Most healthcare organizations have obtained the best prices for the commodities they purchase and have significantly standardized on these same supplies that they are buying. So, what’s left to attack to reduce supply chain expenses? The answer is the waste and inefficiencies in your supply streams. With this said, here are three ways supply chain leaders can avoid waste and inefficiencies in their supply streams:
1. Utilizing Supply Utilization Analytics: The best way we know of to identify waste and inefficiencies in your supply streams is by using supply utilization analytics or “the extensive use of data, statistical and quantitative analysis, explanatory and predictive models, and fact-based management to drive decisions and actions”.1 Trust me when I say that it takes all the hard work out of hunting for your utilization misalignments.
2. Employing Enhanced Value Analysis Studies: When investigating a new or revised GPO contract offering, include in your value analysis study “shadowing your customers” who use the product, service, or technology. This will determine if there are any waste and inefficiencies in their supply chain processes, like using more than is necessary or accepting inferior products.
3. Comparing Year-Over-Year Activity-Based Supply Expense Increases: If you see an unexplainable year-over-year supply expense activity-based increase in a supply, purchased service, or technology expense, it needs to be investigated. This is reliable data because you have adjusted your metrics to account for any volume changes in any given year, therefore giving you a crystal-clear picture that something has changed and that could mean waste and inefficiencies in your supply streams.
I’m sure you would agree that it’s getting harder and harder to find new supply chain expense price and standardization savings. So, don’t rely on these cost reduction strategies alone to reduce your supply expense budget. Consider embracing a new savings source – supply utilization management – to meet your budget goals in your current fiscal year and beyond. It could make your savings job a whole lot easier.
1 Thomas H. Davenport, Competing on Analytics
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