Supply chain efficiency trends

For years, hospitals have been trying to discover new strategies for getting greater efficiencies out of their supply chains. Here are some current trends:

Cost education – Over the last three years, the Cleveland Clinic has achieved supply chain savings of $180 million, said the organization’s Simrit Sandhu, executive director of supply chain management. Among the strategies the Cleveland Clinic has used to achieve this savings is a cost education program, including posting prices of surgical tools in operating rooms.

[See also: Leverage buying power for better prices]

“The cost education program for our caregivers spans many tactical measures including posting prices,” Sandhu said. “It parallels our quality assessment process so that all product use decisions are made in the context of value. The decision to educate our stakeholders on cost was an easy one because it also allowed us to enable value-based sourcing that resulted in our overall savings.”

Improved collaboration – According to a recent McKinsey & Company report, more than 70 percent of senior supply chain executives in the pharmaceutical and medical device industries ranked improved collaboration across the healthcare value chain as the greatest opportunity for future savings. In its report, McKinsey said to achieve improved collaboration, relationships must move beyond being purely transactional to "something more ambitious," and that the biggest barrier to improved collaboration often is one of culture rather than technical issues.

Self-distribution – As more organizations have grown in size, they’ve looked to do their own distribution, said Angela Zotos, principal, advisory services at Ernst & Young. “We’ll see whether or not they can do it cheaper or better, but I think that's one potential impact that you'll see to traditional distribution.”

Aggregating data – Zotos also said supply chain managers, like other departments in the hospital, are seeking to make greater and better use of data. “It's really about aggregating your data into meaningful data,” said Zotos. “Organizations that are really cutting edge are linking outcomes now with reliable data to making product choices.”