Savings Beyond Price™
Innovative Supply Savings and Quality Solutions That Work
by Strategic Value Analysis® in Healthcare
Did You Know...?
That Value Analysis Was Developed Back In the 1940's After World War II as a Way to Find Lower Cost but Higher Quality Alternative products and methods. This was Due to the Lack of Material Resources At The End of The War.
Savings Beyond Price -Weekly eNewsletter - October 28, 2009
Robert T. Yokl
President & Chief Value Strategist
Price is the Smallest Factor in the Savings Equation
Greetings,
Just the other day a materials manager told me that he believes that price is the smallest factor in the savings equation. He said that you can get the best tier pricing from your GPO and still have the highest supply cost in the region if you aren’t managing and controlling how your hospital’s staff are utilizing the products, services and technology you are buying.
This materials manager has been campaigning for a few years to get his executive management and staff to “think utilization”, not just price when they are searching for new savings opportunities. Now that he has made headway with his crusade he is ready to attack his utilization misalignment at every level of his healthcare organization.
I don’t think I could explain the utilization philosophy any better than this enlightened materials manager, since our studies show that the effect of price as a percentage of the total cost for a product, service or technology can be as low as five-percent.
For instance, the printing industry has found that for every $1.00 you spend in printing cost, your in-use cost is at least $25.00 or a 25:1 ratio. I know this metric is reliable since a few years ago we studied the utilization of one of our client’s General Requisition forms. This client was spending $185,536 annually to print this form that was used for ordering tests and procedures for their patients.
After an extensive investigation, observations and functional analysis by my consulting team we were able to shave the in-use cost of this expensive form by $93,994 or 92%. Here’s the big ‘aha” that we uncovered when we finalized this study: The ratio of printing cost to in-use cost was a whopping 1,460:1! Isn’t that an eye opener?
So as you can readily see, price is just the smallest factor in almost anything that you buy. That’s why utilization management is the most important evolution in supply chain management in the last 25 years.
This is where you need to focus at least 50% of your time vs. price if you want to put a big dent in your supply chain budget in 2010 and beyond.
Your Partner In Savings Beyond Price™,
Robert T Yokl
Chief Value Strategist
Strategic Value Analysis® In Healthcare
1-800-220-4274
P.S. We just released our new breakthrough book, “Healthcare Supply Utilization Revolution” If you would like to receive a no cost complimentary copy of this book (yes it is no cost to you) please follow this link and fill out the form so we can mail you your printed copy ASAP. Get your copy here
P.S.S. This is a limited release of the “Healthcare Supply Utilization Revolution” and will only be available for a short period so be sure to take advantage of this offer now, it doesn't get any better than priceless new savings strategies and information at no cost to you! Get your copy here
***Just Released***
Free Special Report
Supply Chain Utilization
Targeting your next big savings opportunities
"Could a misalignment that comes with a simple (and less costly) fix be eating away at your savings?"
"Beware of Standardization"
"Managing utilization costs can save six to 10 percent on total supply expenditures"
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