Strategic Value Analysis In Healthcare

Weekly Strategic Value Analysis Newsletter

Fast Target Savings

Strategis^TM Value Management

ValueNet Central ^TM Value Analysis Software

About HCP

Client List

Articles and White Papers

Contact HCP

SPANNING THREE DECADES OF VALUE MANAGEMENT LEADERSHIP

August 20, 2002

5 Critical Challenges For Supply Chain Managers In The 21^st Century

“No Other Management Function Has The Power To

Reduce Cost And Improve Quality As Does Supply Chain Management”

Robert T. Yokl, President, The HCP Group, Ltd.

Supply chain management is a raising star in healthcare corporations throughout the country.  There are now, than any time in our history, more vice presidents of supply chain management and material management, who are being welcomed as vital members of healthcare management teams. Yet, SCMs are still being tested by healthcare organizations to bring more value to their healthcare organizations by meeting these five critical challenges:

1.           Having the right product, at the right time and at the right place

This time worn “mantra” of supply chain professionals is still a critical challenge in the new millennium, because of the complexity of our health care operations today.  This complexity is further complicated when the supply chain generates stock outs, backorders, mistakes and confusion in the supply pipeline. This challenge can only be met by computerizing all or most supply chain functions to bring more discipline and less variation in your supply chain architecture, so you can move to a Six Sigma or Zero Defects environment.

2.           Reducing the total cost of the products, services and technologies you are purchasing

While healthcare organizations have done an excellent job of reducing their purchase cost, the challenge that we still face is reducing the total cost or life cycle cost of the products, services and technologies by a factor of 5x to 10x your purchase cost. This can only be accomplished with a  strategic, function oriented, team-based value analysis program to stream-line and reinvent your supply chain.

3.           Reducing hospital inventories to the lowest levels possible to improve cash flow and cash-on-hand

Positive cash flow and cash-on-hand is a measure of financial health for any hospital, yet ineffective inventory management in healthcare today is contributing to a cash flow drain and less cash-on-hand due to bloated inventories.  The responsibility for managing inventories hospital-wide falls on SCMs and no one else. So it’s the SCM’s responsibility to make these inventory reductions happen utilizing modern inventory management strategies and tactics.

4.           Meeting the ever changing requirements of internal and external customers

Things change and people change at an accelerated pace in healthcare today; and so it must be too for SCMs if you are going to keep pace with your internal and external customers.  The only way to stay on top of your changing customer base and their requirements is to be close to your internal and external customers through frequent interaction, questionnaires, surveys and focus groups to take their temperature and feel their pain.

5.            Improving the cycle-time of all supply chain functions, processes and lead times

Speeding up the time it takes now to perform supply chain functions, processes and lead times will generate even greater efficiencies in your supply chain by uncovering weaknesses and exposing problems that are holding you back from optimal supply chain performance.

Healthcare organizations are looking to their supply chain managers to bring about the next wave of savings for their organizations, now that they have ratcheted down their labor cost.  SCMs therefore will be challenged to optimize their supply chain to bring about reductions in the range of 8% to 10% -- beyond price to meet this challenge.  This opportunity to show the value of supply chain management can only be met by SCMs focusing on these five critical challenges outlined above that represent the future of supply chain management in healthcare in the new millennium.

Robert T. Yokl, President, The HCP Group, Ltd., has over 35 years of experience as a consultant and manager in the field of Supply/Value Chain Management and is one of the country's leading healthcare experts in value analysis, value engineering and materials management. He is the developer and program leader of the award winning Certified Value Analysis Practitioner Training Program™. Mr. Yokl is also the developer of the healthcare industry's leading ValueNetCentral™ Value Analysis Software. Over the past two decades he has trained thousands of healthcare managers in his patented Strategic Value Analysis™ and Team-Based Project Management™ processes and has assisted scores of organizations in developing their own value management programs. He has published six books, videos and audios on supply/value chain management. His latest book being, “ Strategic Value Analysis™: The #1 Smart Strategy for Taking Cost Out of a Healthcare Organizations’ Supply/Value Chain”.