Good Buying Decisions
Savings Beyond Price -Weekly eNewsletter – March 26, 2009
Robert T. Yokl
President & Chief Value Strategist
Good Buying Decisions
Greetings,
We would all like to think that when our value analysis teams make high-quality buying decisions they are logical, unemotional and are anchored in fact. The scientific truth is that most of our VA teams’ buying decisions are filled with emotion and lack rational deliberation. These poor decisions are caused by impatience and the absences of a systematic repeatable decision-making process.
To truly make good buying decisions on every new product, service or technology that you buy, your value analysis teams require the proper framework, wide-ranging information sources, and clear alternatives to compare and contrast the many choices that should be available to them in making good decisions.
It’s all about choices! Good decisions are based on choosing the best alternative from multiple options that your VA team has brainstormed, investigated and cost-justified not just selecting the first-best idea that someone has suggested. They need, at minimum, a second and then a third best-idea in order to avoid making the wrong decision.
For example, if a clinician recommends to your VA team a new cath care kit be purchased since it’s less expensive than your current kit that’s not a good enough reason to buy it, until you have investigated at least two additional kits to ensure you are making the right buying decision.
Good decisions, believe it or not, don’t come naturally. If they did, we would never make a bad decision. If left to chance, our natural human tendencies (haste, empathy, illogical thinking, and emotions) will lead us to bad decisions every time. That’s why good decisions by your VA team(s) should be built on facts, not opinions, should be comprised of multiple choices and use of scientific logic to determine the proper outcomes so you can avoid your team member’s natural tendency to rush to judgment.
Is this the way your VA team(s) is making their decisions today?
avings one penny at a time.
Your Partner In Savings Beyond Price™,
Robert T Yokl
Chief Value Strategist
Strategic Value Analysis® In Healthcare
1-800-220-4274
P.S. If you haven’t downloaded our new webinar “Game Changer: Recession 2009” then you will be missing my predictions that can smooth the way for your supply chain survival plan this year.
The Power of Patience and Perseverance
John Quincy Adams, our sixth President of the United States, once said that “Patience and perseverance have a magical effect before which difficulties disappear and obstacles vanish”. This quote should be the mantra of all supply chain professionals since it is the essence of what we do: prepare, present, win/lose, and then if necessary, reorganize to try again on another day.
What disturbs me is that too many supply chain professionals GIVE UP too easily. They accept a NO decision as being final, without being patient and persevering in finding the right opportunity to make their case again. Maybe in a different way!
This reminds me of a supply chain manager, who is now a client of ours, who impressed me by his patience and perseverance in getting approval on our Utilizer™ Dashboard subscription service. He saw the value of our Utilizer™, but his senior management didn’t. He could have stopped there and no one would have thought less of him, but he didn’t stop at the first sign of resistance. Instead, he patiently persevered by asked his CEO and CFO what would need to happen to get this service approved. They then give him a number of tests (IT approval, high marks on reference checks, favorable case studies, legal review, etc.) that our Utilizer™ would need to pass in order to obtain their approval. He then methodically set out to meet all these tests that where outlined for him by his CEO and CFO. Well, it took a few weeks to make all these requirements happen, but guess what? This MM met all the tests and gained his management approval. That’s what the power of patience and perseverance can do for you!
No one’s batting average is 1,000% on getting your ideas approved, nor should it be in a democratic healthcare organization. However, if you don’t have a batting average of 500% or better you need to do something different to get different results. I agree with John Quincy Adams that the best way to do so is with patience and perseverance. This will have the magical effect of making your difficulties disappear and obstacles vanish. Isn’t this what you are looking for?
Is Experience Enough?
Savings Beyond Price -Weekly eNewsletter – March 18, 2009
President & Chief Value Strategist
Is Experience Enough?
Greetings,
Don Moyer of ThoughtForDesign.com tells us that “Wisdom may come from experience, but mere wisdom isn’t always enough to tackle the complicated challenges facing today’s senior managers”.
What Moyer is talking about is that when faced with complex challenges supply chain managers in particular fall back on their past experience to solve their new multifaceted problems. When in fact, a more insightful solution is called for that isn’t in your old playbook!
A good example of this pattern is the trend toward of switching GPOs to obtain a better savings yield. Our past experience tells us that “price is king” and we must push the envelope to continue to reduce our pricing.
