Strategic Supply Chain Management

Supply items add up.  It is estimated that the supply chain can make up 30-50% of a hospital’s expenses.  In 2020 medical supplies will surpass labor as the biggest expense for hospitals and health systems.  These are some big stats. Much of the time the focus has been on cost cutting ,but that isn't always the best answer. Quality is still a concern. Supplies need to perform and drive successful patient outcomes.  Suppliers who can provide high quality while offering lower costs will win the game.  Here are some tips for strategic supply chain management.

Cost Analysis

This is the given but the old adage of what gets measured gets done is true. Take the time to re-evaluate your product lines.  This can be quarterly, annually or beyond.  Have a system and analyze if you are still using the right supplier or it is time to make a change. Negotiate costs based on your volume increase, raw materials data, or buying in larger quantities at a time.  The key is to not be complacent.  Continue to fight for the bigger, better deal.

Automation

Look for ways to increase efficiencies.  There are endless technologies from software, apps, or complete ERP systems that can improve your processes.  If you save time doing administrative or repetitive items, you can spend more time doing what you do best.  Look for ways to automate to conserve your biggest resource – time.

Relationship Building

Take time to forge relationships with your vendors.  Know what makes them tick. Learn about their lives beyond their product or service.  Set up a calendar for touch base contacts such as phone calls, emails, or written letters.  Move beyond just the digital world.  This helps you negotiate more effectively and builds a partnership mindset to drive the win-win agreements.

Cross Reference

Determine the value proposition. Most of want to know what is in it for me to move business or convert to a new line.  Request a cross reference from your vendors to show the savings and value they can provide.  A value analysis is a priceless tool that provides hard data to prove savings and the value of a move.

It is more important than ever to create a supply chain strategy.  Have other tips to help your peers?  Please leave suggestions in the comment section below.  

Be the Buyer Hero

Healthcare reform keeps swirling around us all. Pressure is being put on all parts of the healthcare supply chain to reduce costs and increase efficiency. According to ModernHealthcare’s 2012 Survey of Executive Opinions on Supply Chain Issues found that 91% say reducing medical and surgical supply costs is very important with 80% of the providers saying it is part of their organization’s strategic plan.  If you are a buyer in the medical supply chain, this initiative has likely landed on your desk. There is no one sweeping magic answer to the challenge ahead, but there are steps you can take now to make headway and look like the buyer hero!

Partnership

Take a look at who you are working with and buying from.  Are you actively buying off your GPO contract or other buying partnerships? If you aren’t involved in these, now is the time to step on board. GPO’s, IDN, ACO’s are all working hard to negotiate lower and best pricing deals which equates to savings. Buying through your wholesaler or distributor has many advantages and can lead to efficiency and savings. Other times speaking directly with your vendors on creative ways to reduce costs such as buying a larger quantity or different timing of your shipments can drive additional discounts.

Capital verses Commodity

When looking at reducing expenses, most buyers start with the big ticket items. This is  natural since they are larger line items on the budget, however significant savings can be found when looking at commodity items. Disposables and supply items used daily add up fast. Put these items on radar for value analysis. Review them with your buying group affiliations for deals you may be missing. This can show up as immediate savings making you look good!

Collective Think Tank

No one has all the answers and being so close to the numbers can blind us. Put together a collective think tank of people from various areas of the business especially those working with the items you are purchasing. Ask them what they recommend or could do differently.  You might discover the size of an item is actually too big and staff is cutting or folding the item - wasting time and money. Going down a size will meet our need and save expense. Another item you might be ordering every 10 days but if you bumped your order for 15 day usage you reap the benefit of the price break. You will be surprised at the saving ideas the front line can share.

Flexibility

Rules and regulations are created to make your business run smoothly, but building in flexibility can help you capitalize on opportunities. Appropriately take advantage of special offers or close out deals. Many suppliers are running promotions to move inventory off their books this year. You don’t want to be swimming in mountains of inventory, but take time to see what will work for your business to reap the savings benefits. Starting the new year off with a reduction in a line item can make you shine. 

Change is constant. Looking at the supply chain buying differently, developing new approaches, and working with your supply partners you will be up for the challenge and become a buying hero. Have other tips that have worked for your teams? Please share below in our comment area. Happy Buying!