Doing it with Data
Savings Beyond Price -Weekly eNewsletter – September 24, 2008
Robert T. Yokl
President & Chief Value Strategist
Greetings!
Doing it with Data
One of the top 10 mistakes that value analysis practitioners make when they are assigned a value analysis study is that they don’t data mine to hunt for predictive information that can lead them to those big and little pearls of discovery.
This is because it is much easier to stop at the first savings that is identified (usually a price savings) in a VA study and then call it quits. Remember, price is just the tip of the iceberg and that 79% of all NEW supply chain expense savings is to be found underneath the iceberg.
Case in point! A few years ago I performed a value study on diabetes tests where I quickly found that my client could save 11% (or $8,234) by jumping on a new GPO contract, but I didn’t stop there with my study. I then data mined my client’s test utilization and found that they were utilizing 7x more tests or $64,234 then their peers. Further investigation and observations uncovered that my client’s diabetes test strips were defective thereby their nurses had to use two test strips before obtaining an accurate reading. Once this defect was eliminated the total project savings for my client resulted in a $72,468 yield!
If I would have stopped my value study when I uncovered the $8,234 in price saving for my client I would have missed altogether 90% of the savings available on this project. The term “Doing it with data” isn’t just a nice phase to quote, it’s the central part of any value analysis study.
More importantly, data mining is the future of supply chain expense management! Don’t ever miss this step (doing it with data) in your value analysis process, or you will leave millions of dollars of savings on the table – untouched.
Fastest Way to Pinpoint Huge Supply Chain Savings Today!
How Good is Your Supply Chain Radar?
Do you need to pinpoint where your supply utilization savings are hiding?
The term radar (radio detection and ranging) was coined in 1941, to describe a new technology that detected the altitude, direction and speed of fixed and movable objects, such as airplanes, ships, motor vehicles, weather and terrain.
Radar worked so well in WWII that it is credited as one of the reasons the Allies won the war.
What makes radar so powerful is that it can pinpoint the exact location of something even when other search methods have failed.
Now, take the radar analogy and apply it to your healthcare organization. The bottom line is that price is no longer king, and we’re in turbulent economic times. You NEED something to help you pinpoint where your savings are hiding if you’re to meet your benchmarks and savings goals.
That’s where our Utilizer™ Dashboard comes to the rescue!
You’ve got to attack unnecessary spending!
Just the other day, a material manager (MM) told me that she oversees 26,000 products, services and technologies, but has no way of knowing which are out of cost control at any given time. As a supply chain professional, you know what that’s like. You must hold your total supply cost to the absolute minimum—and doing this requires vigilance.
There’s no better way to be on the lookout for savings opportunities than with your own supply chain radar! The Utilizer™ Dashboard is exactly that! It will help you detect the waste, inefficiencies, misuse, misapplication and value mismatches in your supply chain before they inflict serious damage to your bottom line. Some of these misuses and mismatches are costing your healthcare organization anywhere from four to 11 percent in lost savings opportunities every month, quarter and year you continue to fly blind.
This savings computes to 1 or 2 million dollars per 100 occupied beds. So if you have 180-occupied beds, this could mean 1.8 million to 2.8 million going right to your bottom line—which isn’t small change when you consider that your price savings are disappearing every day.
Utilizer™ Dashboard is Fast, Easy, Efficient Radar—We Do the Heavy Lifting!
Because supply chain professionals have such limited time, it’s critical that when value analysis tools are employed, they provide a high ROI and require very little time and effort to be deployed by supply chain managers. To our delight, that’s exactly how our new Utilizer™ works. We do ALL the heavy lifting, and you reap all the savings.
You Get More with the Utlizer™ Dashboard, Including Training in an
Award-Winning Value Analysis Program
When you use the Utilizer™ Dashboard, you aren’t just getting a software program and a “Best of luck,” from us. We want you to succeed and see the value in this revolutionary program, so included in your purchase of the Utlizer™ Dashboard is a FREE Advisory Service that guides you through the implementation process to quickly and easily make your savings happen!
As a bonus, we will also train your value analysis team in our award-winning advanced value analysis training program to smooth the road to change for you. You’ve got nothing to lose and everything to gain, so give us a call today and start seeing immediate savings opportunities with the Utilizer™ Dashboard.
