January 30

How Healthcare Supply Chain Leaders Can Dramatically Improve Their Standardization Model by Optimizing It with Best Value Products, Services, & Technologies


Standardization in its simplest terms means establishing a standard size, weight, quality, strength, or the like to standardize on the products, services, and technologies your healthcare organization purchases each year. The benefits of doing so are a lower price due to economy of scale, uniformity in practices, and reduced business risk.

Though standardization is a good thing if managed artfully, it can also be a powerful catalyst for identifying the best value products, services, and technologies in your healthcare organization. We call this methodology standardization optimization which can reduce your already standardized product, service, and technology savings by an additional 15% to 18%.

All Products, Services, and Technologies Aren’t Created Equal

When looking at the utilization or the in-use cost of common products, services, and technologies, such as cardiac catheter trays, you are buying across your healthcare organization you will soon discover that one or more of your divisions will have lower in-use costs, sometimes even if they are buying the same brand product, service, or technology.

How could this be happening?

First, these divisions could have uncovered the lowest cost alternative product, service, or technology for its intended use through functional analysis, as Consumer Reports did when they tested 25 blood glucose meters and found that the best value meter was FreeStyle Freedom Lite, costing under $20.00. You can perform this same standardization optimization methodology utilizing your own divisions’ in-use cost as a guide for your standardization optimization decisions.

Breakthrough That Enables You to Optimize How You Standardize

Most often, when healthcare organizations standardize on a product, service, or technology, they select the product, service, or technology to conform to a new GPO contract offering. Unfortunately, while this standardization process is efficient, it generally isn’t the most cost-effective methodology to optimize your standardization savings over the long term.

A much better way is to measure all your products, services, and technologies’ in-use costs across all your divisions to determine your best value (or lowest cost alternative) products, services, and technologies system-wide. Then, investigate why these are lower total cost (not price) products, services, or technologies to enable you to select one in each category of purchase as your standardized best values.

This is the quickest way we know of to determine your supply chain best value products, services, technologies, or practices. The only other way we know of to do so is through trial and error, which is a very expensive and time consuming way to accomplish this goal.

Obtain Maximum Value for Your Standardization Process

Maximizing the value of products, services, and technologies in your standardization process should be the goal of every supply chain/value analysis manager, not just selecting a commodity to standardize on that your GPO is recommending. In doing so, you will discover that the product, service, or technology you select based on best value, not contract price, will generally outperform any GPO contract offering.

In fact, we would recommend that you standardize on your best value products, services, and technologies first, then search out a GPO or write a local contract for the commodity to maximize your savings. Trust us; you will be pleased with the outcomes!



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