Your Low-Hanging Fruit Has Been Picked! NOW WHAT?
I guess you have figured out by now that “there aren’t any more easy savings to be achieved”, on price, standardization, or even on your distribution fees. And I’m sure you have been asking yourself lately – now what do I do?
Another way to state this reality is that the “fish have stopped jumping into your boat”. This is because we have all have focused our supply chain efforts on price for the last 20 years and have wrung the towel dry in price savings. I’m sure you get it; there is NO more low-hanging fruit to be picked!
Now What? The answer to the dilemma we all face is for you to progress beyond just price savings and move up to the next generation of savings productivity which is called utilization management. To put it another way, you need to attack your wasteful and inefficient consumption, misuse, misapplication and value mismatches in your supply chain where your greatest savings can be achieved.
For instance, just last week I was talking to a MM — who gets it – who told me he just completed a utilization project where he measured the variation in his orthopedic surgeon’s implants and found a $50.00 per case difference between his surgeon’s procedures. Since his hospital performs 1,700 orthopedic cases a year, this could mean a potential savings of $85,000 for him. This is where you too need to expend your time (analyzing your data), vs. trying to shave off another one percent off your orthopedic implant cost, which probably isn’t going to happen.
In brief, your low-hanging fruit has been picked – get over it! There is a whole new world of utilization savings just waiting to be harvested, if and when, you take the time to measure, manage and control them. We call this the new discipline “value analytics*” which is the future of supply chain expense management. Don’t miss the boat on this one!
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* If you would like to see how we perform value analytics with our Utilizer™ Dashboard that will make you job easier, more fun and more profitable you can sign up for a test drive at www.strategicva.com/utilizer.htm.
Filed Under: Best Practices • savingsblog
