How To Become A Supply Savings Rainmaker:
The
6
Rules For Uncovering Endless Savings Opportunities
“Finding New Supply
Savings Doesn’t Need To Be Excruciatingly Painful, If
You Know The 6 Rules Of How To Find Them.”
Almost every day I hear from CEOs, CFOs,
COOs and supply chain professionals that tell me that
their supply savings initiatives have stalled,
fizzled, or worse yet, are on “life support”.
Their question to me is how can they find new supply
savings, since they have picked all of the “ripe” fruit
from their vineyard? I then tell them about “The 6
rules for uncovering endless savings opportunities”,
that I would like to share with you now:
Rule #1:
Never-ending Benchmarking at the Commodity Level
Most
healthcare organizations do global benchmarking (at
30,000 feet) to measure the effectiveness of their
supply chain, but none that we know of (unless they are
our clients) benchmark at the commodity level
endlessly. This is one of best ways to uncover supply
chain savings at any hospital, system or IDN, if you do
it persistently!
Rule #2:
Doing It with Data to Uncover Unfavorable Trends
Data in
and of itself is useless, unless you utilize
financial, purchasing and utilization data to seek out
unfavorable trends and patterns. For example, one of our
clients found, through datamining, that they were buying
10x the number of diabetes tests than they had
patients that required them. Ultimately, leading to the
discovery that they were being stolen, not used at all.
Rule #3:
Partner with Your Vendors to Discover New Savings Ideas
Your
Vendors can bring you more great and endless savings
ideas than you can implement in any given year, if you
challenge them to do so. This is far better than
beating them on the head for more price concessions
on the products and services you are buying from them.
Rule #4:
Teaming Up For Success with Your Department Heads
As you
have heard me state numerous times, your department
heads and managers own their budget, you don’t.
They set the specifications for the products, services
and technologies that they use, you don’t.
Therefore, it’s also their job to make savings happen
for your healthcare organizations, if you organize them
into value teams to do so.
Rule #5:
Observe a Lot by Watching How Your Products are used
Yogi
Berra (the great baseball Hall of Fame catcher) once
said that “you can observe a lot just by watching”
what people do. I found this “Yogism” to also
be true with supply chain management. You can find a lot
of savings by just watching how your customers are
utilizing their products, services and technologies. Our
experience has been that you can save 26% on the
commodities you purchase by doing so.
Rule #6:
Look Outside Your Own Organization to Find Savings
I’m
always looking for new savings ideas inside and
outside the healthcare industry, because I don’t
have all the answers either. You should do the same, by
attending conferences, workshops and forums. This also
means reading trade magazines inside and
outside our industry, such as, Business Week,
Journal of Supply Chain Management, Purchasing Week,
Harvard Business Review, Fortune, etc. to glean new
savings ideas.
These six rules, when combined, will give
you ENDLESS savings ideas that will keep your
savings funnel filled to the brim with new savings
initiatives. This is also how you can become a supply
savings “rainmaker”; never needing
to worry about your vineyard going to seed or not baring
ripe, mature and fully grown fruit again.
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