{"blog_id":5,"dated":"Sat, 15 Feb 2025 08:22:43 GMT","description":"<p><strong>Optimizing Healthcare Supply Chains: A Strategic Approach to Cost Containment and Efficiency</strong>&nbsp;</p><p><br></p><p>&nbsp;</p><p>There are a plethora of business books, conferences and limitless articles on supply chain optimization strategies. Why do we need another and what makes this article any different? We take the view that the strategic approach to the entire supply chain needs to go beyond the procurement and contracting opportunities and needs to focus on working in alignment with the needs of the institution, the internal and external customers and most importantly towards the positive support of the patients and the communities we serve.&nbsp;</p><p><br></p><p>Most Supply Chain strategies focus solely on getting the best price for the product or service that the clinicians, care givers and caretakers of our organization need to meet their objectives. We do not disagree with this approach as cost containment and reduction is a fundamentally critical component of the supply chain strategy. The more we can reduce or eliminate costs; the more opportunity we generate for needed critical investments such as purchase of necessary diagnostic equipment, hiring of staff, or other much needed facility improvement projects. Many organizations rely on the best pricing based on the GPO savings matrix. A starting point strategy would be to truly analyze the GPO contracting opportunities and:&nbsp;</p><ul><li>Analyze market factors that would have an impact on the supply chain to determine the necessity to \u201clock in\u201d supplies at a set price&nbsp;</li><li>Take advantage of pricing analysis to find out if the organization is getting the best price on the product based not on the top tier GPO price but against other organizations across the country. Several organizations have undertaken this analysis, and the results have been surprising and the savings substantial.&nbsp;</li><li>Analyze the value adds that come along and research if the value adds can eliminate other redundant costs and services in other parts of the organization&nbsp;</li><li>Collaborate with other supply chain professionals to understand whether scheduling \u201cgroup buys\u201d can provide substantial savings \u2013 leadership on various levels must serve on their GPOs committees and where possible their senior executive should secure a seat on the senior leadership committees. We have seen first-hand how this information pooling induces the propensity to seek out savings!&nbsp;</li><li>Review the product / item master / off master acquisitions to identify whether there are lost savings opportunities due to redundant product acquisitions from varying vendors / manufacturers. Make product standardization opportunity listing for value analysis review.&nbsp;</li><li>Review and identify opportunities to shift non-core competency activities to out-source vendors. Pursue only where savings can be demonstrated and positive impact to operations can be realized. Recommend risk-sharing with guaranteed service level agreements (SLA) and savings arrangements by outsourced vendor.&nbsp;</li></ul><p>Cost reduction and cost containment also must go deeper than just the prices we pay. We need to ensure that waste within the entire supply chain process is reduced and/or eliminated with a continual focus on the defect rate throughout the process.&nbsp;&nbsp;</p><p><br></p><p>Opportunities to reduce waste in the supply chain that should be part of the strategy, needs to include:&nbsp;</p><h2><strong>Par Locations and Inventory Management</strong>&nbsp;</h2><ul><li>Ensure that the supply areas designed in a manner to reduce clinician and staff \u201clooking\u201d for supplies or having the right visual management aids in place, is it organized in a logical manner reflective of utilization, category and body mechanics. This is a major opportunity to maximize clinical efforts and realize savings. Equally important is customer satisfaction as our clinicians and end users expect this to be the new \u201cnorm\u201d.&nbsp;</li><li>Ensure that a system (manual or automated) is in place to ensure that supply areas are restocked prior to running below the replenishment point&nbsp;&nbsp;</li><li>Ensure that the stock is properly rotated, and all recalls are addressed&nbsp;&nbsp;</li><li>Ensure that the right stock is available (regular audits of stock against non-stock utilization and ordering) \u2013 reduce the need for \u201crunners\u201d to go and get the supply&nbsp;</li><li>Ensure that there is a plan in place that addresses stock outs and secondary supply sources or products&nbsp;</li><li>Monitor supply status on an enterprise-wide basis not just by par and inventory location but holistically to redistribute supply in relation to utilization&nbsp;</li><li>Supply chain teams, Inventory, logistics, distribution need to hold team huddles daily to review stock outs, defects and opportunities for improvement and review customer feedback&nbsp;</li><li>Review opportunities to move towards just in time \u201cJIT\u201d programs to reduce inventory and potentially redirect staff to more critical needs&nbsp;</li><li>Reducing inventory has real impact to the bottom-line:&nbsp;</li><li>Space required can be used for more patient centric activities&nbsp;</li><li>The costs of the inventory equal cost of opportunity lost&nbsp;&nbsp;</li><li>Excess on-hand leads to excess shrinkage and spoilage&nbsp;&nbsp;</li></ul><h2><strong>Receiving and Distribution</strong>&nbsp;</h2><ul><li>Review receiving locations and understand the flow and opportunities to improve the flow by:&nbsp;</li><li>Collaboration with Procurement to optimize management of the Vendor Delivery Schedule by utilization, priority and type&nbsp;</li><li>Organize the Receiving work area to maximize the receiving process and flow&nbsp;</li><li>Ensure that system is use is leveraged to maximize receiving functions&nbsp;</li><li>HHT devices that are wireless&nbsp;</li><li>Dock logging and delivery tracking&nbsp;</li><li>Fully Integrated with Procurement system&nbsp;&nbsp;</li><li>Develop workflows for all aspects of receiving including the inspection process&nbsp;</li><li>Integrated messaging with critical areas (Equipment Inspection, HazMat, etc.)&nbsp;</li><li>Work with the Procurement and Materials management areas to ensure that Receiving staff is scheduled in relation to the volume of orders / work&nbsp;</li><li>Daily team huddles to review delivery issues and opportunities to improve the average time to deliver as well as reviewing customer feedback and periodic \u201crounding\u201d with team&nbsp;</li><li>Analyze and review opportunities to leverage JIT delivery to the unit with opportunity to redirect staffing to critical deliveries and areas needing support within the Supply Chain.