Building a Supply Chain Business Case for Change!
I have found that the best way to get your supply savings ideas (especially those big creative ones) approved by your senior management, customers and stakeholders is to make a formal written business case for change. Why? Because too much is left unsaid, misunderstood or lacking in logic when you try to verbalize your savings ideas on complicated issues that need to be internalized before they are put into practice.
I have followed this same advice in my own career where I have proposed big business changing savings ideas at every healthcare organization I have worked in my supply chain management employment. For instance, I have proposed (in writing) a new supply value analysis program at every healthcare organization that I have worked and NEVER once have my proposals been turned down by senior management, customers or stakeholders.
I once decentralized the centralized buying function that had been in place for 46 years at my multi-hospital system and then replaced it with a GPO model based on a written business case for change that saved my healthcare corporation millions of dollars — almost on day one.
I proposed in writing, and eventually received approval from my board of directors, to move forward with a group purchasing program for their 27 long-term care facilities where I was Vice President of Support Services. This reinvented the way they had done business for decades.
I’m sure you get the idea! Developing a written business case for change in order to introduce, test the waters and then to gain approval on your big and even little supply savings ideas is a powerful instrument for the changes you believe are mission critical to your healthcare organization.
Here’s how it works! This business changing and decision-making instrument begins with a written document that would give the background of the problem or opportunity and description of what you want to accomplish. It would describe how it benefits your organization, how it fits into your organization strategic plan, the risk and rewards, the resources required, the responsibilities and the timing and the operational and financial considerations.
Your business case for change doesn’t need to be elaborate, but it does need to be thorough, concise and well thought out. Most importantly, it needs to be your tool of choice that you employ when you want to “change the way we do things around here”.
Confronting the Tough Stuff
Every supply chain professional is confronted every day with tough decisions, inflexible people, immovable objects, and sticky situations, especially now that we are in a recession. How do you cope in this environment?
The short answer is that you need to become more skilled at dealing with difficult people, irrational situations and the politics of your workplace. There is an art and science in doing so. Here are five basics that work every time:
- Have Patience – Thomas Paine, in his pamphlet “Common Sense” tells us that all things and truths become clearer with time. That’s why you need to have patience when confronted with a tough situation. I personally wait at least 24 hours before making any tough decisions because the emotions of the moment have now passed and I have a clear head to make the right decision. Don’t make rushed decisions if you can avoid it!
- Listen Artfully -We all know the techniques of “Listen Artfully”, but how many times have you really used them? I have found that if you can keep people talking and keep yourself listening attentively you can find out everything or anything you want to know about any situation. It always pays dividends to listen!
- Be Respectful - Even when you totally disagree with an individual’s point of view, be respectful, civil and polite. In doing so, you might just learn their reason(s) for why they have a different perspective on the subject at hand. Then you have all the facts you need to make your own decision!
- Ask Why – The most important question you can ask anyone, when confronted with an opposing opinion, is why they feel that way. They will then need to defend their position. Often they will talk themselves out of this opinion, when they hear their own answer. That’s why the “why question” opens up a whole new way of thinking for even the toughest opponent.
- Don’t Cave In -The easy route to take when confronted with tough people, decisions or situations is to “cave in”, but this won’t solve your problems. It will just complicate them. Once your colleagues, employees or management realize that you change your mind easily they will never ease up on the pressure to change your mind on any subject. But if they know that you are hard as a rock and are an unmovable object, they will soon tire of trying to change your mind. This doesn’t mean that you should be inflexible or stubborn, but always be mindful that your opinions count too! Be firm and consistent!
The Reverent Robert H. Schuller has said that “Tough times never last, but tough people do”. That’s why you must master these five skills that are needed to deal with tough people, tough decisions and tough situations. If you do, I can ensure you that it will make your job and your life a whole lot easier, more productive and fun again.
Vacillation isn’t an Option
If you have been reading any newspaper, magazine or have been watching the TV news over the last few weeks you can’t miss the headline, “Healthcare Reform on the Way”. However, what the media doesn’t tell you is that no matter what form healthcare reform takes each proposal now before Congress “will require providers to radically restructure the way they interact with other providers and control cost. Facilities will be best served by preparing now. Those that wait risk their facility’s financial health through reduced payments and lower volumes.” is the prediction of Hospital Financial Management Magazine.
