaccurate most of the time, since many other factors influence (waste, inefficiency, misuse, and misapplication of products, services, and technologies) how much you utilize annually of any commodity. A much better way to project your actual savings is to develop supply chain expense metrics and value analysis analytical protocols that predict anomalies in any savings project you come across.
Times are a changing when supply chain professionals can provide supply chain expense projections to their CFO or budget manager that aren’t accurate, ignore that there are hundreds of thousands of dollars of hidden savings that are going unnoticed annually and that our savings projections formulas aren’t as simple as they once were.
If you are looking for innovative Value Analysis or Supply Utilization Tools, please sign up for a no cost no obligation demonstration to see how you can take your purchase service program to a whole new level.