The Times Are Changing, But Is Healthcare Supply Chain Planning Changing With It?

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Learn about the 16 distinct advantages to Strategic Supply Chain Operational Planning, that you need to know about. Material management (or supply chain management as it is now called) has been red hot for 27 years now in healthcare, yet very few healthcare organizations have taken the time to develop a Strategic Supply Chain Operations Plan (SSCOP) to fine tune their multi-million dollar business operations. Few healthcare organizations ever take the time to refresh their SSCOP’s plan to compensate for the winds of change that take place yearly and will affect their hospital, health system or Integrated Delivery Network (IDN).

Material management (or supply chain management as it is now called) has been red hot for 27 years now in healthcare, yet very few healthcare organizations have taken the time to develop a Strategic Supply Chain Operations Plan (SSCOP) to fine tune their multi-million dollar business operations. Few healthcare organizations ever take the time to refresh their SSCOP’s plan to compensate for the winds of change that take place yearly and will affect their healthcare organization. By neglecting this mission critical activity healthcare organizations are losing the opportunity to “wring the towel dry” of savings in their multi-million dollar supply chain operations that are bigger and more complex than most businesses in their service area.

Winds Of Change: One big change that is right around the corner for hospitals is the new Medicare reimbursement regulations (charged based to cost based reimbursement) that will be phased in over the next three years starting this month. This will surely cost hospitals, systems or IDNs hundreds of thousands of dollars, or in many cases millions of dollars in lost revenues not to mention the drastic affect their bottom line.

Master Change: We in supply chain management always seem to be herky--jerky when it comes to strategic operational planning, when planning is the little known secret supply chain managers desperately need to stay on top of their game. By looking at where you have been, where you are now and where you want (or need) to be in 1, 2, 3 or 5 years with your supply chain management program, supply chain managers can manage these unpredictable winds of change more effectively.

Anticipate Change: This is the case with one of our clients whose management has told their material manager that he needs to do more with less. He has responded to this challenge by developing a Strategic Supply Chain Operations Plan, with our assistance that includes re-inventing and re-tooling his purchasing operations and supply value analysis program to be leaner, meaner and more productive. At the same time our client is proactively increasing his supply saving yield by 11.4 times over the next few years.

If supply chain managers want to be left standing when the winds of change hit their healthcare organization, they need to master change by anticipating change with their own Strategic Supply Chain Operations Plan that will keep their supply chain organizations afloat in good times and bad.

Activity Without Planning is Always Dangerous. The term "strategic planning" is not a new term in management's lexicon. It is derived from military usage and the need for on-going assessment and self-appraisal of an organization's strengths and weaknesses. It's a systematic and defined planning process leading ultimately to the appropriate strategies and tactics necessary to enable an organization to adapt to change in an ever changing marketplace. The end result of such a planning process is a clear vision for management of where it should focus its energies and resources in the short, intermediate and long term to meet their stated vision, mission and objectives.

A Strategic Supply Chain Operational Plan has many similarities to the strategic long-range planning process in that it is a systematic and defined planning process. This plan will, enable a healthcare organization to appraise the strengths and weaknesses or GAPS in its Supply Chain Management Program. It will devise new strategies and tactics for reducing and controlling their supply related expenses by employing the value methodology. It begins with defining your vision, mission and objectives for their new or refined Supply Chain Management Program, in terms of what their aspirations are:

  • Being one, two and five years out
  • What savings and quality goals are real and achievable
  • What policies and procedures are required to align them with their new or reinvented Supply Chain Management Program
  • What steps are needed to develop strategies and tactics that will be creative enough to meet the challenges of this new or refined program
  • What problems or hurdles can be anticipated that would threaten the success of a new or refined Supply Chain Management Program, and where do we get started?

This mission critical planning process will position your hospital, system or IDN’s new or refined Supply Chain Management Program to be successful, as opposed to just letting it happen in an unplanned and disorganized manner. When developed properly, it will provide you with a blueprint for your Supply Chain Management Program and give you a roadmap to follow over the next few years, thereby, increasing your probability of success.

