Tag Archives: supply cost efficiencies

Ensuring the Resilience of Your Supply Chain – Team, Strategy and Tools – Part 1

Ensure the Resiliency of Your Supply Chain

Excerpts from a Conversation with Intalere Senior Advisory Specialist, Tracey Chadwell

Supply chain resiliency is a term and phrase that has really gained traction over the past several months as we deal with the fallout of the pandemic and seek to apply some lessons and best practices so we can avoid making the same mistakes in the future.

While the pandemic showed the importance of the supply chain, it also served in some ways to spotlight its weak links. In order to make the healthcare supply chain more resilient, we need to identify several components that are vital to its success.

In building a resilient supply chain, we need to focus on building a cross-functional team, implementing the correct strategies and utilizing the tools that can make the supply chain more efficient and effective.

First, let’s look at some of the key team members and what their roles are.

When you look at the supply chain and its function, it’s a vital part of the entire team at the hospital to achieve the quadruple aim of improving the patient care experience, the health of a population, the clinical experience and reducing per capita healthcare costs. For that reason, we need to make sure that we in supply chain develop a winning team with some good strategies and some good tools to help do that.

When we look at the team itself, we need to make sure that we’ve got all the stakeholders involved including leadership, clinicians, finance, suppliers, distributors and group purchasing organizations (GPOs). Once the team is identified, you need to develop a game plan. What are some of those most critical winning strategies to enhancing your supply chain once the team is in place?

The most important part is identifying your areas of vulnerability. COVID gave us an opportunity to actually see some of those areas and identify them pretty quickly. But we really need to do a deeper dive and explore the areas that might put us in a vulnerable situation, and then develop strategies as far as preserving supplies, and preventing over ordering and hoarding of limited resources.

You want to look at your current inventory practices. Many facilities went to just-in-time (JIT) inventories to avoid having bulk storage. And yet this could have caused them a problem with the allocations during the pandemic. That may be something that needs to be re-evaluated.

Another strategy is to review a list of must-have supplies and develop a hierarchy of clinically approved substitutions. That’s why having clinicians on your team is so incredibly important. You may find products that you think would be viable substitutions, but they really need to be clinically approved to ensure they meet the requirements of the end users.

You also want to build in redundancies. Source like items from several sources and build relationships with vendors that are manufacturing in different countries or non-traditional local suppliers. Many of us have had an opportunity to develop some relationships with local suppliers, and those need to be continued because they may be able to provide you with an allocation in an emergency so that you would have priority in obtaining needed supplies.

Another area that people have been investigating is the use of disposable versus reusable versus reprocessing. There may be an opportunity for you to lower the inventory that you carry by utilizing reusable products or by reprocessing. Additional investigation may be required as you’re going to need to have laundry services or some way to reprocess or reuse the product.

Demand signaling is another strategy in which you have visibility to the availability, consumption and utilization of critical supplies. What this all boils down to is having access to, and knowing how to use data to predict potential waves of cases. Demand signaling involves understanding your current supply levels or inventory, the burn rate of how it’s being used and the sourcing challenges.

Predictive forecasting models that are based on clinical surveillance through the EHR and supply chain data can be useful in helping to do this, especially if we go beyond COVID. There are opportunities to identify swings, upticks of certain illnesses, diseases or even surgery cases at certain times of the year, and use that data to do some predictive forecasting about what supplies will be needed to ensure that you have inventory to care for your patients.

In our next post, we’ll review some important tools to implement to help you get ahead of the curve.

We Can Help

For further information on any of our resources to help you deal with your supply chain challenges, visit our website at intalere.com. You can review our recent Supply Chain Resiliency podcast and infographic, as well as success stories and recent blog posts on a wide variety of supply chain topics.

9 Reasons for Inefficiencies in Supply Management

by Tracey Chadwell, Senior Director, Advisory Solutions, Intalere

In recent blog posts, we discussed the idea of supply utilization management and building a sustainable process to identify gaps in supply chain strategies and create new behaviors that bring savings to your healthcare facility’s bottom line.

One area of particular scrutiny is waste in the supply chain. Waste and inefficiencies in the consumption of products is where 79% of all new supply chain savings are hidden. That includes things like inferior products, value mismatches and misused, misapplied, or misappropriated products, which must be identified and eliminated.

In some cases, supply chain can evaluate, select and contract for a product/service/technology, but hospital staff use too many, use wrong products, choose feature-rich products, waste products, or vendors upsell new, higher cost products inside the new contract. That is why a cross-functional team with representation from supply chain, finance, operations and clinical segments, along with a process that includes checks and balances, is so important.

