How to Gain Control of Your Hospital’s Supply Chain
Savings Beyond Price -Weekly eNewsletter - July 16, 2008
Robert T. Yokl
President & Chief Value Strategist
Greetings!
How to gain control over your supply chain
When I sit back and analyze, as I do every week when I write this column, I ask myself what are the biggest challenges that supply chain professionals are facing today? I would say one of the top ten challenges would be “how to gain control over your supply chain” and not let it control you.
By control I mean that you always know where your savings reside, what defects (those things your customers don’t want or need) exist in your supply chain operations and how you would quantify these cost drivers down to the third decimal point.
To obtain these mission critical key performance indicators you don’t need to hire more staff, buy a new MMIS system or even normalize all of your data. What you do need to do is to develop short and long-range RADAR (I call these dashboards) that will quickly detect where your operational challenges are located and what their financial impact is on your supply chain. It then becomes much, much easier to solve these operational issues quickly and effectively without missing a beat.
We have numerous clients that are utilizing dashboards as their supply chain RADAR to detect anomalies in their supply chain performance. They tell us that they are now able to sleep much better because they are in control of their supply chain operations. No more guessing, assumptions or conjecture; they know precisely where to focus their resources and labors on their journey to operating excellence.
Wouldn’t having supply chain RADAR make your job easier too?
Your Partner In Savings Beyond PriceTM,
Bob Yokl
Robert T Yokl
Chief Value Strategist
Strategic Value Analysis® In Healthcare
800-220-4274
P.S. We are getting more requests for test drives on our Supply Chain Pilot since supply chain professionals are looking to re-energize, normalize and really control their VA process in order to increase their savings yield. If you are looking to increase your savings yield too, why not check out this power tool at www.strategicva.com/valuenet_main.htm.
P.P.S. Don’t forget to check out my new blog article “How to Identify and Develop Your Best VA Team Members”. This blog is all about not leaving to chance the selection of your VA Team Members, but basing your selection on facts.
Three Hidden Risks in Your Supply Chain
We all think our supply chain is humming along with no perceived dangers lurking in our value streams, except this thinking couldn’t be farther from the truth. We are seeing numerous supply chain risks lying beneath most healthcare organizations’ supply chains that can be a danger to your hospital, system or IDN’s financial health.
The first risk is over-standardization of the products, services and technologies you are buying that are costing your hospital, system or IDN thousands of dollars a year in unnecessary and unneeded cost. This is happening because of the misunderstanding that one size fits all customers, when, in fact, customization is the secret to having the lowest total supply cost.
The second risk is bulging inventories that at some hospitals can exceed two million dollars in safety stock that is two years old. As a result of this, damaged, out-of-date and unreliable products end up being used in medical procedures. Consequently, these hospitals are risking multi-million dollar law suits from medical misadventures that are directly caused by these old and outdated products.
The third risk is over-specifications of the products, services and technologies that you buy. I like to call this catalog buying! If you haven’t identified the exact functional specifications for the products, services and technologies that your hospital is buying (and are accepting what your department heads say are their specifications), then you are buying too much feature-rich and over-engineered stuff that you don’t need at all. Wouldn’t it be better to get the specs right the first time!
In a time when healthcare organizations are looking to reduce their cost even further and improve their quality (or they won’t be paid by third parties), the hidden risks in your supply chain need to be eliminated, and purged from your value streams.
To do less is risking the short and long-term financial fitness of your supply chain.
Your Partner In Savings Beyond Price™,
Bob Yokl
Robert T Yokl
Chief Value Strategist
Strategic Value Analysis® In Healthcare
800-220-4274
P.S. We have just announced our fall 3-day Certified Value Analysis Leadership Course that will be held on November 4th to 6th, 2008. Our attendees tell us that if you are looking to start-up, re-invent or re-energize your supply value analysis program this is the course for you. Our early bird special rate ends September 15th, so sign up now to save $200.
Grow, Lead and Succeed with One Big Idea!
By Robert T. Yokl
I had the pleasure last week of being a presenter at the Hospital Purchasing Service of Michigan’s semi-annual supply chain seminar. While there I talked about some new big ideas on how to grow, lead and succeed in supply chain management which was warmly received.
One of the big ideas that I presented to this group of MMs was that material managers must provide their management with a monthly report outlining their accomplishments (savings, operational improvements, market analysis, challenges and opportunities) for the month, quarter and year-to-date. I told the attendees that this monthly report is absolutely necessary because recent studies have shown that their bosses haven’t a clue of what they do, or, how their supply chain efforts has consistently contributed to their hospitals’ bottom line.
