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Strategic Value Analysis® in Healthcare
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That Value Analysis Was Developed Back In the 1940's After World War II as a Way to Find Lower Cost but Higher Quality Alternative products and methods. This was Due to the Lack of Material Resources At The End of The War.
Inside This Issue
Looking Outside Our Industry for New and Better Ideas
5 Steps to Be Organized to Save!
Savings Beyond Price -Weekly eNewsletter- June 27, 2007
Robert T. Yokl
President & Chief Value Strategist
Greetings!
Staying Paranoid!
I just read an article in Business Week about Toyota being fearful of the “big-company disease” of becoming complacent, self-satisfied and smug when you’re successful. I can almost guarantee that your organization will lose its edge, competitive spirit and profitability eventually -- as is actually happening with Toyota today!
From my experience, this is just what happens to too many hospitals, systems and IDNs who are riding high for a few years with a high census, excellent payer mix and big profits and who are spoiled by their success. Then these same hospitals, systems and IDNs are taken by surprise when their bottom line disappears sooner or later because they stopped staying paranoid about everything they where doing.
There is a natural tendency to take it easy when you have achieved success. This behavior however, must be avoided like the plague or you will be spoiled by success and find your hospital, system, division, or department quickly sliding down a slippery slope to being mediocre and second-rate.
Toyota’s answer to this challenge of “Staying Paranoid” is to launch a new initiative called “Everything Matters exponentially”. They are rethinking everything they are doing from repairing dents to fixing their customer service problems to get back to being a mean business machine.
You need to do the same if you want to be “unspoiled by success”. If you want to keep your competitive juices flowing you need to re-think, re-tool and re-vent everything you are doing every three to five years like Jack Welsh did at GE.
Your Partner in Supply Chain Savings,
Robert T. Yokl
President & Chief Value Strategist
P.S. A good place to start rethinking what you’re doing is to take a diagnostic test like our “no cost – no obligation” Supply Saving Scorecard www.strategicva.com/scorecard.htm to see if you are becoming complacent with your success.
Click here to view the scorecard
Looking Outside Our Industry For New And Better Ideas That Can Make Your Job Easier!
“All Of The Best Ideas Aren’t In Our Industry -- By A Long Shot”
Everyday I read four or five e-newsletters from other industries and and subscribe to five non-healthcare business journals monthly because I recognize that all the best ideas aren’t to be found in our industry -- by a long shot.
In fact, I can’t think of one innovation in healthcare supply chain management (spend management software, ERP systems, RFID, data analytics, reverse auctions, freight management, etc.) over the last few years that wasn’t swiped from other industries.
To my thinking, looking for new innovative solutions just in our healthcare industry in order to make your job easier is a big waste of time. You need to look outside our industry to set new standards that are world-class, not just our industry bests.
Three Hot Trends In Other Industries
Three trends that are hot now in other industries that we can learn from are:
1. Contract Management
It is now a supply chain principle in other industries that the centralization, management and control of ALL contracts within a corporation (e.g., purchase services, preventive maintenance, travel, temp help, etc.) is the responsibility of supply chain management department. Why? Because a corporation’s contract spend is equal to or greater than any and all of their supply purchases. Therefore it must be managed and controlled aggressively!
2. Strategic Dashboards
Supply chain managers in all industries are becoming aware that they need real-time information to track -- at a glance -- their key performance indicators such as savings, utilization, inventory, vendor performance, product failures, customer satisfaction, etc. This enables them to instantly sort through their millions of lines of information and understand favorable and unfavorable trends before a crisis arises.
3. Demand Management
All industries are catching on to the fact that “purchase cost is just the tip of the iceberg!” There are big savings opportunities in how their products, services and technologies are employed and deployed throughout their business units -- not just in controlling the prices paid for the commodities that they purchase.
I could recite hundreds of new trends in other industries that would be applicable to the healthcare industry, but it might be easier for you to track them yourself at www.supplychainbrain.com if you want to become a trendsetter in our industry.
What can we learn from these three trends?
This is where healthcare supply chain professionals should be focusing their time and efforts at this time. As I mentioned previously, literally all new innovative savings and quality improvement ideas are coming from outside our industry. These new business trends are the bellwether or leading indicators of future developments in our own industry that we could learn about before our peers even know they are fashionable.
By the way! You won’t find these new trends in our industry publications for 2, 3 or even 5 years after they have become best practices in other industries. So why not take the initiative and learn and deploy these innovative ideas today to make your job easier.
Click Here to Learn More About Supply Savings Analysis
June 27, 2007
to view all the past blog entries click here
Bloggers - Robert T. Yokl, President/Chief Value Strategist and Robert W. Yokl, VP of Operations for SVAH
5 Steps to Being Organized to Save
Here’s a secret! 99% of what SVAH accomplishes for its' clients with our engagements and what all Supply Chain Professionals need to do too, is based on a 5 step process to organize our clients to save that I would like to share with you now:
1. Set Goals, Time Lines and Objectives – The good old “Save As Much As We Can” philosophy is too hit or miss to be even considered seriously as a cost management process. And there is no accountability for success that can be associated with this shot gun approach to cost cutting. Instead, what you should shoot for is clear, concise and well defined goals and objectives that are as simple as possible so they can be clearly and plainly communicated and executed by your value teams.
2. Do A SWOT (Strengths – Weaknesses – Opportunities – Threats) Analysis – You need to take a long hard look in the mirror and be as objective as you possibly so that you can focus your savings efforts in the right expense categories. As a result, maximize your strengths and minimize your weaknesses.
3. Must Have A Plan Of Action – This is one of the biggest challenges in an organization whose motto is “We Just Do It or Make It Happen”. Nothing (not even a motto) can substitute for a well thought out systematic plan of action. Therefore, encourage planning on every aspect of your supply savings program -- from data collection to value analysis -- on your savings projects. And develop a new motto “you can’t go wrong with planning” to replace the old one. .
4. Data Does Not Have to Be Perfect – There is a fallacy in our industry that we think that we need to have perfect data before we can perform value analysis to save money. This could not be further from the truth! As SVAH analyzes our client’s data throughout the country (big and small hospitals, systems and IDNs) we have found that you work with the hand that is dealt you. Just keep this in mind that you do need to have a system to organize your expense categories into meaningful classifications so you can analyze them effectively. There is many ways to deal with good and bad data. Don’t make this an excuse to stop your savings efforts.
5. Develop Systems to Report, Monitor and Control Your Costs – Let’s look at MMIS systems! They are purely transactional systems that only touch the edges of your business intelligence, because that is not their core function. With this said, you need to develop databases that will enable you to monitor and control your supply expenses -- on every level. If you start to report, monitor and control your utilization expenses you will find a virtual goldmine of savings opportunities.
These 5 steps to be organized to save can point the way to huge supply chain savings for your healthcare organization. Without them you will be flying blind!
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