In response to his comment, I told him that price savings, cost avoidance and inflation fighting should still be a priority with him, but he also needed to bridge the gap between price and utilization savings if he wanted to continue his double-digit savings every year.  I believe the goal of every supply chain professional in 2010 should be to avoid being blindsided by diminishing, thinning and meager price savings that are a reality today.

Here’s how to do it! First of all, price savings is exclusively a purchasing activity so let’s keep our buyers pecking away at even more price concessions, better terms and conditions and negotiating special deals to hold our cost of acquisitions to an absolute minimum. 

On the flip side, let’s get our value analysis teams in high gear to attack our utilization misalignments, since this is their area of expertise and can best be accomplished by teamwork — not individual activity.

This success formula is the simplest and easiest way I know of to bridge the gap between price and utilization savings without missing a beat. You don’t need to hire new staff, reinvent the wheel or even change the way you do business. 

Just change your operational orientation from price ONLY to utilization too since there functions aren’t mutually exclusive. Then you will have the best of both worlds to attack your total cost of acquisition to disposition in just two complementary supply chain operational areas. The solution to this challenge can be just as straightforward as that!

Large Dollar Expenditures - Products, Services or Technologies with an annual value of $25,000 or more.

Vendor Recommendations – Review brochures, catalogs, samples from vendors to cull new savings ideas.

Magazine Articles On Savings Opportunities - Call article authors to find out exactly how they did it.  They will be happy to help you out without a fee.

New or Changes in Regulations - Most new or proposed changes in regulations costs can be reduced through Value Analysis.

New Clinical and Administrative Employees – Interview new employees for savings ideas they have been exposed to at other healthcare organizations.

Benchmarking – What are other healthcare organizations doing to save money?

Any Disposable Product – Can you return to a reusable product?

Any Type of Custom Kit or Tray – Contents of kits and trays should be fully investigated for their value!

New Technology – In addition to the cost of the new technology there is always add-on cost of labor and supplies that must be value justified.

High Utilization – Any Product, Service or Technology that has a high utilization cost is a candidate for study.

Product Recalls – Value Analysis Team(s) should be empowered to investigate why the product was recalled and the corrective action required to bring into conformity.

Bundled Products – Products like IV Starter Kits, Admission Kits, etc., need to be value justified.

Old Technology – Old technologies tend to be wasteful and costly and should be evaluated for appropriateness.

If you have any additional savings pipeline ideas, I would love to hear from you (bobpres@strategicva.com), since there is still time for me to add them to my new book. Naturally, if your idea is used in the book I would give you attribution for your idea.  I’m looking forward to hearing from you.

___________

* “The Healthcare Value Analysis Bible: The Ultimate Savings Resource” will retail for $29.95, plus $5.98 for shipping and handling (pricing subject to change in the future).  If you would like to pre-order this A-Z blueprint for establishing, refining or re-energized your supply value analysis program we are now offering a 10% discount on the retail price of the book, if you pre-order by February 26, 2010.  You can e-mail your order (with your name, title, organization, phone number, e-mail address, and shipping and billing address) to bobpres@strategicva.com. You will then be the first to receive this important breakthrough must-read book no later than May 2010.

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

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.

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

Bobpres@strategicva.com

800-220-4274

P.S. We have just announced our fall 3-day Certified Value Analysis Leadership Course that will be held on November 4^th to 6^th, 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.

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.

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.

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.