I see this communication strategy as being especially relevant today when I heard from these MMs that some of them can’t get their bosses attention for even 5 minutes a week. In fact, some of the attendees told me that they rarely, if ever, have regularly scheduled meetings with their bosses to discuss their challenges. Is this anyway to run a supply chain department? I don’t think so…
One prescription to solving this universal supply chain challenge is to start to communicate with your bosses through the vehicle of a monthly report. You would do this by beginning dialog with them about what you do, how you positively effect their P & Ls and that you do have information that would make their decisions easier. This would radically change the perception of your bosses that MMs are just buyers — not strategic thinkers.
Your Partner In Innovative Savings,
Bob Yokl
P.S. If you would like more powerful savings and quality ideas like this one I would recommend that you sign-up for our “no cost” weekly Savings Beyond Price™ e-Newsletter at www.Strategicva.com. You will also get a copy of my e-book “Your Target Blueprint for Supply Chain Management Success”, as a bonus.
Are You Really Practicing Value Analysis or Are You Doing Something Else? (Revisited)
I have written often about healthcare organizations’ value teams not practicing value analysis, but are instead doing something else. But what I didn’t know, until we started conducting our Certified Value Analysis Leadership Program (CVAL) in 2007, is that value analysis coordinators, managers and directors aren’t practicing value analysis either.
What I have found from my interaction with these coordinators, managers and directors, at our three-day CVAL program, is that these individuals spend most of their time evaluating new and renewal GPO contracts! That’s not value analysis at all, that’s contract management in its purest sense.
After these very intense three days of training I’m happy to report that most of the attendees at our CVAL program finally realize that they aren’t practicing value analysis and have decided that going beyond price is where they want to go in the future with their value analysis programs.
As I mentioned last week at the North Carolina Materials Management Association annual conference, hospitals should have an annual audit of their pricing, then fill in the gaps of their contract portfolio where needed. It doesn’t make sense for these individuals to spin their wheels and waste their time trying to eke out a few more percentages savings with their GPO contracts, when there is about 26% savings on just about any commodity these individuals would investigate using the techniques of value analysis.
I went on to tell the NCMMA members that they should petition their GPOs to have more 3, 5 and 10 year contracts, with annual renewals, so their members could stop the madness of trying to keep up with their new and renewal GPO contracts that are e-mailed to them daily.
Bottom Line! Value analysis coordinators, managers and directors need to get back to basics by actually practicing the tenets of value analysis and then move away from being contract managers. Contract management isn’t your job (it’s your purchasing department’s job) and it’s not what you were hired for.
It’s your job to study the functions of the products, services and technologies your hospital is buying, and then search for lower cost alternatives to meet those functions. That’s what’s missing from your value analysis program and is holding back huge savings for your hospital.
P.S. If you would like more powerful savings ideas like this one I would recommend that you sign-up for our “no cost” weekly Savings Beyond Price™ e-Newsletter at www.Strategicva.com. You will also get a copy of my e-book “Your Target Blueprint for Supply Chain Management Success”, as a bonus.
New Podcast: 80/20 Rule for Healthcare Supply Chain Savings
This podcast is geared towards helping you align your efforts and focus towards the supply chain savings opportunities that will give you the best bang for your buck as far as effort to return on investment. We will highlight the major functions of supply chain savings and detail out all the major supply chain savings areas and why and where you need to focus your efforts for the highest supply chain savings return possible.
How to Plan, Reduce, Improve and Succeed Even With Limited Resources!
by Robert T. Yokl, President
We all know we need to do more with less since our healthcare organizations’ revenues are flat, reimbursement is meager and staffing is at a premium. Rather then wince over these realities let’s talk about how we can plan, reduce, improve and succeed even with limited resources.
It’s been my experience that there is always a better way to do things that can dramatically improve your situation, even with limited resources. I remember when I was hired for my first materials manager’s job at a children’s hospital in Philadelphia, I quickly found that my new employer was so cash-strapped that on some weeks we were told we would not be getting a paycheck. But that didn’t stop me from planning and implementing a new par level system, reducing my utilization cost with my new value analysis team, improving my supply chain operations with a new computerized inventory system and succeeding with very limited resources. I was even promoted after only a year on the job!
Success in anything, when its comes right down to it, is having the right ATTITUDE, not money, time or even resources to get the job done. Since my first job as a materials manager at that children’s hospital I just talked about, I have worked for some of the largest, and most affluent healthcare organizations in the country, but you know what, I really didn’t really get anything more done with more money, more time and more resources than I did when I didn’t have any of these things many years ago.
If you are looking to succeed as a supply chain professional, don’t let any constraints, of any kind, hold you back from your planning, cost reductions, and improvements even if you have limited resources, since they really don’t matter if your have the right ATTITUDE to succeed!
P.S. If you would like more powerful savings ideas like this one I would recommend that you sign-up for our “no cost” weekly Savings Beyond Price™ e-Newsletter at www.Strategicva.com. You will also get a copy of my e-book “Your Target Blueprint for Supply Chain Management Success”, as a bonus.
