A Back to Basics Approach to Big Supply Chain Double-Digit Savings Results

We all are looking for new strategies, tactics or techniques to improve our supply chain  savings yield.  Yet, have you ever considered that going “ Back to Basics” as the best course of action to gain double-digit savings results? If not, here is a checklist of six strategies, tactics or techniques you need to revisit every year to get your savings engine in high gear:

1. Benchmarking: If you want to identify where all your supplies and purchase service savings reside, benchmarking is the surefire way to do so.  If you don’t have an ongoing comprehensive benchmarking program already,  search out a benchmarking partner to help you develop one.  By the way, benchmarks at 30,000 feet won’t help you save more  — you need them at the SKU level.
2. Standardization: We are still seeing multi-millions of dollars of standardization savings opportunities at hospitals, systems and IDNs. It’s now time to identify all your unnoticed, unheeded or ignored standardization savings opportunities.   If the reason for disregarding some standardization savings is that they are being employed by “sacred cows”, maybe it’s time to address this situation?
3. Group Buys: If you haven’t been using the tactic of “Group Buys” lately, maybe it’s time to revisit this purchasing option because it’s the fastest way to reduce your purchase price for just about any commodity group.
4. Value Analysis: Most healthcare organizations have only skimmed the surface of their value analysis savings, since they are spending 80% of their time on their new and renewal GPO contract’s evaluations. Just as importantly, GPO evaluations aren’t value analysis, but instead your VA practitioners are performing due diligence on your GPO contracts.  Consequently, they are missing out on savings in the range of 7% to 15% of your total supply chain expense budget.
5. Bidding: Sometimes, we forget that bidding is one of the most powerful tools we have in our savings toolbox. We often forget this fact in this era of group purchasing organizations.  Just remember, if you have the committed volume, you generally can obtain a better price than your GPOs can for you.
6. Compliance: Its been our experience, that most contract savings projections can be off as much as 23% to 47%, because things, people and policy changes during the term of the contract. Therefore, you need to validate all your contract savings on a quarterly basis. This will then give you an opportunity for mid-course corrections  if something is out of kilter.

Next time you get the urge to try a new strategy, tactic or technique to save money, first think of “Going Back to Basics” for a refresher where you can almost be guaranteed savings that are just waiting for you to pull the trigger.

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