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Strategic Value Analysis® in Healthcare
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Inside This Issue
Are You Ready for Data Mining?
5 Long Term Strategies to Grow Your Supply Chain Savings
Savings Beyond Price -Weekly eNewsletter- June 12, 2007
Robert T. Yokl
President & Chief Value Strategist
Greetings!
Are You Ready For Data Mining?
We recently completed an assignment where our client believed there were price savings to be achieved in their orthopedic implants. While we did find some small price savings for our client the biggest savings opportunity that we uncovered through data mining was that their orthopedic surgeons where utilizing high end implants for 96% of all of their cases. This finding represented a 61% increase in their implant cost per procedure.
My point here is that we can all find these huge savings opportunities in our supply chain spend if we are ready, organized and prepared to use our data to derive greater value from it.
This is what data mining is all about; continuous, data-drive investigations and analysis of your supply spend to identify hidden unfavorable patterns and trends that are bloating your supply budgets.
If you are not already data mining, then I would urge you to start today because it is costing you too much NOT to mine your data.
Your Partner in Supply Chain Savings,
Robert T. Yokl
President & Chief Value Strategist
P.S. If you would like a demo of our data mining tool called the UTILIZER™ to start making those big savings happen for you just call (1-800-220-4274) or e-mail me (bobpres@strategicva.com ) and I will be happy to promptly schedule your demo.
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Long-Term Strategies To Grow Your Supply Chain Savings
“Long-Term Savings Success Always Requires New Ways To Do Things”
Cutting prices, extending the length of your contracts, and increasing your rebates and incentives are all short-term tactics to reduce your supply chain cost. A much better way for you to have long-term savings success, that won’t be affected by inflation or contract price creep or changes in your vendor’s rebates and incentives, is to find new ways to do things.
That’s why I’m suggesting 5 long-term strategies herein to grow your supply chain savings over the long term so you can be in total control of your fate, fortune and future:
- Create A Wide-Ranging Contract Administration Program!
This is a huge untapped savings area that I don’t see healthcare organizations taking advantage of -- beyond price. Hospitals aren’t defining their services, identifying outcomes, determining price/cost drivers and establishing on-going performance measurement where the big savings opportunities reside.
- Outsource more of your supply chain operations for better results!
Supply Chain Professionals have a tendency to want to “go it alone” on almost everything they do. There are less expenses outsourcing options that we need to tap into to streamline our operations and lower our cost.
One excellent outsourcing tactic that is often overlooked is to outsource your technology purchases (computers, hardware, licenses, and software) to a third party who is an expert in these complicated and ever changing technology purchases. We have consistently observed that by doing so you will save thousands of dollars annually.
- Develop More Sourcing Options than You Have Now!
GPOs are a great source for sourcing options, but they don’t have a corner on the market. For example, one of our clients isn’t using their GPO office supply vendor, because they are getting a much better deal from a local vendor. Another client is investigating sourcing all of their plastic disposable bedpans, emesis basins, urinal, carafes, etc. from China at drastically reduced cost. You should be doing the same!
- Build More Value Into Your Capital Purchases Than Price!
It’s rare that I see hospitals actually value justifying their capital purchases – again beyond price. Our clients are saving 12%, 24% and even 46% on their capital purchases by performing a functional analysis on these high ticket purchases to ensure that they are needed at all. If you do look beyond price you will find you don’t need all of the bells and whistles you are buying now.
- Attack Freight Cost Which Are Now Out Of Control!
You might not realize it but you are losing 35% to 40%, on average, on your freight costs on inbound prepay-and-add freight charges, and up to 30% savings on your outbound freight!
The reason for this is that you are letting your vendors manage your freight costs, not you. Get control of your freight costs can save $45,000, $65,000, $100,000 or more in less than 90 days.
These 5 long-term strategies (or new ways to do things) are just some of the approaches you can employ to ramp up your savings machine that won’t be negatively affected by inflation, your vendors, luck or chance. These new strategies will put you in the drivers sit to consistently churn out big savings for your healthcare organization over the long term.
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