April 12

What Does It Take to Be In the Top 5% In Healthcare Supply Chain Expense Management?


I think that everyone wants to be at the very top of their savings game, which we call the top 5%, but getting there isn’t as easy as it looks from the outside looking in. Here are six best practices we have observed that highly effective supply chain expense managers employ that almost guarantee their healthcare organization double-digit supply savings each and every year:

  1. Supply Utilization Management: These individuals realize that their price savings are slowly disappearing, so they have moved up to the next level of savings performance – supply utilization management. These new savings, on average, represent 65% of their total savings in any given year.
  2. Price/Contract/Tier Management: This is the foundation of their savings strategies, which they keep well-oiled, maintained, and flexible so that they don’t miss even one new savings opportunity that comes their way.
  3. Cost Avoidance/Cost Containment: They see it as their job to not only generate new savings each and every year, but to hold the line on their commodities’ price increases to less than the inflation rate in any given year, even if this means changing suppliers in midstream to hold the line on price increases for as long as possible. No price increase is acceptable to them!
  4. Value Analysis Steering Committee: Not only have these managers established value analysis teams to reduce the cost of goods, but they have created a value analysis steering committee to guide, monitor, arbitrate disputes, and set the financial and quality goals for their VA teams every year.
  5. Attendance at Conferences/Meetings: They frequently attend conferences and meetings inside and outside the healthcare industry to uncover new ways to save money for their corporations.
  6. Networking with the Best of the Best: Formally and informally, they network with other industry supply chain cost management leaders to benchmark where they are now and where they want to be over the next few years.

As you can see, highly effective supply chain expense managers don’t just do one thing well to generate savings for their healthcare organization. They have multiple strategies, tactics, and techniques for doing so. These professionals are always searching for new ways to keep their savings rolling in, since they realize that nothing stays the same forever. Take a quick test to see if you, too, qualify as one of these leaders.


best practices, expense management, healthcare, healthcare organization, healthcare supply chain, savings, supply chain, utilization, utilization management, value analysis

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