How to Save 10%, 20% or Even 30% on Your Supply Chain Expenses
As I see it, supply chain managers will be called on to save more than their usual 3% to 5% on their supply chain expenses each and every year. This will become a reality due to the drastic reductions, over the next few years, in your hospital’s Medicare and Medicare reimbursement. Here’s a game plan for making these double-digit savings happen:
Getting to 10%: These are the incremental savings (price, standardization and value analysis) that you have been accustomed to saving all along, but now you will need to go one step further to re-specify all of the products, services and technologies you have been buying. This is because your department heads and managers don’t need everything they say they need in their specifications and you are just wasting your hospital, system or IDN’s money buying unneeded functions and features. An easy way to get started on this journey is to re-specify all of your packs, kits and trays. In doing so, you will discover that most of your packs, kits and tray’s components are feature rich, over-specified or not needed at all.
Getting to 20%: These savings are typically found (or most often ignored) in the way your department heads and managers utilize (i.e., waste, inefficiency, misuse, misappropriation and value mismatches) the products, services and technologies you are buying for them. We see these utilization misalignments all the time with I.V. sets, endomechanicals, oxisensors, floor gloves or custom packs. In most situations, no one takes the time or effort to investigate why your hospital is using more of a commodity group than their peers.
Getting to 30%: These savings most often come about by eliminating, recycling or reinventing the products, services and technologies you are buying. A good example would be moving from disposable to reusable operating room and maternity custom packs at a double-digit savings as many hospitals are already doing throughout the U.S.A.
Saving 10%, 20% or even 30% in your supply expenses is easier than you might think if you continue to implement your incremental savings, start attacking your utilization misalignments and then eliminate, recycle or reinvent the products, services or technologies you are buying now.
This isn’t an exercise in theory, but a foundation for reducing your supply chain expense to a bare minimum over the next five years. When you’ve got to cut cost, it’s much better to have a plan to do so than to hope that someone will come to the rescue before the inevitable becomes a reality. Remember: Planning takes the sting out of reality!
Filed Under: savingsblog • Supply Chain
