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.
Savings Beyond Price -Weekly eNewsletter- May 9, 2007
Robert T. Yokl
President & Chief Value Strategist
Greetings!
The Most Important Skill!
I have found that the most important skill that a supply chain professional needs to master to be extraordinary isn’t price analysis, negotiations, sourcing, inventory control, or memorizing the uniform commercial code.
The most important skill is to become proficient in functional analysis: the ability to quickly identify and eliminate unnecessary and unwanted labor and non-labor costs in your supply chain. By doing so supply chain professionals will be able to uncover double digit savings opportunities that won’t be found anywhere else in your supply chain.
All of the other skills that I mentioned are important, but are only used situationally. Whereas your functional analysis expertise will be employed everyday in helping you make the correct decisions on buying the right product with the exact functions and features that your customers absolutely, positively require and then delivering them in the most expeditious and cost effective way.
Your Partner in Supply Chain Savings,
Robert T. Yokl
President & Chief Value Strategist
P.S. If you would like to learn more about functional analysis just click on our 400 + article archive to gain more expertise in this critical supply chain management skill.
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Redefining Your Supply Chain Operations By Creating A Value-Based Model
“A Powerful Prescription For Today’s Supply Chain Management Challenges”
The biggest challenge that I see for healthcare supply chain management as we close out this decade is the limited time, resources and money that is being allocated to supply chain operations.
Even with these constraints, your management is stilling pushing you to save even more money, since supply chain management is one of the few operational areas left where there is still significant dollars to be saved.
This leaves supply chain professionals with three choices as I see it: (1) look for another job in another industry, (2) endure the pain in silence, or (3) redefine your supply chain operations by creating a value-based model.
Rather than throwing in the towel and surrendering, let’s look at the third option, which makes more sense to me.
Redefining Your Supply Chain Operations
I haven’t seen a supply chain operation yet that couldn’t be redefined, reinvented, and reorganized to be more efficient, effective and productive if it is created with a value-based model in mind.
By value-based I mean that everything you do must meet the value test; it must have value in your customer’s eyes! If not, eliminate, remove, reinvent or purge it from your operations today!
For instance, one of our clients found that there was no value in their customer’s eyes for their buyers to continue ordering their storeroom supplies. So this function was turned over to their storeroom manager who now does all of his own ordering. This saved our client’s buyers 7 hours per week that can now be devoted to more time sensitive purchases.
Another client of ours almost completely eliminated all of their printed forms by having these same forms reside on their servers and printed by their hospital department’s on-demand. This change not only reduced their printing cost by tens of thousands of dollars annually, but reduced their printing staff by a few FTEs.
You can bring about these same or similar improvements in your supply chain operations by using the “value test” as your guide.
How To Employ The Value Test?
The quickest and easiest way to employ the “value test” in your operations is to list the top 3 volume or cost driven activities in your purchasing, stores, receiving and distribution operations. Then, hold a focus group with these affected customers to see if all these activities are of value to your customers. If not, as I just said previously, eliminate, reinvent, or purge it from your operations!
I remember when I was a MM we required our departments to sign for all packages that were delivered to them. This was a time consuming service taking 13% of my receiver’s time on any given week. When we held a focus group with our high volume customers we found that nobody cared that we required signatures for their deliveries. This activity was of no value to them. So we stopped doing it, especially since we rarely, if ever lost packages in our hospital.
This “value test”, if applied conscientiously, never fails to improve any and all supply chain operations. It’s just like taking a digital photo of your operations; all of your flaws will instantly standout and then you can make the suitable corrections to give you a perfect picture every time.
Are new strategies, tactics, tools, and techniques required to dig deeper and broader for supply chain savings?
Supply
Six
Sigma
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