The #1 Way to Create Winning Value Teams
In my last week’s blog article I talked about incentivizing your value team(s) to save, which is one of the key ingredients in creating winning value teams. This week I’m going to tell you how gift cards can be great rewards to motivate your value team(s) to go the extra mile for savings.
Incentivizing your value team(s) boils down to this essential unassailable fact “Everyone wants TO WIN. And if you create a good COMPETION, everyone will try hard to be in the winners’ CIRCLE.” says Henry Canaday. That’s why it is vital that you reward your value team(s) for their achievements in order to create excitement and ultimately better performance.
Gift cards make the perfect reward because your team members can choose from thousands of gifts, trips and entertainment venues vs. being forced to take what your management thinks they want. For instance, one IDN we worked with thought the perfect reward for performance would be an all expenses paid trip to attend a national material management conference. I know this wouldn’t be my idyllic reward – how about you?
That’s not all! You need a “point system”* to enable you to grant these gift card rewards along the way. Some of the criteria for awarding gifts cards to your team members could be attendance, completing projects on time and on budget, exceeding project goals, exceeding team goals, etc. The point here is that you will need a system (preferably on-line in real-time) to motivate your team members to exceed your expectations — not just meet them.
We Americans thrive on competition, big challenges and contests (that’s why there are so many successful reality competition shows on TV these days). So why not use this quirk of human nature to our advantage to motivate your value teams to be better than good? All it takes to do so is a contest that motivates, invigorates, excites and ultimately creates better performance for your value team(s) for the valued work that they do for your healthcare organization.
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*We have been installing “point system” incentive systems for 10 years now for our clients, so if you want to learn more about our IncentiveSave™ Dashboard to manage ALL of the elements of your Lean, Six Sigma or value analysis incentive programs please e-mail me at Bobpres@strategicva.com for more and bigger savings – now!
Where do You Stand — Are You at Level 1 or 4?
The fact that all value analysis processes aren’t created equal is becoming more clear to me every year that I’ve been in the healthcare industry. In fact, different levels of VA processes create different results. Here’s why this happens based on four levels of VA proficiencies that I have developed:
Level I: No Standard Process. These healthcare organizations are random in their approach to VA, with everyone doing their own thing in their own way. Even though some savings are achieved, they are always unpredictable in terms of performance.
Level II: An Informal Process. In these healthcare organizations VA practitioners are exposed to an informal VA process, but the process isn’t regimented, monitored nor measured to enable them to achieve the optimal saving results. By my estimate, more that 82% of hospitals, systems and IDNs fall into this category.
Level III: A Formalized Process. These healthcare organizations have a defined, repeatable, measurable and teachable process that is strictly enforced. But they don’t control their outcomes, so they never know if their “so-called” savings ever happened. Such organizations are at risk for having big swings in their supply budgets since no one sees the big picture.
Level IV: An Optimal Process. These healthcare organizations have a formal process, but they are consistently and aggressively monitoring and controlling their outcomes. They proactively react to even minor changes in the supply chain conditions to achieve optimal savings results. Such organizations are extremely rare and often become savings machines in just a short period of time.
In the final analysis, if you want to raise your “VA proficiency” from a level I, II or III to an IV level you will need to recognize that you will need to develop a formalized VA process that incorporates the monitoring and control you absolutely need to become the best in class supply value analysis program in our industry.
Your Partner In Savings Beyond Price™,
Robert T Yokl
Chief Value Strategist
Strategic Value Analysis® In Healthcare
800-220-4274
P.S. You might want to checkout our LEAN Value Analysis Program to see what attributes are required to have a “Level IV” supply value analysis program.
P.P.S. Don’t forget to check out my new blog article “ 5 Quick Tactics for Results-Oriented Savings”. This blog is all about some old and new ideas to get your savings machine moving again.
5 Quick Tactics for Results-Oriented Savings
In preparation for our August 28th “Offset Price Increases in Tough Times” Webinar I started thinking about five quick techniques for results-oriented savings that I could share with the attendees of this session. Now that I have these five quick techniques formulated, I thought I would list them here in my blog to give you a preview of some of the things we will be talking about in this month’s Supply Chain Best Practices series:
- Join a Regional GPO
What goes around comes around, sometimes in a big way! That’s how I feel about the hundreds of regional GPOs that are either popping up or being re-energized around the country.
If you don’t belong to a regional GPO, you are missing the opportunity to drive another 3% to 5% off your bottom line.
- Sign Multi-Year Contracts
This tactic of signing multi-year contracts (3 to 5 years vs. one year) is a little like being a broker in the futures market! That is, you are betting that the future prices you will be paying for the commodities and services that you buy will be higher than today’s prices in the future. I believe this is a “no-brainer” tactic you should implement tomorrow with the next contract that comes across you desk nothing goes down – just up!
- Perform Contract Value Analysis
The amount of fat in our purchase services contracts from my experience is enormous. Meaning, we are paying for things in our purchase service contracts that our customer’s don’t need, want or will never use. That’s why you need to perform contract value analysis on every purchase service contract that is up for renewal.