This “experience trap”, as authors Kishore Sengupta and Taretk K. Abdel-Hamid call it, can be misleading and ambiguous given that all GPOs are CREATED EQUAL and won’t actually reduce your cost in the long-term.
Supply chain managers need new insights to comprehend that price is “only the tip of the iceberg” and that real, sustainable and long-lasting savings can only be found in their utilization misalignments (in-use cost) where 79% of all new savings reside.
You can either ignore these new insights or pick up on them, when faced with complex problems, to ensure that you complement your long-held empirical experience with new ways of doing things for bigger, better and longer-lasting results. squeezing the towel dry in supply chain savings one penny at a time.
Your Partner In Savings Beyond Price™,
Robert T Yokl
Chief Value Strategist
Strategic Value Analysis® In Healthcare
1-800-220-4274
P.S. If you are looking for new insights with your supply value analysis program you might want to download my white Paper “EVOLUTION” to gain new wisdom for bigger, better and longer-lasting results.
Hunkering Down Isn’t A Viable Solution
I’m hearing from supply chain professionals throughout the country that their hospitals, systems or IDNs are “hunkering down” in this new economy with the hope of weathering this financial storm we all are facing.
Just the other day a supply chain manager clearly stated this paranoia when he said “I know this doesn’t make sense not to spend a little money with your Utilizer™ Dashboard when we could save millions by doing so, but that’s the reality at my hospital today.”
This frugality doesn’t make any sense to me, since when you are in a hole you need to dig yourself out, not wait for someone to rescue you. Simply refusing to spend money to save money or to generate new revenues isn’t a viable solution in these tough times. It will only make your situation worse!
So when you hear that there is a freeze on ALL new spending at your hospital, system or IDN, I would question the validity, sanity and wisdom of this management fiat. Inspired leadership doesn’t retrench, hunker-down or hide from reality. They take prudent steps to dig out of the hole that they find themselves in until they can see the daylight. Then they dust themselves off and move one step at a time to higher ground where they can clearly see the light at the end of the tunnel.
In fact, inspired leaders are spending money to make and save money, even in these perilous times. These leaders understand the importance of moving forward, not backward in this sea of change. And they have the courage to make the hard decisions that are necessary to keep their healthcare organization on course in these turbulent times. To their credit they aren’t waiting for someone to rescue them from the challenges they face because they know help isn’t on the way.
When Every Penny Counts
Savings Beyond Price -Weekly eNewsletter – March 11, 2009
President & Chief Value Strategist
When Every Penny Counts
Greetings,
I reviewed a list of savings opportunities with a small rural hospital client’s CFO recently and I told him I was disappointed that we only found $226,926 (3% Annual Supply & Purch. Svcs.) in new savings for him. He told me that he wasn’t let down by the results for the reason that “every penny counts” at his healthcare organization. In most years, this figure would equal his bottom line.
This CFO’s response shocked me, since I didn’t realize how thin most hospitals’ bottom lines were each and every year. However, it reinforced my philosophy of how important it is for supply chain professionals to save each and every penny that they can to improve their hospital’s bottom line.
Remember: It requires about $33 dollars in new revenue to produce just one dollar in new profits for your hospital. It only takes one dollar in supply chain savings to have the same bottom line effect. That’s why this CFO was pleased about the savings opportunities we uncovered for him, since it is nearly impossible for him to generate new revenues in our current economy.
Now that you know that “every penny counts” at your healthcare organization, supply chain professionals can become heroes by squeezing the towel dry in supply chain savings one penny at a time.
Your Partner In Savings Beyond Price™,
Robert T Yokl
Chief Value Strategist
Strategic Value Analysis® In Healthcare
1-800-220-4274
P.S. If you are looking for ideas to save even more pennies, I invite you to download my “Building a Savings Factory” White Paper to get your savings engine into high gear.
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P.P.S. I want to remind you to take a look at our latest version of our Utilizer Dashboard Software today. You have to see how this software tool will give you fast, efficient and easy to use low cost tool to help you drive out all of your savings beyond price then you need to take a look at the Utilizer today! You have to see the Utilizer to Believe it!
Stop Wasting Your Valuable Resources
People are the most valuable resources in any and all healthcare organizations, yet they are being stretched beyond human capacity to get their jobs done, while at the same time save money and improve quality.