16 Distinct SSCOP Advantages You Need to Know About! By creating a SSCOP you will bring 16 distinct and powerful advantages to your healthcare organization:

  • Enable you to influence the future of your supply chain operations by anticipating the winds of change then preparing for them.
  • Provide a new and powerful vision to break through the barriers that have been holding back “big” savings for you.
  • Focus on the important things (time, talent, money and materials) so that they are properly allocated and aligned to those activities that provide the most benefits.
  • Provide awareness to your management of the changing healthcare environment as a foundation for needed change in your supply chain operations.
  • Enable you to have the necessary insight into your supply chain operations so you can evaluate the impact of these operations on your overall performance.
  • Recognize the impact the changing healthcare environment is having on your hospital, system or IDN that will affect the need for a change in strategic direction.
  • Provide awareness of your supply chain’s potential in light of its strengths and weaknesses.
  • Identify and analyze available opportunities and potential threats.
  • Bring up strategic issues for your top management review.
  • Make possible for you to set more realistic goals and objectives that are demanding, yet attainable
  • Provide more and better information for decision making
  • Identify areas of poor performance that can be eliminated.
  • Gain control over all of your current operational challenges.
  • Develop better communications with your management team.
  • Provide a road map to show where your supply chain operation is going and how you are going to get there.
  • Develop a frame of reference for budgets and short and long range financial planning

Beyond these 16 distinct advantages that I have listed above a SSCOP will put greater supply chain control in your hands because through the SSCOP process so you will have better information, better focus for better decision making and control.

It All Starts With a SWOT Analysis to Create Your Supply Chain Of The Future! To prepare your Strategic Supply Chain Operational Plan you need to conduct a SWOT (strengths, weaknesses, opportunities and threats) Analysis of your supply chain management’s current state (political, cultural, operational, attitudinal and transformational), which needs to include the following categories:

  • MISSION- Identify current state and devise future state of supply chain management mission
  • VISION- Identify current state and devise future state of supply chain management vision
  • VALUES- Identify current state and devise future state of supply management values
  • OBJECTIVES- Identify current objectives and devise new objectives for supply chain management
  • OUTCOMES- Document successes to date and devise new outcomes for supply chain management
  • MEASURES - Quantify current supply chain management measures and devise or refine measurement tools
  • BASELINES - Determine current supply chain management baselines and devise or refine baseline measurements
  • TARGETS - Finalize supply chain expense management savings targets based on Supply Chain Performance Assessment
  • STRATEGIES & TACTICS - Understand current supply chain cost management strategies and tactics and revise, or devise new strategies and tactics that are performance focused
  • PRIORITIZATION- Prioritize tasks and activities for the deployment of new supply chain management initiative
  • EVALUATION SYSTEM- Identify current evaluation system and refine, revise or devise new system to integrate with new supply chain management program

Once your SWOT Analysis is completed you will need to schedule several half day or full day planning workshops with your supply chain management and executive management team to share your findings and recommendations and then develop and finalize with them your SSCOP.

3%, 6% or Even 9% Supply Savings and Dramatic Operational Improvements in Less Than Nine Weeks! It has been our SSCOP client’s experience to save a minimum of 3%, 6%, or even 9% on their supply spend and to dramatically improve their operations by building their own customized plan for their supply chain of the future utilizing the SSCOP’s methodology.

More importantly, our clients have seen their management team connected to this SSCOP planning process which enabled them to have their new strategies, tactics and ideas heard (without a filter), evaluated and quickly approved.

The end result of the SSCOP process for hospitals, systems and IDNs nationwide has been the development of a defined plan with a new and powerful vision to break through the barriers that have been holding back “big” savings for these healthcare organizations.

Robert T. Yokl, President and CEO, Strategic Value Analysis® In Healthcare(http://www.strategicvalueanalysis.com) is an acknowledged healthcare leader in supply chain management. And he is the creator of the Supply Six Sigma™ System that is a new way to manage a healthcare organizations’ functions, variations, and defects in their supply chain.

NOTE: This article may be used with attribution please. Interview requests and special feature article requests welcome and appreciated.

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