Furthermore, redundancies in supplies and unnecessary deviations in inventory processes lead to variations in practice, many times sacrificing clinical and operational excellence for personal preference or comfort.

What are some of the main reasons for waste in the supply chain that we need to guard against?

  1. Tradition – Products, services and technology need to be reviewed regularly to ensure relevancy beyond the old adage of, “this is what we’ve always used and it’s been fine.”
  2. Poor or inaccurate performance specifications – Most items are purchased from manufacturer-supplied data, not based on required performance expectations, and, therefore, are either over- or under-performing, resulting in waste and inefficiency.
  3. Wasteful and inefficient practices – Excess inventory, discards, redundant motion, unnecessary practice variation, irrational consumption.
  4. Old technologies – Some products may be inefficient or need maintenance to keep operational. It’s important to evaluate “useful” life to ensure these products are still meeting needs.
  5. New technologies – Conversely, new products and tech purported to be faster, better, cheaper may be less reliable, more supply intense and, thus, more costly.
  6. Lack of accountability – No one “owns” the value chain to oversee the life and cost of an item used by numerous departments.
  7. Lack of input from key stakeholders – Customers aren’t consulted prior to product or service decisions, so inappropriate use or changes occur. Comprehensive stakeholder involvement helps identify flawed thinking or assumptions so better decisions can be made.
  8. Feature-Rich Products – Value mismatches provide more than what is functionally required. For example, pacemakers with over 100 features that cost 50% more, when only 10-15% of its features are medically indicated.
  9. Standardization vs. Customization – It’s rare that one product is able to meet all requirements of all users without incurring waste, inefficiency and a higher cost than necessary. Customization, or building products according to individual specs, will meet the requirements of approximately 80% of the users. The other 20% require higher or lower specs to fit their needs, which may mean buying different products for them. Doing so may actually reduce waste and inefficiency by 10-15%, thus lowering overall costs.

Identifying and understanding these possible hurdles and how best to make critical adaptations, create new behaviors, and revise policies and procedures to mitigate them, is an important part of bringing sustainable savings and a strategic supply chain to your organization.

We Can Help. Intalere helps you better understand the strategic nature of supply chain and provides resources that can assist in bringing efficiency and savings to every area of your supply chain. Reach out to see how we can help. Contact Customer Service at 877-711-5600 or customerservice@intalere.com  or your Intalere representative.

Intalere Member Best Practice Spotlight – Supply Cost Efficiencies: How Increasing the Use of Custom Packs Helped WASC

ISSUE

Wooster Ambulatory Surgery Center (WASC) was facing many inventory issues: inventory costs out of proportion, inefficient management of the supplies needed and how they are purchased and/or stored and too many miscellaneous items on stock shelves.

SOLUTION

WASC became a sole-source member of Intalere and began utilizing Intalere supplier contracts to receive the best possible pricing on all supplies needed. The facility also determined that increasing the number of custom packs used daily would allow the distributor of the packs to buy them in bulk, providing a better price per item.

In addition, WASC implemented a “two bin” stocking and storage system which helps the purchase agent keep a better eye on stock and know when items need to be ordered. Using the two bin system eliminated the storage of items in multiple locations and improved the efficiency of inventory management. Since WASC is a small facility and space is limited, using carts for each service allowed staff to stock specific items in one place and helps the purchase agent and staff know what is available at any given time.

OUTCOME

By using Intalere contracts for purchasing supplies, WASC’s supply costs have been significantly reduced. Implementing the two bin system has allowed for more efficient inventory management and restocking, and allows nursing staff the ability to focus on patient care. The system has helped WASC decrease inventory by roughly 1/3 of their previous inventory. The new system has lowered overhead costs, eliminating the need of increasing their charge master and keeping costs of services low and quality high.

ABOUT WOOSTER AMBULATORY SURGERY CENTER

Wooster Ambulatory Surgery Center (WASC) was built in 2008 when a group of area physicians recognized the need for a high quality and lower cost medical facility option for the local community. Built as a multi-specialty ambulatory surgery center, WASC has increased the number of cases performed on a yearly basis and in 2016 performed more than 4,000 surgeries/procedures. WASC serves five counties in rural northeastern Ohio and has a high number of self-pay patients as it serves the Amish communities in its area. WASC is highly committed to providing high quality care at an affordable price in an environment that staff would be proud to bring their own families.

View the WASC page in the 2017 Intalere Best Practices Compendium.