Supply Six Sigma™: What’s It All About?

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Did You Know...? 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 *Supply Six Sigma: What's It All About* *Driving Down Your Supply Costs with Utilization Analysis* *Systematic Training Vs. "Winging-It" Culture* Savings Beyond Price -Weekly eNewsletter- May 30, 2007 *Robert T. Yokl* *President & Chief Value Strategist* Greetings! *Supply Six Sigma™: What’s It All About?* I’m getting a number of requests to speak at state or regional conferences this year on Supply Six Sigma™ because I’m told that their members want to know -- what’s it all about. I’m planning to answer this question in my presentations, but I thought I would give you a preview of what I’m going to tell these members on how to squeeze out even more savings the Six Sigma way! Supply Six Sigma™ is a new way to manage your functions, variations, and defects (anything your customers don’t need or want) in your supply chain. It’s linked to ambitious goals before you even start your first project. Its objective is to reduce your defects, flaws, and deficiencies in your supply chain to near zero by a targeted date and has a built-in mechanism for holding your gains. Lastly, it improves your customer service and your ability to think strategically, not episodically. Best of all, it can enable you to make a great leap forward in your mastery of your supply chain, while at the same time, wringing the towel dry in your supply expenses. Now, don’t you want to know more about Supply Six Sigma™ too? Your Partner in Supply Chain Savings, Robert T. Yokl President & Chief Value Strategist P.S. If you would like me to speak at your state or regional conferences on “Supply Six Sigma” just e-mail me and I would be delighted to tell your members -- more about it. Click here to learn more about Supply Six Sigma *Driving Down Your Supply Cost With Utilization Analysis* “Now That My Purchasing Data Is Organized – Now What? I estimate that about 55% of all healthcare organizations have had their purchasing data cleansed, normalized and classified over the last five years. Now that this purchasing data is organized -- now what? I know that you have found price and standardization savings in your cleansed data with a price/cost analysis, but now that these savings have been achieved -- what’s next. The answer: Now it’s time to drive down your supply cost with a utilization analysis! Price Is Just The Tip Of The Iceberg! We just completed an assignment with a large IDN who had their purchasing data organized a few years ago, but they quickly hit the wall on price and standardization savings. They then realized that price is just the tip of the iceberg and it was now time for them to embark on a utilization analysis. Now that they made this important decision, they asked my consulting team to train their staff on how to conduct a utilization analysis that would quickly drive down their supply chain cost. In less then three- months time we had their internal consultants performing utilization studies that will save them several million dollars in this fiscal year alone. By their actions this healthcare organization really understands that their price savings are quickly disappearing, but that their utilization savings are ripe for harvesting! And they aren’t going to leave even one stone unturned in finding them! Your Utilization Savings Are Ripe For Harvesting We have never - ever found a healthcare organization that didn’t have huge utilization savings opportunities ripe for harvesting. This is because these invisible costs haven’t been surveyed, or mined yet by supply chain professionals. To attack these budget bloating costs, you need to track and trend your product, service and technology utilization by month, by quarter and annually to detect unfavorable variations in your supply spend. Then investigate, scrutinize and study these utilization misalignments until you find the root cause of these disparities. In 9 out of 10 cases the reason for these utilization misalignments will be that you are misusing, misapplying or wasting these products, services or technologies that you have targeted as a savings opportunity. The very good news is that your average savings will be 26% on these same commodities and the resources to detect them will be minimal if you are organized to save. Click here to view the scorecard SAVINGS BEYOND PRICE BLOG May 30, 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 Systematic Training Vs. Winging-It Culture We need to eliminate “seat of the pants thinking” in order to raise our supply chain savings up a notch or two. How do we get beyond the conviction that saving money isn’t a true management skill that you need extensive training and mentoring in order for your healthcare organization’s to thrive and survive in the coming years? Like any other skill that must be learned savings money is one of the most important skills to master given the huge number of products, services and technologies that you are purchased on a daily basis. Biggest Challenge! Let’s face it supply chain managers are doing a fantastic job attacking their core functions: contracting, price negotiations, sourcing, etc. The biggest challenge that I see supply chain managers are facing today is not having systems to attack their NEW savings opportunities, i.e., utilization management. Winging-It Culture! Most healthcare organizations have deployed a value analysis team(s) or product evaluation committee to reduce their costs and improve their quality. Yet, how much training has these teams or committees received on saving money? In most cases, little or no training which is daunting when you think that this is how our industry is operating at the moment in time. I call this the “winging-it culture! Fatal Flaw: Why do healthcare organizations assume that if we form a supply savings team(s) and tell them to go save money that they are going to produce the quantitative and qualitative results that our healthcare organizations expect from their supply chain operations? Why do we persist in learning from the “school of hard knocks”, when this hard learned knowledge doesn’t translate into systematic approaches to saving money? I’ll let you answer these questions, because only you can change your culture from “winging it” to systematic training to obtain savings results you never dreamed were possible. Click Here to Learn More About Supply Savings Analysis	*Sign Up for Our FREE Weekly Savings Beyond Price* eNewsletter to Receive Exclusive Content Not Found Anywhere Else** PLUS as an added Bonus, we'll also send you our SPECIAL REPORT "The 10 Lost Secrets of Savings Success" Sign up today!
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