We are often asked to build into our value analysis software products metrics, like cost per adjusted discharge per new product request, that to us don’t seem to have any bearing on the success of a healthcare organization’s value analysis program. That’s why it is crucial to the success of your healthcare supply chain operations to measure what matters and eliminate measurements that have no impact on your supply chain performance.
Measure, Monitor, and Manage Your Key Results, Not Activities
To this end, I would suggest that you adopt a management measurement system called OKR (Objectives & Key Results) that was developed by the late Andy Grove, former CEO, Intel Corporation, to re-engineer how you measure, monitor, and manage your supply chain operations. The OKR concept is pretty easy to understand; adopt significant, concrete, actionable, and inspirational objections for your supply chain operations and then quarterly measure and monitor your key results against benchmarks. Regrettably, many supply chain leaders are measuring activities (e.g., requisition processed, purchase orders cut, exchange carts restocked, etc.) that don’t bring about the key results you should be looking for in your supply chain operations.
Examples of Healthcare Supply Chain Objectives and Key Results
To give you a feel of what supply chain objectives and key results might look like for your organization, I have listed below a few examples:
- Value Analysis Objective/Key Result: Reduction in the number of new product requests by 25% in 12 months.
- Inventory Management Objective/Key Result: Increase warehouse inventory turnover to 26x annually.
- Category Management Objective/Key Result: Reduction of clinically unnecessary feature-rich pacemakers by seven percent in eight months.
This list could be expanded, but I think you get the idea. You need to align your hospital supply chain objectives (specific and time bound) with a key result tied to an operating metric. Then, on a monthly/quarterly basis review your objectives against your key results and make mid-course corrections, if necessary. It’s the best way to keep your team on track.
OKR Is The Ultimate Accountability Factor
Everyone is talking about accountability, but how do you make this happen? The best way we know of is to implement an OKR system that is measurable and verifiable. Remember, it not an accountable key result unless it has a number tied to it. This tactic will reinforce accountability in your supply chain organization, since your managers will either meet their key results or they won’t. There are no grey areas to negotiate future outcomes with this OKR system. It all comes down to being accountable, being responsible, and being answerable for your objections & key results.
(Source: Measure What Matters: How Google, Bono and The Gates Foundation Rock the World With OKRs by John Doeer and Larry Page)
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