June 11

Six Areas Where You Will Discover Savings at Every Point of Your Supply Chain Operations


There was an old story about a person who was always looking for gold in all the wrong places, until to his surprise, he found a mother lode right in his own back yard. It’s the same with supply chain management. Too often, supply chain leaders look for savings in all the wrong places, when there is gold to be mined right in their own back yard. Here are six areas where you can discover these savings at every point of your supply chain:

1. Distribution: I haven’t seen a distribution department that couldn’t become more productive, speedier and more customer focused. All you need to do is survey your customers to discover where you need to improve your operations.

2. Warehousing: Excess inventory costs your healthcare organization money (i.e., holding cost) if it is just sitting there not being used. That’s why you need to increase your inventory turns until they have, at minimum, reached 24x annually.

3. Central Sterile Supply: Instrument breakage, loss, and repairs is an easy area to reduce your CSS expenses. This is because generally, no one is really focused on this operational area of central sterile supply.

4. Transportation: Too many hospitals, systems and IDNs still think they can’t reduce their inbound and outbound transportation cost, when nothing can be further from the truth.  On average, freight management services have averaged 30% to 50% savings per shipment.

5. Purchased Services: This is an area of supply chain operations that’s still not universally managed by supply chain management. By centralizing, bidding, and then managing your purchased service contracts, you can save 11% to 18% on your purchased services budget.

6. Utilization Management: Believe it or not, the utilization of your products, services, and technologies represents 86% of their lifecycle cost. Therefore, if you are only focused on price and standardization (the tip of the iceberg) you are leaving your job half done. Don’t overlook this goldmine of savings for your healthcare organization.

The point of this article is that supply chain savings are right in your own back yard. All you need to do is take your blinders off and look for them.


If you are looking for innovative VA and Utilization Tools, please sign up for a no cost, no obligation demonstration to see how you can take your program to a whole new level.


css, expenses, healthcare, hospital, IDN, lifecycle cost, products, purchase services, services, standardization, sterile processing, supply chain, system, technologies, utilization management

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