What People Are Saying about the Utilizer™ Dashboard
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“I thought the Utilizer™ Dashboard would require more time—that I didn’t have—to manage it. To my surprise SVAH, as promised, did all the heavy lifting and showed me where my savings were hidden, which actually saved me time. ” |
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Quickly Schedule Your “Test Drive” Today!
Yes, call me to schedule my “Test Drive” today so I can see for myself the UTILIZER™ Dashboard in action and find out how I can take my supply chain to the next level of savings performance.
Thinking Lean
Savings Beyond Price -Weekly eNewsletter – September 19, 2008
President & Chief Value Strategist
Greetings!
Thinking Lean
Believe it our not, studies have shown that in excess of 60% of the supply chain activities you perform every day add no value to either your internal or external customers. Simply put, they wouldn’t pay for them if they knew what the cost was to serve them. Does this surprise you?
Well it shouldn’t! I know of supply chain professionals that have been doing the same things every day, the same way, for 20 years who haven’t questioned why they are doing it. Nor, have they analyzed if their activities and processes can be leaned even further to reduce their cost-to-serve to their customers.
A good example of this un-lean thinking is that some hospitals are still stocking office supplies, x-ray film, paper towels and lab supplies in their warehouses when it adds no value to their customers to do so. These commodities should be delivered directly to their home departments by your suppliers to dramatically reduce your handling cost.
Value analysis is another area where lean thinking is absent in my judgment. I have seen as many as 35 members attend a value analysis committee meeting, which I would consider a mob, where little or no real work was accomplished. Does having 35 members add value to your value analysis process? By the way, we have found that 10 people is the ideal number of team members that you should have on your value teams.
The lesson to be learned here is that we should all be THINKING LEAN (what would the customer pay for if they knew its cost) in everything we do, and then always be searching out new ways to reduce the cost-to-serve our customers.
THINKING LEAN is really a simple concept to learn and apply. If you want to save big by introducing practical ideas, methods and techniques the thinking lean concept will cut your costs to serve your customers one activity or process at a time.
Your Partner In Savings Beyond Price™,
Robert T Yokl
Chief Value Strategist
Strategic Value Analysis® In Healthcare
800-220-4274
P..S. I’m happy to announce the release of our new Utilizer™ Dashboard Contract Driver module that will make your contract management job a whole lot easier. I consider it a way for you to have ultimate control over all of your contracts.
P.P.S. Don’t forget to check out my new blog article “4 Tactics to Combat Complacency with the Status Quo” This blog is all about progressing beyond just price savings, and moving on to the next generation of savings productivity.
4 Tactics to Combat Complacency with the Status Quo
Complacency or the lack of urgency to get things done is probably the biggest idea killer that we ALL experience in the supply chain. Just the other day a MM told me that when he showed his CFO a supply chain savings survey we performed for his hospital that documented 1.7 million dollars in savings, his CFO was too busy to think about it at this time.
What this CFO was really saying to this MM was that he was satisfied with the status quo; why rock the boat, take any risk or try to make things better. Change is never easy, but absolutely necessary if you want to keep your supply train on track, on time and moving forward. It is therefore essential for supply chain professionals to combat complacency by changing hearts and minds to get momentum moving again or you will run out of fuel to stoke your savings fire. The best way to do so is to employ these 4 proven and time-tested tactics:
•1. Never, Never, Ever Take “NO” for the Final Answer
The answer “no” is just a temporary setback for supply chain professionals who want to be wildly successful in their field. Your must always come back another day, week, month or year with a reconfigured proposal to get your way. Or, you will be left with the crumbs in your business life that are left over after all of the other big decisions are made by your management.
•2. Never, Never, Ever be Satisfied with the Status Quo
Never accept the way things are now, if you want to see things change for the better. Just because your hospital, system or IDN has done things the same way for many years doesn’t make this the best way to do things. Always be looking for new, different and better ways to improve what you are doing to make your healthcare organization a better place to work.
•3. Find champions to fight Your Battles with You
There are always one, two or three high level executives in your organization that will agree with your proposals and that can be convinced to become champions for your initiatives. Your job is to find them so that they can help fight your battles with you. Otherwise, you will be a voice crying in the wilderness that will never be heard over the chatter and noise that your management is hearing everyday from your peers.
