How to Find Opportunities to Advance Your Supply Chain Organization

Brent-Johnson-Amerinet-President-and-CEOBy Brent Johnson, President and CEO, Intalere

A recent supply chain survey conducted by UPS found that only 18 percent of companies could produce a current supply chain strategy document with a detailed project roadmap. Why? Much of it has to do with the fact that supply chain, especially in the case of healthcare, is extremely complex and challenging in terms of scope and development. Just that initial fact is enough to keep organizations from getting started. But it is extremely important for healthcare executives to understand, that with the coming pressures of healthcare reform, supply chain management will need to become a competitive differentiator for many organizations. Externally purchased materials and services represent 40-45 percent of a company’s total cost structure, making supply chain best practices adoption the most powerful cost-reduction and quality lever available.

So what are some of the steps that an organization can undertake, whether through their own initiative, or by partnering with a consultant or facilitator, that can more easily get the ball rolling? Let’s take a look at some solid steps to follow, starting with data analysis and pre-assessment:

  • Conduct a qualitative assessment across the people, processes and technology of the organization.
    • People – Understand gaps or hand-offs between internal customers and materials. What, if any, staffing limitations exist? What are the currently defined roles and responsibilities of current staff and what might cross training needs be? What’s the scope of influence of your supply chain across the non-labor spend of your company? What’s the talent level of your supply chain resources, and can they lead strategic improvements in categories beyond med-surg?
    • Processes – In this area, you need to gain a full understanding of the current state of supply chain skill sets, resources and communication dynamics, with an eye toward coordinating the organization in all service areas related to procurement processes and possibly formulating a plan for standardization of products. Understand how/why clinical staff outside of supply chain order product, what the current policies and procedures are, how space is being utilized in terms of inventory, and what is being done to mitigate product waste or to reduce the touches of products from “dock to doc.”
    • Technology – Identify metrics needed for each area – med surg, pharmacy, etc. – to help those managing understand what they should be measuring to gauge performance. Identify tools that can assist in integration and help to operationalize tracking of spend, and other related details.
  • Quantitative assessment of supply chain data. Depending on what size and type of facility you have, it is important to understand where you are currently in terms of relevant supply chain benchmarks. Some areas to consider in setting benchmarks that can help you establish next steps:
    • Procedure volumes, including encounters by specialty and encounters by physician.
    • Spend – Spend analytics is the foundation of supply chain management. It’s important to know the volume, by category, of all the non-labor spend within your organization. Other data needed would include inventory volumes by areas, supplier/vendor spend and spend volumes by unit cost and month.
    • Inventory – par levels, inventory velocity, waste management and reduction.

With these basics established, you can begin to gain a clear picture of where you are and where you may need to go. In subsequent posts, we’ll examine how you can use this information as the building block to take you from your current state of supply chain operations to a more fully integrated and advanced future state.

Learn more about Intalere’s supply chain solutions.

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