The best case scenario for healthcare reform is that the Feds will attack the cost of readmissions within 30 days of discharge by disallowing reimbursement, bundle inpatient and outpatient charges at a lower rate, and expand their pilot gain sharing program to all qualified providers who can meet seven stringent participation criteria. The worse case scenario is that the Feds will dramatically reduce your hospital’s already meager Medicare payments, which has been already proposed.
With this said, I don’t think this is a time when you should take a “wait and see attitude” since vacillation isn’t an option. It’s safe to say that some form of healthcare reform is on the way and to pay for it the Feds will need to take more dollars from your healthcare organization’s budget to make it work. That’s why even more rigorous cost management should be the order of the day for all healthcare organizations. To do less is to risk getting caught asleep at the wheel while your competitors sail through this impending historic financial disruption without missing a beat.
Are You Getting Serious About Value Analysis?
We are seeing a very positive emerging trend in healthcare today: hospitals, systems and IDNs are getting serious about value analysis. The question I have for you is “Are you getting serious about value analysis too!”
For years value analysis was something we told our bosses and colleagues we were doing to make them think we were on the cutting edge of supply chain management. We knew however in our heart of hearts that our team(s) or committee(s) weren’t generating the savings and quality improvements that they could or should be. We knew our team or committee members weren’t attending meetings, that we weren’t getting management support that we needed to be successful and that our department heads and managers too often placed barriers in our path that prevented us from making savings happen.
That was then, this is now! We are now seeing hospitals, systems and IDNs providing formal advanced training for their senior management and value analysis teams in the classic tenets of value analysis, organizing their teams to save and seeking out new power tools to manage, monitor and control their supply value analysis program. They are hiring professional trained value analysis coordinators, managers or directors to manage their supply value analysis program.
Why Now, not then? No hospital, system or IDN, with their dip in revenues due to the recession, can leave a significant 7% to 15% in utilization supply expense savings on the table untouched. In the past this 7% to 15% seemed nice to have, but now is critical to their survival. That’s where value analysis comes to the rescue!
Value analysis, if practiced patiently, fervently, artfully and scientifically is the vital savings engine that all healthcare organizations (large and small) need to make Savings Beyond Price™ quickly happen. But this budding success story won’t materialize unless your senior management, team(s) or committee(s) has the requisite tools, training and executive management support required to create, manage and maintain high performance value analysis teams.
So if your hospital, system or IDN is getting serious about value analysis just remember this important salient fact: value analysis isn’t about establishing a value analysis team or teams and then telling them to GO SAVE MONEY! It’s all about having highly trained, motivated and incentivized VA team leaders and team members that understand, internalize and vigorously apply the six-step value analysis methodology to uncover and then implement any and all savings opportunities for your healthcare organization.
How to Get a Bigger Dose of Creativity
Supply chain professionals have stepped up their savings game due to the effects of the recession of 2009, but are they really creatively driving the last dollar out of your supply chain or just nibbling around the edges? Here are five big ideas that will give you an even bigger dose of creativity to ramp up your savings in these unsettling times:
1. You don’t have all of the good ideas
I can’t tell you how many times I’ve seen the door closed on good ideas because they weren’t invented by the supply chain department. It’s now time to encourage new and better ideas to bubble up from your vendors, staff, co-workers and department heads to bring new inspiration to the job at hand.
2. You need to collaborate more with your peers
Too many supply chain professionals act as if they are lone rangers as opposed to collaborating with their peers in teams to make savings happen. As an individual you can only accomplish a minuscule amount of work on a daily basis, but you can supercharge your savings efforts by teaming up with your peers to get this hard work done.
3. You need to have more diversity in your teams
Teams that act, look and think alike won’t generate new, different and better solutions to your challenges. One little known secret to boosting your creativity is to get people with different backgrounds and expertise to work together as creative contributors.