•4. Create a Sense of Urgency that Can’t be Ignored
There is always a good reason why your organization should do things NOW! Prices will be going up NOW. Resources are available NOW to make it happen, but won’t be next month. Jim is on vacation next month, but is available NOW to get this project started. Get the picture? There is always a good reason that you can unearth to get your management to move NOW on your proposals as opposed to a later date. This is because any proposal has a way of becoming less attractive and less timely as time marches on. Do it now needs to be your mantra, if you really want to get things done around here.
There are certainly more things you can do to combat complacency with the status quo at your healthcare organization. However, these four tactics have been successful at any organization that has employed them. Why? Because they tap into the rational and emotional side of our brains to get us moving in the right direction….NOW!
Are You Hearing the Voice of your Customers?
The term voice of the customer or VOC is used to describe your customers’ needs, wants, desires, and their perceptions of what they need to get their jobs done. It’s only through skillful research that you can understand your customers’ unique functional requirements so that you can cost effectively design, deliver and improve the products, services and technologies they use.
From my prospective, we are too often missing the VOC of our customers in healthcare. By this statement I mean we aren’t spending enough time or energy identifying our customers. No product, service or technology has just one customer value group, since one size does not fit all customers’ requirements. Consequently, this oversight has lead to massive over-standardization in healthcare. This is costing your hospital, system or IDN hundreds of thousand, maybe even millions of dollars annually.
We see this observable fact with just about every client we work with. Just the other day, one of my consultants uncovered that one of our clients had standardized on three pacemakers, with an average cost of $6,800. When they changed their pacemaker product mix, by adding a few more pacemakers, they lowered their average pacemaker cost to $4,200. The effect! Hundred’s of thousands of dollars a year were saved simply by really listening to the VOC.
You too can achieve these kinds of savings by collecting and analyzing data to understand your customers’ practice patterns, trends and variations. You can interview your customers to really understand what they absolutely positively must have to do their jobs and observe how they use their products, services or technologies in the real world. Then and only then, will you be able to say that you truly and wholly understand the voice of your customers.
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.
New Podcast Published- “Offsetting Price Increases in Tough Times”
6 Tips on Leading Virtual or Remote Teams
We are finding that more and more our value analysis client’s team members don’t reside in the same building, city or even the same state. A good example of this new emerging trend is one of our clients has 51 locations, with at least a two or three hour traveling distance between their facilities. So how do we and you create truly effective, productive and cohesive teams long-distance?
Here are six tips to smooth the way to keeping your virtual or remote teams engaged, on track, on budget and communicating effectively:
1. Harness Technology to Stay Connected
Technology is the best friend of virtual or remote teams since it keeps them connected, focused and disciplined with their project work. We found that conference calls alone won’t keep your teams focused on their objectives. That’s why we recommend communications portals like www.GoToMeeting.com for the reason that it is easy to use, efficient and inexpensive.
2. Publishes an Agenda to Stay Focused
It’s one thing not to publish an agenda when you are conducting tradition team meetings, but it is mandatory when you are conducting virtual or remote meetings since everyone must be on the same page when you are on-line and in real time.
3. Frequent Meetings Keep Your Team Alert
We recommend two virtual meetings a month to keep your team alert, engaged and on target. Otherwise, they will easily forget about their assignments due to their other heavy workload.
4. Communicate, Communicate, Communicate
Frequent e-mails, phone calls and regular check-ins between meetings are the glue that will hold your virtual or remote team together. The lack of recurrent communications by your team leaders will almost guarantee that your virtual or remote teams will lose interest, momentum and stop working on their projects altogether.
5. Establish Measurable Goals and Objectives
It’s even more important that you have measurable goals and objectives with your virtual or remote teams, than traditional teams, or else you won’t know if your team(s) is on track and on budget with their projects.
6. Gaining Upper Management Support
The best way to gain your upper management support so that they continue to give you the resources, time, staffing and the money that is necessary to conduct your virtual or remote teamwork is to provide them with a monthly report of your quantitative and qualitative results. This way they will know with certainty that your virtual or remote team is meeting their quality and profitability goals for any given period. To do less is to risk having your upper management question the legitimacy, efficacy and productivity of forming these new emerging virtual and remote teams.
