Everyone is quick to judge everything these days and value analysis as well as supply chain cost optimization opportunities are judged even harsher today than ever before. Many times, you see VA and Supply Chain Professionals shy away from presenting a clearly major savings opportunity because they just don’t want to hear the harsh rebukes from their key customers and stakeholders. This is the reality of our Healthcare Supply Chain world, yet we still need to push forward and make savings happen even with our customers and stakeholders being major Doubting Thomases.
It’s Their Budget Dollars We are Striving to Save
In a perfect world, every one of our clinicians, non-clinicians, and other key stakeholders should be all for the savings opportunities that we bring to the table because in the end, it is their supply budget that this will be saved from. Supply chains, other than a few office supplies, do not consume any products and very little services. We are the facilitators of the process of cost optimization which automatically makes us “bad people.”
Understanding the Dynamics of Cost Optimization
Keep in mind that several factors come into play when you present a credible savings opportunity backed by strong, verifiable evidence. An initial reaction is often surprise — stakeholders may not have been aware of the opportunity — followed by resistance as the conversation moves into an area they feel ownership over. In response, they may quickly offer reasons why the savings aren’t valid, effectively shifting the conversation as they defend their position.
Be prepared for this kind of back-and-forth and welcome this part of the cost optimization analysis. It’s a natural part of the process, and one worth embracing. These discussions often surface valuable insights that can help you either validate or refine your analysis. The best approach is to stay composed, listen carefully, and take detailed notes. Their feedback, whether supportive or resistant, can provide a wealth of useful information, and that’s a positive step forward.
They Do Want to Save but They Don’t Want to Change
Let’s face it, we are all for saving money, losing weight, performing better, getting in better shape, becoming a better golfer, etc. The reality is that we are going to need to make changes to gain different results. Our customers first must accept that they may in fact have a viable proven savings opportunity but then they also must accept the changes they will need to make to accommodate and gain the savings. Remember, as a VA or Supply Chain Professional, it is okay to let them steer the bus when it gets inside their departments. They are going to need to customize our recommendations for change into how they do business within their span of control and that is more than okay.
Be Smart Before You Show a Savings Opportunity to a Customer or Stakeholder
When developing a savings opportunity, challenge it from every angle. Examine it thoroughly from all perspectives, including ones you may not have initially considered. Bring in a trusted expert within the product category to validate your assumptions and pressure-test your approach. Do this work before presenting the opportunity to your customer’s department. By rigorously vetting the savings opportunity, you ensure nothing is overlooked and, most importantly, demonstrate to your customers and stakeholders that you’ve done your homework. There is nothing worse than pitching a savings opportunity in a VA meeting only to have it fall apart within minutes. Be prepared!
Be Relentless but Know When to Move On
You are going to have bumps in the road. Sometimes, your customers do know more than you do about a particular cost increase that looked like it was a viable savings opportunity, but you must be grateful that you did not spend a whole lot of time on it over the long term. As they say, if you are going to fail then fail fast so you can move on to the next savings opportunity.
The Bottom Line
Achieving major savings requires VA and Supply Chain Professionals to put themselves out there with cost optimization initiatives. The more initiatives you put on the table, the more savings you are going to achieve. Look at this like the 80/20 rule. You are never going to get 100% of your savings initiatives accepted and implemented, but you can get about 80% of them which will give you those next level savings numbers you and your CFO are looking for. Be smart about savings and you will gain more savings with your buy-in skills than ever before!
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