What Fuels Long-Term Supply Chain Success?
The lessons of supply chain management of yesterday no longer hold true. To secure lasting supply chain success, today’s supply chain professionals must become more strategic vs. episodic in everything they do.
This statement implies that in everything you are doing right now or thinking about doing for the future you must take a long-term view of how it aligns with your hospital, system or IDN’s long-term goals. Those goals are fueled by the uncertainty of the healthcare marketplace in the 21st Century.
As an illustration, I’m seeing healthcare systems and even Alliances centralizing some or all of their financial services (payables, credit and collection, accounting, credit and collections, etc.) under their corporate umbrella to dramatically reduce their overhead cost. More than a few healthcare systems are replicating the WalMart model by vertically integrating all of their supply, processing and distribution operations as separate and free-standing new business entities.
These are long-term trends that have short-term implications for supply chain professionals who must start thinking and planning to move in this new and better strategic direction. For instance, if you are planning to upgrade and expand your current warehouse, as one of our clients is considering doing, you might want to think about building a shared services off-site warehouse with other hospitals in your region. This way you will be following the long-term trend of vertical integration today instead of locking yourself into a short-term strategy of building your own warehouse and absorbing all of these costs yourself.
To summarize, what fuels the long-term supply chain management success is to always be looking over the horizon at the trends that are emerging in our marketplace, and then incorporate these lessons into your own strategic planning process so you are always thinking short-term with the long-term in mind.
When Does Something Become a No-Brainer?
I just read an article about how all of our nation’s hospitals aren’t reprocessing the numerous medical devices that have been approved as safe by the FDA to do so – even though you can save 50% of your medical devices’ original cost. Wouldn’t you think this was a “no-brainer” for all hospitals? Here’s the rest of the story!
The reason given in the article on why all hospitals haven’t jumped on the reprocessing bandwagon is that they think it will be too time-consuming to do so because of the numerous internal changes in behavior that would be needed to achieve this savings.
So maybe this reprocessing idea isn’t a “No-Brainer” after all or is it? But how would you know unless you tried it? This is the key for knowing when something is a “No-Brainer” or not. Experiment to find the real answers instead of tuning out the sales rep because his or her “its easy” message seems to implausible to believe.
Nothing good happens unless you are willing to experiment with a pilot study to determine the financial, quality and service fitness of any proposed new product, service or technology. This way, you will know with certainty when something becomes a “No-Brainer” for your healthcare organization — or not.
How to Gain Control of Your Hospital’s Supply Chain
Savings Beyond Price -Weekly eNewsletter - July 16, 2008
Robert T. Yokl
President & Chief Value Strategist
Greetings!
How to gain control over your supply chain
When I sit back and analyze, as I do every week when I write this column, I ask myself what are the biggest challenges that supply chain professionals are facing today? I would say one of the top ten challenges would be “how to gain control over your supply chain” and not let it control you.
By control I mean that you always know where your savings reside, what defects (those things your customers don’t want or need) exist in your supply chain operations and how you would quantify these cost drivers down to the third decimal point.
To obtain these mission critical key performance indicators you don’t need to hire more staff, buy a new MMIS system or even normalize all of your data. What you do need to do is to develop short and long-range RADAR (I call these dashboards) that will quickly detect where your operational challenges are located and what their financial impact is on your supply chain. It then becomes much, much easier to solve these operational issues quickly and effectively without missing a beat.
We have numerous clients that are utilizing dashboards as their supply chain RADAR to detect anomalies in their supply chain performance. They tell us that they are now able to sleep much better because they are in control of their supply chain operations. No more guessing, assumptions or conjecture; they know precisely where to focus their resources and labors on their journey to operating excellence.
Wouldn’t having supply chain RADAR make your job easier too?
Your Partner In Savings Beyond PriceTM,
Bob Yokl
Robert T Yokl
Chief Value Strategist
Strategic Value Analysis® In Healthcare
800-220-4274
P.S. We are getting more requests for test drives on our Supply Chain Pilot since supply chain professionals are looking to re-energize, normalize and really control their VA process in order to increase their savings yield. If you are looking to increase your savings yield too, why not check out this power tool at www.strategicva.com/valuenet_main.htm.
P.P.S. Don’t forget to check out my new blog article “How to Identify and Develop Your Best VA Team Members”. This blog is all about not leaving to chance the selection of your VA Team Members, but basing your selection on facts.
How to Identify Your Best Value Analysis Team Members
Most hospitals, systems and IDNs have value analysis teams that evaluate and select the products, services and technologies that they are buying. The question I would like to pose to you is how do you identify the best VA team leaders and team members? Is it by chance or fact?
For years, we allowed our clients to select their value analysis team members by title or position, only to find that we were leaving this selection to chance – not facts! Our studies were showing that 76% of the team members that were selected by this chance method were failing in their team member roles.
We then realized that this selection process was really a hiring decision and it had to be made more scientifically if our clients were to have the best talent on their value analysis teams. That’s when we instituted our “Team Leader and Team Member Placement Test” based on the top value analysis team member competencies that we have observed were the most successful, more often, in the past.
The result, after eight years of using this test with our clients, shows that if you have a placement test for your team leaders and team members you have a 97% probability of having the best candidates for
your team’s jobs and you can, up front, eliminate any mismatches for this teamwork before it becomes too late or too embarrassing to do so.