All of these activities are extremely important. However, we have observed that healthcare organizations’ timing, targeting and discovery of new savings and quality opportunities actually are wasting their value resources, not conserving them.
We have seen LEAN Management inventory reduction initiatives in operating rooms that have expended hundreds of hours of their clinicians’ time with only meager savings and quality improvement to show for it. Also, value analysis teams meeting monthly for years without producing real substantial savings.
If you are to stop wasting your valuable resources we must get rid of this “shoot from the hip” mentality when deciding on our savings and quality projects, and then replace it with a scientific approach to conserve our limited resources.
By “scientific” I mean that you actually measure where your best savings and quality improvement opportunities reside by employing value analytics. Then and only then, do you assign a value team to ferret out the opportunities for improvement – not before.
In light of the fact that we in healthcare have a shortage of 100,000 registered nurses, we need to be cognizant of the reality that our clinical resources aren’t limitless. Yet, it is mission critical for us to have our clinicians deeply involved in our savings and quality projects. This won’t happen unless we conserve these finite resources by being more prudent, cautious, and practical on how we assign them to our cost and quality management programs.
When the Going Gets Tough
Savings Beyond Price -Weekly eNewsletter – March 3, 2009
President & Chief Value Strategist
Greetings,
When the Going Gets Tough
Mikel Harry of the Six Sigma Management Institute tells us that when the going gets tough “Get back to basics. Re-examine everything you do and aim for breakthrough, not incremental, improvement. Have the courage to lead. You lead people to breakthrough, not manage them to breakthrough.” This is a winning formula in this recession!
Your healthcare organizations need your ideas, your expertise and your leadership to pull them through these uncertain times. If support from the top is lacking, then it’s even more important for you to lead the way in producing significant supply chain savings to right your boat.
I know that you are a regular reader of this e-newsletter and I’m preaching to the choir here. However, sometimes I think it’s important to remind you that almost nothing happens in your hospital, system or IDN without the leadership, involvement and know-how of supply chain management — making it happen.
You are an essential cog in the wheel that is required to keep your healthcare organization financially fit. So when the going gets tough I know that supply chain management will be part of the solution to these hard, tough problems we face today.
Your Partner In Savings Beyond Price™,
Robert T Yokl
Chief Value Strategist
Strategic Value Analysis® In Healthcare
1-800-220-4274
P.S. If you are really looking to “get unstuck” by traveling on new paths you will want to sign up for our latest webinar “Game Changer: 2009 Recession” where we will discuss this topic in detail.
P.P.S. I want to remind you to take a look at our latest version of our Utilizer Dashboard Software today. You have to see how this software tool will give you fast, efficient and easy to use low cost tool to help you drive out all of your savings beyond price then you need to take a look at the Utilizer today! You have to see the Utilizer to Believe it!
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How to Select the Best VA Team Leaders
Indentifying the best value analysis team leader candidates can be like playing a game of roulette if you don’t have a list of proven characteristics that are known to be a good predictor of success. To help you in your selection here are four characteristics you should look for in your Value Analysis leaders:
1. Team leadership experience
Your candidates should have managed at least one team previously, before even being considered as a VA team leader. This is not the time for on-the-job training if you are looking for a high-level of performance for your value analysis teams.
2. Problem-Solving Skills
This is an essential skill that your team leaders must possess, since this will be a big part of their job as a VA team leader. This important skill will help their project managers when they hit the wall on their projects and think that no solution can be found to move their projects forward.
3. Proven Track Record
Just because a candidate has led a team before, doesn’t mean that they have done it successfully. Look for candidates with a proven track record of results (quantitative and qualitative) before assuming that they have the leadership abilities necessary to lead one of your VA teams.
4. Excellent Communications Skills
One of the most important leadership skills a VA leader can have is to be an excellent communicator, since this is 80% of what a VA leader does. A VA leader must provide frequent, consistent and timely verbal and written communications to their team members that are clear, motivating, and goal oriented. If a leader doesn’t have this skill they will be ineffective in leading their VA team in the right direction.
These are just a few of the characteristics we have found that VA team leaders must exhibit if they are to be effective, successful and competent in leading their VA teams. Don’t forget to use them the next time you make the important selection of a VA team leader. This will ensure your ability to get a good fit – not a mismatch!
