Driving Value in Healthcare Through Supplier Collaboration – Part 1: What’s Forcing the Need for Healthcare Supply Chain to Show Greater Value?

Todd Larkin, Chief Operating Officer, Intalere

Excerpts from a Conversation with Todd Larkin, Chief Operating Officer, Intalere

By the nature of their design and objectives, new payment models really are forcing supply chain to demonstrate that value, and that requires collaboration – with other providers, suppliers and group purchasing entities. We need to understand how healthcare providers can maximize their relationships with their suppliers, because these two parties, traditionally, have been very transactional and focused on almost trying to outwit each other.

That’s indicative of the status quo the healthcare industry has seen over the past several decades. The fee for service model has exacerbated that as a challenge for healthcare. These new payment models are starting to necessitate new relationships that must be forged. In many other industries, these types of relationships have been in place for several decades – the automotive industry and the way that the auto industry integrates with their supply chain partners to achieve higher quality, lower cost for innovation and improved efficiencies.

First, you need to understand who your suppliers are and which ones you should focus on. Obviously, not every supplier is going to be a strategic, integrated partner. No organization has unlimited resources to devote to robustly manage every single supplier relationship. It’s very important that you understand your supply base and classify or segment each one of those relationships and determine rules of engagement for each segment.

Just like a sales organization should understand its customers and segment its customer base, supply chain organizations need to do the same for their suppliers. A very simple matrix can be developed where key factors would be the criticality to the business and spend.

Remember though that low dollar suppliers can be extremely critical to your operations as well. If you have a blind spot and don’t understand that, you could find yourself in a very difficult situation if that supplier relationship goes south or that supplier is not able to provide you the services or products that you’re expecting.

This is what we saw with Personal Protective Equipment (PPE) in the COVID-19 pandemic. Previously thought of as commodities, PPE often didn’t get the appropriate attention that it deserved, and a diverse and resilient supply chain was never established. Understanding that supplier segmentation and then aligning your resources to meet the needs of those supplier relationships and corresponding behaviors with those suppliers, is critical.

We’ve done this with our suppliers here at Intalere. In fact, we built this model and engaged our supply base by getting their input on what types of behaviors we should expect with each other as we engage as partners.

The nice thing about taking this approach with our supply base was that it established a constant feedback loop going forward and everyone understands the reasoning, roles and expectations. That’s been a real benefit to Intalere and to our members.

We Can Help. Intalere provides resources that can assist in the area of supply chain and supplier relationships, as well as many other areas to benefit your healthcare facility. Review our Post-COVID Transformation Toolkit and reach out to see how we can help. Contact Customer Service at 877-711-5600 or customerservice@intalere.com or your Intalere representative.

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