So if you want to hit the bull’s-eye every time by truly predicting the performance beforehand of your new value analysis team leaders and team members you need to design a “Team Leader and Team Member Placement Test” for your new team hires based on FACTS, not chance.
Three Hidden Risks in Your Supply Chain
We all think our supply chain is humming along with no perceived dangers lurking in our value streams, except this thinking couldn’t be farther from the truth. We are seeing numerous supply chain risks lying beneath most healthcare organizations’ supply chains that can be a danger to your hospital, system or IDN’s financial health.
The first risk is over-standardization of the products, services and technologies you are buying that are costing your hospital, system or IDN thousands of dollars a year in unnecessary and unneeded cost. This is happening because of the misunderstanding that one size fits all customers, when, in fact, customization is the secret to having the lowest total supply cost.
The second risk is bulging inventories that at some hospitals can exceed two million dollars in safety stock that is two years old. As a result of this, damaged, out-of-date and unreliable products end up being used in medical procedures. Consequently, these hospitals are risking multi-million dollar law suits from medical misadventures that are directly caused by these old and outdated products.
The third risk is over-specifications of the products, services and technologies that you buy. I like to call this catalog buying! If you haven’t identified the exact functional specifications for the products, services and technologies that your hospital is buying (and are accepting what your department heads say are their specifications), then you are buying too much feature-rich and over-engineered stuff that you don’t need at all. Wouldn’t it be better to get the specs right the first time!
In a time when healthcare organizations are looking to reduce their cost even further and improve their quality (or they won’t be paid by third parties), the hidden risks in your supply chain need to be eliminated, and purged from your value streams.
To do less is risking the short and long-term financial fitness of your supply chain.
Your Partner In Savings Beyond Price™,
Bob Yokl
Robert T Yokl
Chief Value Strategist
Strategic Value Analysis® In Healthcare
800-220-4274
P.S. We have just announced our fall 3-day Certified Value Analysis Leadership Course that will be held on November 4th to 6th, 2008. Our attendees tell us that if you are looking to start-up, re-invent or re-energize your supply value analysis program this is the course for you. Our early bird special rate ends September 15th, so sign up now to save $200.
A Time for Action…Not Rumination!
Your management will be asking you to ratchet down your supply expenses even further this year due to the high cost of energy which affects almost everything your hospital buys. And still another reason is the slowing economy that could have an effect on your hospital’s revenues.
These challenging times call for action…not rumination. As leadership guru John C. Maxell tells us “The pessimist complains about the wind. The optimist expects it to change. The leader adjusts the sails” to catch a favorable wind. This is the attitude you need to keep your supply chain ship righted in these turbulent times.
Here are some questions I would like you to ponder to keep your boat afloat in this perfect storm. Are you adjusting the way you do business to weather this squall? Are you looking beyond price to uncover new savings for your healthcare organization? Are you re-specifying everything you buy to trim your sails?
The reason I’m asking you these three questions is that price savings alone won’t keep you from running aground. Only by attacking your utilization misalignments and value mismatches can you right your ship, and get wind in your sails. If you continue to pursue price savings alone you won’t have enough fuel to ignite your savings fire.
I see more and more supply chain professionals becoming believers in this new way of doing business, since they now realize that price isn’t king any longer. Isn’t it time you take massive action to alter your course and right your supply chain ship before the winds become too strong to change course?
New Pay for New Work!
President & Chief Value Strategist
Greetings!
New Pay for New Work!
We just held our summer session of our Certified Value Analysis 3-day Training Program which brought into the daylight that only a small number of healthcare organizations are rewarding and recognizing their value team members for the hard work that they do.
This hasn’t ever made sense to me, since hospitals, systems and IDNs should be authorizing new pay for new work that these value teams are doing. By incentivizing your value teams you can keep them on track, on budget and keyed up to save even more money for your healthcare organization.
I’m so convinced that this is the right thing to do that we mandate that every healthcare organization that installs our LEAN Value Analysis Program also establish a rewards and recognition program to encourage their value teams to be peak performers. Or, why else would their staff squeeze into their already busy days, weeks and months all this new work. Rewarding people for extra work is not only logical but it’s a key facet of human nature!
Every client of ours who has adopted this philosophy of “new pay for new work” has been repaid for their investment by at least 100 fold. Likewise, their value team members’ productivity, creativity and doggedness has risen to a new level of superior performance.
Reward and recognition programs aren’t just the right thing to do for your value teams, but are a prerequisite for everlasting savings and quality improvements. Without this your value teams aren’t firing on ALL eight cylinders, just meandering along on three or four cylinders!
Isn’t it time you get your value teams into high gear?
Your Partner In Savings Beyond Price™,
Robert T Yokl
Chief Value Strategist
Strategic Value Analysis® In Healthcare
800-220-4274
P.S. We have been told by our Value Analysis Resource Web members that our Value Analysis Leader Resource Web is the right product, at the right time and at the right price to fuel their value analysis teams performance. If you haven’t seen this unique knowledge management resource yet, may I suggest that you check it out now at www.strategicva.com/vaweb.htm
P.P.S. Don’t forget to check out my new blog article “Fail Often to Quickly Succeed”. This blog is all about how failure isn’t a stigma, but an opportunity for massive innovation.