- Re-invent Your Value Analysis Teams
If you have read my August 17, 2008 Savings Beyond Price™ column on how different levels of value analysis processes create different results, then you know that 98% of healthcare organizations can greatly improve their value analysis process. In doing so, you can quickly save 4%, 7% or even 12% of your annual supply spend.
- Incentivize to Save
Very few healthcare organizations have incentivized their value analysis teams to save money, but the ones who have done so have demonstrated a ROI of 27.5x based on their original investment. Isn’t that a good enough reason for you to incentivize your value analysis teams to save too?
As I said, this is just a preview of the information we will be talking about at our August 28th webinar. If you have missed any of these 60-minute Supply Chain Best Practices webinars, you missed hearing million dollar savings ideas that we share each month with our attendees. Why not invest 60-minutes this month to save hundreds of thousands, or maybe millions of dollars with just one idea you get from this series? It will cost you nothing to do so, but the information you will receive I promise you will be priceless!
Changing the Game!
Robert T. Yokl
President & Chief Value Strategist
Greetings!
Changing the Game!
What I’m hearing from supply chain professionals is that they are receiving more price increases from their GPOs than price savings offers. I see this as an historic milestone that is “changing the game” of supply chain management – forevermore!
If you think your GPO will continue to pull rabbits out of a hat (in this price is always going up economy) to give you never ending supply expense savings, then you are in for a rude awakening. Even Wal-Mart, Costco and BJ’s Wholesale Club are finding it next to impossible to hold back their vendor’s price increases. So why should healthcare be any different?
The good news is that there are literally billions of dollars of Savings Beyond Price™ in our own back yard in the form of utilization misalignments that have yet to be uncovered in the healthcare marketplace. This situation is analogous to the energy debate we American’s are having now on how much energy resources are available domestically. We are told by experts that these resources (oil, gas, wind, solar, etc.) are almost limitless if we start to explore for them now.
It’s the same with our own healthcare marketplace, we need to start today (not tomorrow or next week) to drill down into our own supply chains to find this hidden “black gold” in our own hospital, system or IDN, because the well is running dry on our price savings.
To sit on the sidelines and hope for the well to fill up again can be dangerous to your healthcare organization’s financial health.
Your Partner In Savings Beyond Price™,
Bob Yokl
Robert T Yokl
Chief Value Strategist
Strategic Value Analysis® In Healthcare
800-220-4274
P.S. More and more hospitals, systems and IDNs are jumping on the Utilizer™ Dashboard bandwagon to uncover their utilization misalignments before their price savings run out altogether. Wouldn’t you like to be one of them?
P.P.S. Don’t forget to check out my new blog article “Teach, Teach, Teach for Even More Supply Chain Savings” This blog is all about how you can do it the Costco way for million dollar paydays.
Teach, Teach, Teach for Even More Supply Chain Savings!
I like to tell my students at our Certified Value Analysis Leadership™ Course* that education (at all levels of the supply chain) is the “magic bullet” for their supply chain success. In fact, I believe that 80% of a supply chain professional’s job should be to teach, teach, teach their bosses, peers, staff and suppliers how to save money and improve quality for their healthcare organization.
I just read an article that states that “teach, teach, teach” is Costco’s corporate philosophy too. Judith Logan, a Costco Assistant GMM, says in this article that it is Costco’s goal “to have buyers who are better educated in their products than their suppliers who sell them, to see through the marketing speak and offer the best value possible.” Costco even has Costco University to train their 130,000 employees in all aspects of their jobs, from food safety to buying Bordeaux wine. This speaks volumes about Costco’s never ending commitment to educating anyone and everyone who touches their members in any way.
That’s not all! At Costco’s “laundry college” their employees “work with laundry manufacturers to understand the science behind what makes a better laundry detergent. They spend time in the labs and touring the production facility” to make them experts in their respective disciplines.
Costco even has stringent certification and licensing programs for their gas station, hearing center, optical store, pharmacy, photo center and tire center employees. Costco invests this money in training because they want their employees to be held to the highest standards of professional competencies. “This translates to better service and value for their members” says Tammy Clark, Director of Training for their Hearing Centers.
What’s this all mean to you? If you aren’t creating a “a culture of wisdom”, as Costco calls it, with your internal and external supply chain community in every aspect of your supply chain management then you aren’t building the future of your supply chain on a sound foundation. Only through never ending training and education at all levels of your supply chain can you sustain, maintain and hold everyone that touches your products, services and technologies to the highest standards possible.
* Our next Certified Value Analysis Leadership™ Course will be held on November 4-6, 2008. Book now to save $200 before September 4th!
Squeezing the Most Out of Your Supply Chain
I recently corresponded by e-mail, with a MM who said he was working on a PPI initiative, instituted a new inventory reduction program, installed a new MMIS system and had started reviewing his purchasing service contracts to generate even more savings for his healthcare organization.
I then asked this MM if he was also targeting his utilization misalignments. In response, he said to me “when is ENOUGH – ENOUGH?” My answer to him by return e-mail was, if you want to squeeze the most out of your supply chain you need to do everything, everyday and in everyway possible to wring the towel dry on your supply expenses.
