What Are The 7 Most Important
Things You Need To Do To Dramatically Reduce Your Supply
Cost In 2006?
It’s not too late to successfully develop your
strategic supply savings plan for 2006 because it’s
never too late to plan, but it could be disastrous not
to. To assist you with this mission critical activity,
I have listed below seven things you need to do
to dramatically reduce your supply savings in 2006:
1. You
Must Believe
Being in the supply chain consulting business for over
27 years now, I believe that the number one reason that
is holding back savings at healthcare organizations is
that hospitals, systems and IDNs don’t believe there is
still substantial supply savings opportunities
available at their organization.
After consulting with hundreds of hospitals, systems and
IDNs throughout the U.S., I can assure you that there is
3%, 6% or even 9% in additional supply savings at
your healthcare organization too. But you “gotta
believe” before you can make these savings
happen!
2. Look
In The Mirror
This is one of the toughest things I find to do, but in
order to attain even higher levels of supply savings you
must first take a hard look in the mirror at
yourself, your management and your supply chain
management system. Are you up for the challenge?
It all starts by asking these questions.
Where is the savings? Do we have the means to flush
them out? Who is holding back savings in our
organization? Do we have the right systems in place to
truly attack our supply costs? Do we have the right
focus? How do I make the savings process easier on me
and organization?
3. Smart
Planning
Most healthcare organizations don’t plan for their
supply chain reductions in any given year; they just
“wing it”. The result is an organization that
generates meager supply savings for their efforts
by year end.
To avoid this dilemma, you need have “Smart Planning”
for the who, what, when, where and how you are going to
make savings happen for your hospitals, system or IDN.
It could take you a day, a week or a month to do so, but
the result of this exercise will be an increase in your
supply savings by 200% to 400%.
4. Expert
Benchmarking
The only way to know, with certainty, where your
supply savings are hidden is to “expertly benchmark”
your top 200 supply categories (in dollars) to
uncover your utilization misalignments, value mismatches
and where your waste and inefficiencies are buried.
If you plan to identify your supply savings by “gut
feel” as supply chain professionals just love to do,
you will be wrong 80% of the time. Don’t waste you time
with inexact measurements if you want to increase
your savings yield 2 fold, three fold or even four fold
this year.
5. Aggressive
Targeting
Through your planning and measuring work out exercise
(described above) you should now have targeted (and
quantified) 10, 20 or even 30 supply savings
opportunities that will generate the best
return-on-investment for your efforts. These
savings now need to be aggressively targeted as part of
your supply savings goals and objectives for 2006.
By aggressively targeted I mean that unless a
catastrophic event besets your hospital in 2006, you
will (no and, if or buts about it) make these savings
happen as planned.
6. Intensely
Research
Whether you decided on a team or committee approach to
produce your savings in 2006 these panels of experts
must “intensely research” your savings targets by
employing the strategies, tactics and techniques of
value analysis. Otherwise, you won’t “wring out” all of
the supply savings that you have targeted in your
strategic supply savings plan, since dynamic supply
savings reductions are a function of teaming, not an
individual effort.
7. Skillful
Implementation
Once you have identified the reason(s) for your cost
outliers through your “intensive research” you then need
to “skillfully implement” these savings ideas.
You might think this would be a “no brainer” once you
have identified these savings opportunities, but this is
just when the skillful and adroit implementation work
begins for you.
Few, if any, of your department heads and managers will
welcome the changes in their products, services,
technologies or processes that you are proposing. As
the late great Professor George S. Odiorne counsels us
if we are going to make change happen we must understand
that, “most people like those changes they cause
to happen, for they are adapting as they create the
changes…” He further recognized that, “When people
participate in making decisions, they make their expert
contribution. Thus, they often are able to prevent the
kinds of errors which grow out of ignorance. They also
acquire more enthusiasm for the decision, or at least
have some of their serious reservations removed and
accordingly work more diligently to make the decision
work in practice.” So, prepare your department
heads and managers for the change, have them participate
in the change, make sure they know the change is
necessary, and that you value their input to make it
happen.
Plant Your Seeds Today, So You and Your Organization Can
Reap The Savings Benefits The Entire Year and More!
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