Tag Archives: value analysis

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.