Why? Because healthcare organizations today need, more than ever before, every dollar that they can get their hands on in order to stem the tide of hyper-inflation on your operating budget which is being caused by our energy crisis, weak dollar and the credit crunch. You could call it a perfect storm!
Tipping point: Your hospital’s heating oil bill alone will cost your hospital 70% more this winter. If you are heating your hospital with gas it’s going up 65% and electric 5.2% over 2007 prices. Your GPO is sending you more price increases, than price decreases. Rather than give you even more examples, let’s just say that your prices are changing faster than you can keep up with them with no end in sight.
Now is the time for you to become a HERO in your management’s eyes. They desperately need all the help you can give them to hold back this whirlwind of inflationary price increases. You can do it by squeezing even more out of your supply chain, especially in your utilization misalignments where you can save up to 12% of your total supply spend (supplies and purchase services) within 12 to 18 months.
Don’t miss this big opportunity to show your management how supply chain management can come to the rescue when the chips are down.
Your Partner In Savings Beyond Price™,
Robert T Yokl
Chief Value Strategist
Strategic Value Analysis® In Healthcare
800-220-4274
P.S. If you want to hold back the inflationary spiral we are now experiencing, why don’t you “Test Drive” our Utilizer™ Dashboard that will show you where all of your utilization misalignments reside.
P.P.S. Don’t forget to check out my new blog article “How Many Value Analysis Courses Have You Had?” This blog is all about what you need to do to become a professional value analysis leader and/or practitioner.
How Many Value Analysis Courses Have You Had? None? or Not Enough?
If 50% of your success as a supply chain professional is tied to having a dynamic and sustainable supply value analysis program that is action oriented, customer, process and data driven, creative and innovative, and self-managed, then how come you’ve never taken a course in it?
I can’t think of any another profession (yes, value analysis is a legitimate and growing occupation in healthcare) that doesn’t require any training or educational requirements in order to be a value analysis leader or practitioner. Even bus drivers must have training, education and a special license to drive a bus.
Yet, value analysis leaders and practitioners make million dollar decisions, year-in and year-out, for their healthcare organization without any training. Is their something wrong with this picture? I would think so!
If you aren’t aware of it, value analysis is an acknowledged and respected discipline with a 60-year history that has a defined six-step process (called The Value Methodology*) that needs to be religiously employed by VA leaders and practitioners in order to save money and improve quality. If you aren’t applying this value methodology in your value studies then you aren’t practicing value analysis – you are doing something else instead.
To be truly called a value analysis professional (i.e. conforming to the standards of skill, competence, or character normally expected of a properly qualified and experienced person in a recognized disciple) you will need to upgrade, improve, and advance your skill sets to the next level of proficiency in this growing art and science. This can only be accomplished with formal classroom training and education in this discipline.
Isn’t it time you search out specialized value analysis training for yourself, value team leaders and your value team(s) so that you can become qualified and experienced in order to drive your value analysis bus?
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* If you are ready to upgrade, improve and advance your value analysis skill sets and learn the value methodology, may I suggest that you consider registering for our Certified Value Analysis Leadership™ Training Program to be held on November 4-6, 2008.
The 26 Cent Solution
Did you know that if you change hundreds of wasteful things you are doing right now in your supply chain that you could reduce your total supply expenditures by as much as .26 cents on every dollar you are spending? Compare this to 1, 2 or 3 cents you are now savings on price.
As a client of mine told me last week, “Today’s savings are NOT about Price; rising cost must be offset by other strategies”. I’m finding that more and more supply chain professionals are agreeing with this statement, but aren’t acting on it as aggressively as they could or should in this (price is always going up) economy. The few trail blazers that have embraced this concept have however saved millions in less than one year – beyond price.
I just read about a major teaching hospital that saved $14 million by completely changing their culture about how things are done at their hospital by making systematic change happen permanently. For instance, they saved $147,000 when they found that all of their towels were being de-linted, instead of just their operating room towels. $100,000 was cut from their telecommunications budget by auditing the use of all of their phones in their building. They saved $87,000 by reducing the frequency of the trash pickups when they found that their dumpsters weren’t full when they were picked up three times a week. And a whopping $400,000 was saved by turning off computers and lights at nights in all their facilities.
That’s just a few real life examples of what any and all healthcare organizations can save when you change the things that you are doing without affecting your patient care at all. It’s really painless, productive and easier than you would think to do so, if you decide to commit to “The 26 Cent Solution” at your healthcare organization.
Your Partner In Savings Beyond Price™,
Bob Yokl
Robert T Yokl
Chief Value Strategist
Strategic Value Analysis® In Healthcare
800-220-4274
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P.S. You wouldn’t believe the huge response we are getting on our Utilizer™ Dashboard. Almost everyone that has seen the Utilizer™ has been blown away with how easy it is to use and the savings that it can generate for them. Our Clients especially like the idea that we do all of the heavy lifting and you get all the savings. Isn’t it time you take a TEST DRIVE too?
P.P.S. Don’t forget to check out my new blog article “When Does Something Become a NO-Brainer?” This blog is all about nothing good happens unless you are willing to experiment – experiment – experiment.
