What Really Works!
Savings Beyond Price -Weekly eNewsletter – November 13, 2008
Robert T. Yokl
President & Chief Value Strategist
Greetings!
What Really Works!
If you separate the facts from the fads in healthcare supply chain management you will quickly discover the “must-have” supply chain practices that truly produce superior results. What does really work, you might be surprised to hear, is that you need to go back to basics before you can go forward to big savings results in the future.
From my experience, here are the four primary supply chain best practices that really work and have past the test of time:
1. Committed Volume Purchasing
I can’t think of a healthcare organization that doesn’t belong to one, two or even three GPOs, but very few hospitals that I have observed have jumped on their GPOs committed volume contracts. That’s where the deep deep savings can be achieved for your healthcare organization, because all vendors sharpen their pencils when they know that they will get all of your business, not just some of it. That’s why regional GPOs are becoming a big factor in saving money for their members; they are all steadfastly focused on committed volume purchasing.
2. Classic Value Analysis Techniques
Value analysis in all its flavors, as a MM characterized it to me the other day, can save you money. However, if you were to employ the classic (back-to-basics) tenets of value analysis as espoused by Larry Miles, the Father of value analysis, you will save a lot more money and have better and faster results.
3. LEAN Management Practices
LEAN management has a 28-year history of leaning supply chains of waste and inefficiencies in all industries, including healthcare, by making use of Toyota’s 14 principles of management. LEAN is not only a best proven practice, but a “must-have” approach to supply chain management that will eliminate the huge costs of your hidden waste. The healthcare organizations that we have worked with over the years that religiously applied Toyota’s 14 principles have saved seven to 15% on supply chain expenses – almost overnight.
4. Supply Utilization Management
In the 80s Bill McFaul, the co-founder of McFaul and Lyons consulting firm, coined the phase “consumption management” to focus his clients on savings beyond price™ where the greatest savings can be achieved. We now call this discipline Supply Utilization Management because this art and science encompasses more than just consumption analysis of the products, services and technology you buy, but also targets the value mismatches in supply chains that are bloating hospital’s budgets. This is an old concept whose time has arrived again to be put into practice, since your price savings are slowly on the decline and your low hanging fruit have been picked.
You might want to consider these four best practices as “what’s old is new again” since the right strategies, tactics and techniques never really grow old, but somehow just get lost in the passage of time as we move on to new but not necessarily better best practices. I hope you will revisit these four primary supply chain best practices to produce even more superior results in the future for your healthcare organization.
Your Partner In Savings Beyond Price™,
Robert T Yokl
Chief Value Strategist
Strategic Value Analysis® In Healthcare
800-220-4274
P..S. If you want to read more about “what’s old is new again” ideas you might want to check my special report “Building a Savings Factory” that will give you even more best practices that have passed the test of time.
P.P.S. Don’t forget to check out my new blog article “Supply Chain Hall of Fame Awards Now a Reality”. This blog will talk about nine men that changed the face of supply chain management in our time.
