Cost management 101 will tell you that you can improve your pricing on any commodity if you standardize on one product, service, or technology throughout your hospital or healthcare organization. The problem with this theory is that it assumes “one size fits” all circumstances, which couldn’t be further from the truth.
Standardization vs. Customization
Why do you think departments buy off contract? Is it because they like being mavericks or that their standardized contract product, service, or technology doesn’t meet their exact requirements? We see this “off-contract buying” all the time when we are reviewing a healthcare organization’s purchases. For example, we will see that 80% of a hospital, system, or IDN’s exam glove purchases are on contract, but 20% are bought off contract because the standardized exam glove doesn’t have the strength, sensitivity, chemical resistance, or other attributes many of their customers require to do their work.
If you investigate your off-contract buying further you will discover that your standardized product, service, or technology’s specifications are too high or too low for many of your department’s chores; therefore, you are wasting money providing a standardized glove to these departments. One of our client’s materials managers found that one of his units only needed one sterile glove to get their job done, so that’s what he provided them at half the cost of providing two sterile gloves for every procedure.
For these reasons, it is more cost effective, prudent, and realistic for supply chain managers to provide each of your healthcare organization’s departments with an “exact fit” on their products, services, and technologies to meet their exact requirements at the lowest possible cost. Otherwise, you will continue to have off-contract buying, unhappy customers, and higher-than-necessary commodity costs.
Aim for Customization, Not Standardization, For 100% Customer Satisfaction
What good is a standardized commodity contract if all your departments won’t or can’t buy under it? This is a false economy! A much better approach, which we call customization, is to provide 100% customer satisfaction by going that extra mile to satisfy the needs of each one of your customers, not just high-end users.
This old-line standardization philosophy is the reason supply chain managers have gotten a bad name (i.e., we only care about price, and not quality) among clinicians. If you want to be a hero at your healthcare organization, aim for customization, not standardization, for 100% customer satisfaction. It will still save you hundreds of thousands of dollars in any given year, without the hassle that standardization brings about.