It is easy for me to foresee that every healthcare organization, regardless of its size, will be employing virtual and remote teams due to the logistics and prohibitive cost of conducting traditional meetings that every team member can attended without fail. This is now the wave of the future, and we ALL need to master these new competencies to meet the challenges we face in the 21st century.
3 Tactics to Successfully Sell Your Best Saving Ideas
I know it can be frustrating when you have thought of a great saving idea and your clinicians or your upper management don’t see it the way you do. They tell you they need more information, proof and testimonials, or that their priorities are elsewhere, so they tell you to come back another day or they don’t want to risk spending just a little bit of money even though you are promising them big results.
These reactions are enough to drive you nuts, but this is the plight or dilemma that supply chain professionals face everyday. Let me say to you that it doesn’t need to be that way if you follow these three tactics to successfully sell your best savings ideas:
1. Prepare the Path for Change
With few exceptions, people need to be prepared for any change. This change can be realized most effectively through education. By teaching, coaching and training your upper management or clinicians this raises their awareness that maybe there is a better way to do things around here. You can do this by sending articles to them on the idea you are selling, giving them a formal presentation on the topic or writing a White Paper and circulating it around to all interested parties. What ever you decide to do to educate your bosses and peers you can’t ever approach them with a new saving idea without pre-selling your idea before you can actually close the sale – down the road.
2. Swamp them With Data
Data in all of its many forms, statistics, graphs, testimonials, studies, etc., has a huge affect on changing people’s minds. This is because people want to be members of the current in group. They want to follow the trends in healthcare, not be out of step with them. So if you can show your upper management and clinicians that they are out of step with their peers you can easily change minds and hearts around to your thinking. In some situations — almost over-night!
3. Give Them More Choices
No one really likes to have just one choice when they are asked to make a little or big decision, so to ease the road for quicker decisions give your upper management or clinicians more than one option when you ask them to make a decision in your favor. I always like to give my clients three options (A, B, or C,) that are tied to my big saving idea, so they can have a few alternatives to select from — not just one. This way your and my probability of obtaining a positive decision on our savings ideas are much, much greater than if we tried to force my client or your boss or peers to base their reputation and credibility on just one uncertain and untried option.
These three tactics are easy to understand and just as simple to put into practice if you are looking for better ways to successfully sell your best savings ideas. These tactics are tried, true and tested, so don’t be anxious about using them when your next big saving idea pops into your mind.
Start at the Top!
Savings Savings Beyond Price -Weekly eNewsletter – August 27, 2008
President & Chief Value Strategist
Greetings!
Start at the Top!
On August 28th we will be sharing our ideas on “Offsetting Price Increases in Tough Times” at our monthly webinar. This webinar is designed to be a primer to get you into high gear to counterbalance your rising product cost by employing other saving strategies. However, it won’t be the answer to ALL of your change initiatives because all sustainable change needs to start at the top of your healthcare organization.
Whether you’re using lean, Six Sigma or value analysis to initiate change at your hospital, system or IDN, starting at the top is critical. By this I mean, if you don’t have your C-suite’s uncompromising and unqualified support for what you are trying to accomplish, you will quickly hit a brick wall that you won’t be able to jump over, craw under or circumnavigate.
The easiest way to do so is to establish an executive council to lead your lean, Six Sigma or value analysis initiative with a C-suite member chairing this committee. It would be this council’s charge to guide, monitor, direct and arbitrate disputes on you way to your ultimate success.
If you are unable to gain a commitment for such a council from your C-suite you are then, I’m sorry to say, left to your own devices to keep your initiative afloat in stormy waters. But don’t let this discourage you since “things change and people change” thereby giving you another opportunity to start at the top when the climate is just right for change.
Your Partner In Savings Beyond Price™,
Robert T Yokl
Chief Value Strategist
Strategic Value Analysis® In Healthcare
800-220-4274
P.S. Did you know that the “Easiest (and fastest) way to save money” is with our Value Analysis Leader Resource Web? That’s right, literally hundreds of million-dollar savings ideas, plus scores of educational materials right at your finger tips — when you need them most.
P.P.S. Don’t forget to check out my new blog article “ How to Create Wining Value Teams”. This blog is all about incentivizing to save, which is one of the key ingredients in creating winning value team(s).
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