4. Accept some failures and dry holes as inevitable
Don’t be frustrated by some failures and dry holes that your team(s) will experience in searching out savings, but instead consider them a learning experience. It’s your job to make your team members feel safe, confident and risk averse so that they can filter the best ideas for implementation and kill projects that are leading to a dead end.
5. Give your team members as much responsibility as possible.
Your team members should be given as much responsibility for their projects as possible. They shouldn’t be second guessed by your team leaders or senior management on their findings and recommendations. Most importantly, they need to be given sufficient time and resources for exploration and implementation of their projects.
Getting a bigger dose of creativity for your supply chain initiatives is more about the process you follow to get results — than luck. It involves tapping into the ideas of right people with the right diversity, accepting some failures and dry holes, and giving your team members as much responsibility as possible. Simply stated, it’s not about being a lone ranger!
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.
Leading Change
Savings Beyond Price -Weekly eNewsletter – February 4, 2009
Robert T. Yokl
President & Chief Value Strategist
Leading Change
Every crisis has seeds of opportunities for those who are prepared, persistent, persuasive and fearless! If ever there was a time when supply chain professionals need to LEAD CHANGE at their healthcare organizations…it’s now!
With few exceptions hospitals, systems and IDNs are bleeding red ink or at best are having one of the worst financial years in decades because of reduced census, growing receivables, shrinking investment income and higher capital cost. I liken this to a tsunami!
To lighten the load on your healthcare organization’s finances, supply chain professionals need to LEAD CHANGE in their healthcare organizations by:
1. Developing a new vision and strategy for change
The old vision and strategy of just saving on the price isn’t going to work in this new healthcare economy since prices are going up – not down. Your new vision and strategy should be focused on your utilization or in-use cost where on average 26% can be saved almost overnight. That’s were your new and better savings reside!
2. Communicating your change vision to all levels of management
Making change happen is a team effort, not an individual endeavor. Therefore, you must get your senior management and department heads and managers to buy into your vision.
This can best be accomplished with white papers, presentations, and newsletters circulated throughout your organization that would get everyone talking, working and supporting your vision. Yes, this does take some time and effort, but this is what leadership is all about. Talking and walking the walk!
3. Creating high-performance value analysis teams
To implement your new vision and strategy you will need to create high-performance value analysis teams, and not accept your current so-so value analysis team’s performance. I haven’t seen a value analysis team(s) that can’t raise their performance by as much as 10-fold if they are reorganize, reinvent and reinvigorate to save money in new ways.
4. Generating sustainable, measurable and new utilization savings
As I have already mentioned, price savings alone won’t lead your healthcare organization out of this crisis. Only by attacking your utilization misalignments will you make a BIG dent in your supply expense budget. And these sustainable, measureable and new savings will go right to your bottom line where your healthcare organization needs the impact most.
I have just outlined an action plan for you to LEAD CHANGE in your healthcare organization in these uncertain times. This will position you to be a hero instead of a victim in the tsunami that hit us in October 2008.
As I see it, supply chain professionals have an extraordinary opportunity to LEAD CHANGE in their healthcare organization because there are still millions of dollars of untapped savings beyond price to be liberated in your supply chain that you never thought was possible.
Now go and LEAD CHANGE before it’s too late to do so!
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 would like more information on how to reorganize, reinvent and reinvigorate your value analysis teams to be better than good you might want to download my White Paper” Strategic Value Analysis®: Savings Beyond Price™” that will give you an insiders’ view on how to do it.
Healthcare Supply Chain Strategic Planning
Isn’t it Time You Look in the Mirror?
Material management (or supply chain management) as it is now called) has been red hot for 27 years in healthcare, yet very few healthcare organizations have taken the time to develop a Strategic Supply Chain Operations Plan (SSCOP) to fine tune their multi-million dollar business operations. Few healthcare organizations ever take the time to refresh their SSCOP plan if they have one to compensate for the winds of change that take place yearly and will affect their healthcare organization.
Winds of Change: Big changes will dramatically affect your healthcare organization is the economic melt down we are all experiencing. Your elective admissions are slowing, your investments have shrunk by double digits, your prices have escalated, your sources of credit lines are shrinking and your capital budgets are on life-support.
