As you know, it takes a solid foundation to build a strong and lasting building or structure like the Taj Mahal in India, Eiffel Tower in Paris or the Chrysler building in New York. What you might not be aware of is that it takes the same unique architecture, perseverance and creativity when you are building your hospital’s supply chain infrastructure to save big in 2012 (and beyond) if you want it to be built to last.
The secret to long-lasting success in supply chain expense management is that you have a structural design that incorporates these four elements:
1. Price Congruency
As I’m sure you realize, price is just one component of supply expense management, but is the basic foundation of all other savings techniques. Therefore, you must continuously test the marketplace to ensure that you are receiving the best price, but you also need create a competitive environment where price is king. By this I mean, that no supplier or GPO should be awarded a new contract for any other reason other than they are giving you the best value (i.e. quality, service and price). Once your vendors realize that relationships are tangential to this formula for success your pricing will be dramatically reduced due to their fear of loss of business. This isn’t a theory, but a fact!
2. Value Analysis Efficiency
We have observed hundreds of value analysis teams in action over the last 25 years, and have concluded that most are lacking in efficiency (i.e. wasting time, energy and effort) in their team work. Conversely, we have encouraged, promoted and witnessed that value analysis teams that follow the Team-Based Project Management model™ are immediately more effective, productive and timely in their teamwork than unstructured value analysis teams. We would suggest that you consider this new team mod- el in the New Year for maximum efficiency and results!
3. Utilization Fundamentals
If your hospital, system or IDN isn’t focused on savings beyond price (wasteful and inefficient consumption, misuse, misapply- cation and value mismatches) or utilization misalignments in your supply streams then you job as a supply chain professional is only half-done! This is a critical piece of your supply chain expense infrastructure, driving out the last dollars in your sup- ply chain expenses by as much as 7% to 15%. Don’t miss this important building block in your supply expense substructure!
4. Compliance Integrity
We see compliance as the underpinnings of any hospital, system or IDNs’ supply expense infrastructure because without the con- formance to requirements all of your expense management work is wasted. We see this occurring all of the time, where a hospital thought they made a change in price, standardization or utiliza- tion but it never happened due to miscommunications misunder- standing or ineptitude. Don’t ignore this critical rung in your sup- ply expense infrastructure or your hard work will go unheralded!
Healthcare supply chain expense management can seem to some, at first glance, as easy, intuitive and a no brainer. However, don’t let this attitude permeate your supply chain organization, since expense management is truly an art and a science that begins and ends with a supply chain infrastructure that is built to last. Remember: There are no shortcuts in the supply chain business if you want to win in the supply chain game!