Don’t Offer Too Many Choices in Value Analysis
Factoid! There have been a number of studies conducted on giving customers too many choices that result in customers either picking the highest cost product out of confusion or becoming frustrated to the point where they select the wrong product just to make some kind of decision.
What does this have to do with value analysis? In my opinion, giving your customers too many choices is at the epicenter of most value analysis misadventures and contributes greatly to the unnecessary escalation of healthcare supply expenses!
Here’s why! It is the common practice in value analysis circles to send numerous products (i.e. IV sets, trays, kits, dressings or what have you) to our customers for what we call in our industry “trials”. Then we ask our customers to pick from a wide-assortment of similar products and then rate the ones they like the best to the least favorite. As I just stated, studies have shown (the most recent study was conducted by researchers and authors Noah J. Goldstein, Steve J. Martin and Robert B. Cialdini) that this is a recipe for abject failure and ever increasing supply expenses.
What should you do? In the classic value analysis model, developed by G.E. in the 1940s, there is no such thing as “TRIALS” to determine your best value products, services or technologies and for good reason. The goal of VA is to select the lowest cost functional equivalent match to your customer’s agreed upon functional requirements, not have them comparison shop to select them. In classic VA, we then have our customers perform a “pilot” study (an in-depth evaluation of only ONE product, service or technology that has been selected by a VA project manager as an exact match of our customer’s functional requirements) to determine if the new product, service or technology indeed hits the target dead center. Based on our customer’s rating of the product, service or technology we either buy it or start our VA study over until we get it right, based on specific measured feedback from our customer.
See the difference? Can you now see the differentiation between a “trial” and a “Pilot” study and how it works with the classic value analysis model? It’s a whole NEW MINDSET about how and why we evaluate and select our new products, services and technologies based on the concept of value.
Remember, value analysis isn’t just a term that has high name recognition in healthcare. It’s a proven, repeatable and scientific process to determine the right functions for the hundreds of products, service and technologies you buy annually. IT’S ALL ABOUT FUNCTION!
The question I have for you is this, “Are you really practicing value analysis or doing something else and just calling it value analysis?” If you’re not really practicing value analysis based on my brief description above, to avoid the one or more of these pitfalls I just talked about (e.g. too many customer choices) you might want to consider some advanced value analysis training to get you and your VA team(s) on track, on target and on the money in 2010!
Filed Under: savingsblog • Value Analysis
