Supply Chain Execs Urged to Stop the Guessing Game

A recent article on The Advisory Board’s website, “Three assumptions that blind you to savings opportunities in clinical supply spend,” discussed some simple and basic ways supply chain leaders at hospitals or IDNs can get additional value out of their supply contracts. It presents three “insidious” assumptions supply chain leaders often make: 1) Assuming you know what suppliers can offer, 2) Assuming you know what your physicians will accept, and 3) Assuming you’re done when the contract is signed.

The article posits that “ineffective savings strategies force hospitals to guess at suppliers’ best offers.” It goes on to suggest that hospitals would benefit from asking suppliers to initiate offers, rather than the hospital approaching the supplier with a predetermined solution. “Benchmarks can offer some guidance, but they can’t tell you what your suppliers will offer for your unique requirements and for their unique business case at hand.”

The article goes on to challenge supply chain leaders to stop guessing about what changes his or her physicians will or will not accept. Instead, it suggests supply chain leaders work with physicians individually to get a more complete picture of what product changes each individual will or will not accept and why.

Finally, the article reminds hospitals to stay mindful of the contract and their supplier after the contract is signed. According to the article, “Suppliers are very sensitive to failed commitments on your part… they watch their hospital partners closely for clues to the value of their next contract, and even grade hospital partners’ performance as customers.” It also notes that suppliers are usually willing to “improve value post-contract, making changes to better serve you at lower cost.”

To read the full article, “Three assumptions that blind you to savings opportunities in clinical supply spend,” visit http://www.advisory.com/research/financial-leadership-council/at-the-margins/2014/04/three-assumptions-that-inhibit-the-full-savings-opportunity-in-clinical-supply-spend.