Master Change: We in supply chain management always seem to be herky–jerky when it comes to strategic operational planning, when the fact is planning is the little known secret you desperately need to stay on top of your game. By looking at where you have been, where you are now and where you want (or need) to be in 1, 2, 3 or 5 years with your supply chain management program, you can manage these unpredictable winds of change more effectively.
Anticipate Change: This is the situation with one of our clients whose management is telling him he needs to do more with less. He has responded to this challenge by developing a Supply Chain Operations Plan, with our assistance that includes reinventing and re-tooling his purchasing operations and supply value analysis program to be leaner, meaner and more productive. As a result our client has proactively increasing his supply saving yield by 11.4 over the next few years.
If you want to be left standing when the winds of change hit your healthcare organization, you need to master change by anticipating change with your own Strategic Supply Chain Operations Plan that will keep you afloat in good times and bad.
Your Partner In Savings Beyond Price™,
Robert T Yokl
Chief Value Strategist
Strategic Value Analysis® In Healthcare
800-220-4274
P..S. Don’t wait until a crisis arises at your healthcare organization to create your Strategic Supply Chain Operations Plan. Be proactive, responsive and visionary by making planning a continual process of improving your supply chain each and every year so that you can master the winds of change.
P.P.S. Don’t forget to check out my new blog article, “The Case for “Know-Nothing” Value Teams. This blog will show you how to achieve better, unbiased decisions from your value analysis project managers every time.
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!
New Podcast Published- “Offsetting Price Increases in Tough Times”
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.
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.
New Supply Best Practices Webinar Announced!
Influence Your C-Suite for Positive Results!
Webinar Objectives:
What is Your C-Suite Thinking?
What Are They Really Thinking?
Solution: More and Better TLC
TEACH to Gain Respect
LEAD in the Right Direction
COACH to Gain Commitment
July 17, 2008 – 1:00pm EST.
Webinar Leader – Robert T. Yokl, President/Chief Value Strategist Strategic Value Analysis in Healthcare
Remember…The Webinar May Be FREE But The Information is Priceless
How Are You Selecting Your Value Analysis Projects?
First of all, don’t confuse new or renewal GPO contracts as being value analysis projects, because they are not. This is contract management in its purest sense, which is a whole other discipline that has its own rules and models.
What I’m talking about here is the way in which you selecting your VA projects, which can unearth millions of dollars of savings in your value streams. For the best results, you should establish criteria for the selection of your VA projects. Here are five criteria I would suggest you start with:
1. Dollar Threshold: No VA project should be undertaken on a product, service or technology that has less than a $25,000 annual spend. The reason: Your ROI would be very small, if at all!
2. Projected Timeline: If your VA project will take more than 90-days to complete it might be better to break the project into smaller projects. Projects that have long timelines tend to go off track. Keep your projects in bit size pieces!
3. Probability of Success: If you only have a 50% probability of success in implementing a project (e.g. orthopedic implant study) then delay the project until you have an 80% success factor.
4. Project Alignment: If your VA project is not supported by your management then I would delay it for another day. Why fight city hall – you rarely win!
5. Solution Clarity: If you already know the solution to a problem (e.g. defective material) then don’t initiate a VA project — just fix the problem. It will save you a lot of time and effort by doing so.
These are just a few ideas to get you on the road to selecting the best VA Projects using criteria vs. gut feel with the greatest possible ROIs.
Your Partner In Innovative Savings,
Bob Yokl
Robert T Yokl
Chief Value Strategist
Strategic Value Analysis® In Healthcare
P.S. My staff thinks I’m crazy to offer our e-newsletter subscribers a 30-day “test drive” on our Utilizer™ Dashboard and you only pay if it works! But I’m so convinced that once you try it you won’t want to live without it that I have turned a deaf ear to my staff’s objections to bring you this outrageous “pay if it works” guarantee. Email me to learn more about this special offer – bobpres@strategicva.com
P.P.S. Don’t forget to check out my new blog article “A Lean Way of Thinking! This will give you a new way of thinking about your workload.
