October 4

4 Ways You Can Improve Hospital Supply Chain Performance with KPIs


Supply chain performance refers to how effective you optimize cost reductions, reduce waste and inefficiencies, improve speed, and meet customers’ expectations. This is why measuring where you stand today with key performance indicators (KPIs) is mission critical for a properly functioning hospital supply chain operation. No longer will you need to guess where you need improvements or where your strengths are in your supply chain operations; it will be revealed to you. In addition, here are four ways you can specifically improve your supply chain performance with KPIs:

Use KPIs to Improve Your Hospital Supply Chain Performance

1. Valuable Insights: How would you know that your inventory turns are at the 25th percentile (or too low) of all hospitals your size? That your blood utilization is $2 million higher per patient day than your peers? Or that your warehousing costs are twice that of healthcare organizations with the same or similar characteristics? The answer is that you wouldn’t know without setting, tracking, and then measuring these specific KPIs to get better than just good!

2. Meaningful Data: Data is meaningless without context, comparables and a historical perspective. This is what key performance indicators can provide you. In particular, a meaningful measurement of your success or an opportunity for improvement. KPIs aren’t a set of numbers, statistics, or metrics that leave you wondering what the data means. They are interpretive, informative, and explanatory because they will give you the necessary perspective to improve your supply chain operations.

3. Peer Cohort Comparisons: Once you have set and tracked specific KPIs, you can then compare them against your peers to determine if you can further improve your performance beyond your own historical metrics. We call these stretch goals that can reinvent what you have been doing for even greater results. For example, I once compared a client’s forms usage using an adjusted patient day KPI only to be surprised that their peer hospital system’s running cost was $0.10 lower. When I inquired how this was possible, I discovered that the peer hospital system had converted almost all their forms to an electronic format, thereby, setting a new standard for all of our clients as a stretch goal.

4. Operational Direction: As managers, we always ask ourselves, “Am I going in the right direction with our supply chain operations?” especially as we prepare or revise our Supply Chain Strategic Plan. KPIs can give you the answers to this question and then provide the operational direction you need to move your supply chain to the next level of performance.

Just as important, tracking KPIs based on your past, current, and comparative performance can result in better supply chain planning. Because you see, once you know what needs to be improved you can plan to implement new systems, processes, and workflows to maximize your supply chain performance. But first, you need to develop your own KPI system to consistently measure your supply chain performance.

P.S. For more in depth information about KPIs, just email me at [email protected] to receive our new ValueKPI™Solutions White Paper: Moving to The Next Level of Supply Chain Performance.

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cost management, cost reduction, healthcare organization, healthcare supply chain, hospital supply chain, key performance indicators, kpi, KPIs, supply chain, supply utilization

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