&nbsp;</li></ul><h2><strong>Value Analysis&nbsp;</strong>&nbsp;</h2><p>The healthcare products and services marketplace are constantly evolving, governed primarily by new solutions, improved products, changing health treatment protocols and of course new government mandates to include a few of the contributing agents. A value analysis program needs to be in place to manage this avalanche of new needs (real or perceived) against opportunities to reduce costs in the supply chain system. The value analysis process needs to continually promote product standardization balanced against product effectiveness, defining \u201creal\u201d TCO and evaluating and tracking \u201cROI\u201d.&nbsp; The value analysis committee is possibly the most vital component of the overall Supply Chain strategy and the best opportunity for the Supply Chain to be successful; the value analysis should be the empirically based voice of the customer. The value analysis committee (VAC) has to be well balanced between business and clinical operations. We need to ensure that the membership who comprise the value analysis committee must represent the hospital community and are in a position to provide meaningful input to the opportunities presented. The VAC must have good and meaningful data on which to make their decisions. This necessitates that the organization has access to a decision support system (BI) in place which provides the requisite information (business and clinical) in which to make decisions. VAC committees tend to be successful once the empirical data is provided for the team to review and analyze and more often than not once presented with the facts \u2013 decisions were almost unanimous with substantial savings realized. However, the importance of the team working in concert with balanced data; decisions were not made solely on the bottom line but most importantly the impact on the quality of care provided.&nbsp;</p><p><br></p><h2><strong>Systems Development</strong>&nbsp;</h2><p>Currently, at several major companies and healthcare institutions across the globe Xerox is working with the Executive leadership and the Supply Chain executives to implement Supply Chain <strong>\u201cbest practices\u201d </strong>and configure the system to support those best practices (Lawson / Infor, PeopleSoft, Oracle EBS, SAP, etc.). We not only work on the system implementation aspect, but we look for value-based opportunities that have recurring value year after year. Several of our clients call us in to do a systems and process optimization analysis in order to improve the Supply Chain operations. We have become experts at pulling together disparate systems that make up the ERP to drive value, transparency and accountability.&nbsp;&nbsp;</p><p><br></p><p>We work heavily in the analytics space as information and getting to the<strong> \u201cone source of truth\u201d</strong> albeit can be challenging and barriers encountered along that path, we get our clients across the finish line.In several of our accounts, we created a single masters (item, vendor, ledgers, A/R, etc.) to be utilized for all facilities, regardless of geographic boundaries and tax status. We have implemented third party systems to support and improve the ERP systems. The focus of a Supply chain system implementation is based on a complete Supply Chain analysis for all areas from Sourcing to Receiving, Distribution and Inventory. We developed dashboards and analytics which produced real-time status, trending and predictive analysis \u2013<strong> \u201chow much of what will be needed at what price and when\u201d</strong>. Though out all these experiences several basic tenets have been tested and proven to be true:&nbsp;</p><ul><li>To be successful the system needs to perform majority of the work autonomously and eliminate redundant tasks; allowing supply chain staff the opportunity to focus on true value add activities&nbsp;</li><li>Develop the system to support standardization with automated workflows for following standards&nbsp;</li><li>Eliminate redundant systems and use one \u201csource of truth\u201d throughout the organization&nbsp;</li><li>Ensure that an analytics dashboard is developed for 2 primary purposes:&nbsp;</li><li>Transparency \u2013 allowing staff to review actionable data or for management to observe workflow and metrics (KPIs)&nbsp;</li><li>Accountability \u2013 open to all to review bottlenecks and status by team/department or resources&nbsp;</li></ul><h2><strong>Culture&nbsp;&nbsp;</strong>&nbsp;</h2><p><strong><em>\u201cCulture eats strategy for breakfast\u201d </em></strong>\u2013 we are not sure who we can attribute this quote to (there is debate as to whether it truly is Peter Drucker\u2019s quote) but for sure it is a critical axiom to observe. Throughout the Supply Chain transformation, we need to ensure that the organization has bought into what is being undertaken and not misunderstood as the \u201cbean counters\u201d saving dollars at all costs nor looked upon as management eliminating jobs. It is with care that we need to approach this transformation and create an atmosphere of positive collaboration in which the entire staff (not just Supply Chain) is helping promote the transformation. Communication is key; not just the message but it needs to be delivered at the highest levels of the organization as \u201cone voice\u201d. The communication needs to stress and reinforce that quality of patient care will always triumph. Supply Chain management and other operational executives should \u201cround\u201d to review first-hand the perceptions of the Supply Chain transformations. Praise for savings derived and opportunities uncovered needs to be applauded publicly and promoted for the departments.&nbsp;&nbsp;</p><p><br></p><p>Within the Supply Chain organization, the most fundamental thing that we can do is to ensure that the staff feels confident in the transformation as not just a way to eliminate redundant work (or employees) but an opportunity to transform their positions i.e. from buyer to a strategic sourcing specialist, receiver to a logistics analyst, stock clerk to an inventory specialist. Of course, all of them would need the appropriate training to make the transformation; at the finish line it will be the fundamental means to enable the transformation from within.&nbsp;</p>","image":"/home/gpeag8ru79y1/api.enrickramlakhan.net/static/uploads/download_27.jpg","slug":"optimizing-healthcare-supply-chains-a-strategic-approach-to-cost-containment-and-efficiency","title":"Optimizing Healthcare Supply Chains: A Strategic Approach to Cost Containment and Efficiency "}