Most of us are aware of the benefits of checklists. They assure us that we don’t miss any steps and motivate us to take action. That’s why I thought it would be appropriate to provide below a supply chain expense management checklist to guide your expense management savings efforts in 2021:
- Evaluate your 2020 expense management strategies, tactics, and objectives: Are you on target to meet your FY expense savings goals and objectives, or do you need to change your strategies, tactics, and techniques to meet those goals and objectives?
- Evaluate your current technology: Many legacy ERP systems don’t easily adapt to change, like providing supply utilization analytics, visualization tools, and benchmarks. Remember, it is easier, more productive, and more cost effective to have the right tools for the right job than to try to make do with what you now have in your toolbox.
- Audit your supply chain expense savings year-to-date: One of the little-known facts in supply chain expense management is that up to 26% to 46% of the expense savings you have already reported in 2020 have not been realized. The good news is that you can recoup these lost savings by auditing This best practice then gives you an opportunity to investigate these shortfalls and correct them in mid-stream.
- Attack your savings beyond price and standardization: If you haven’t taken a deep dive into your supply utilization misalignments (i.e. wasteful and inefficient consumption, misuse, misapplication, and value mismatches in your supply streams), you are missing a whole new world of savings in the range of 7% to 15%. This is where progressive supply chain managers are uncovering many of the new non-salary expense savings.
- Tackle your purchased service contract expenses: Slowly but surely, more and more supply chain directors are targeting their purchased service contracts for savings in the range of 11% to 18%. This is because their purchased service contracts are a virgin territory for new and better savings.
- Reinvent your value analysis teams or committees: It has been said that the term “value analysis” is now synonymous with “new product evaluation,” which really isn’t saving money for your healthcare organization. As I see it, value analysis is not just new product evaluations, but should be a cost saving methodology as originated by Larry Miles, the creator of Value Analysis in the 1940s.
Using a checklist allows you to get more done in less time with less mistakes. They even make it easier to delegate and meet your annual goals and objectives. It would be my suggestion to expand on this supply chain expense checklist to make sure that you are covering all of your supply expense management bases in 2021. I can assure you that a checklist will make you more efficient and effective than you have been in the past.
P.S. For more savings ideas like these you might want to download my FREE Kindle book called “10 Best Strategies on How to Save More in Less Time With Less Risk”.
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