3 Ways to Reduce Waste and Inefficiencies Within Your Supply Chain Expenses

2020 is a new year with new challenges for supply chain professionals. As we see it, supply chain executives’ biggest challenge in 2020 is to keep their double-digit supply expense savings machine humming. Since it is common knowledge that price and standardization savings are slowly disappearing, the only vineyard that we see left to harvest in new supply expense savings is to eliminate the waste and inefficiencies in your supply streams. This can give you another 7% to 15% in supply expense savings in 2020 for your efforts. To give you a head start on these new and better savings in 2020, the following are three ways to reduce waste and inefficiencies within your supply chain expenses:

1. Trend, Track, and Analyze All Supply and Purchased Service Spend Anomalies: Why would one nursing unit utilize 55.3 exam gloves per patient day, while another identical nursing unit utilizes 30.2 exam gloves per patient day? This is a 45% variation and both units are using the same products at the same price. These are the types of questions you need to ask as you trend, track, and analyze anomalies in your supply spend. The answers will lead you to savings!
2. Benchmark Your Supply and Purchased Service Spend in the Search of Superior Best Practices: The definition of benchmarking is “the search for best practices that lead to superior performance.” This is how you get better than just good and uncover waste and inefficiencies in your supply streams.
3. Analyze Your Year-Over-Year Supply and Purchased Service Spend for Changes in Velocity: A big tip-off that you have a wasteful or inefficient practice is if you uncover wide swings (year-over-year) in volumes with specific commodities. This is because organic change is incremental, not dynamic.

It is also important to recognize that reducing the waste and inefficiencies in your supply streams by employing the above tactics isn’t a one-time event, but a never-ending journey. It’s like picking weeds in your garden; your job is never done. Yet, the rewards of doing so are not only generating new and better double-digit savings but it enables you to plug the holes in your leaky bucket.

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