Supply Utilization Cycle Management Essentials

The term Supply Utilization Cycle Management is defined as, “All supply chain, clinical, and operational practices that contribute to the over-utilization of products, services, and technologies.” It includes the management and control of the entire lifecycle of every product, service, and technology employed at a healthcare organization.  

However, for this definition to be meaningful to you and your supply chain staff you will need to understand these three Supply Utilization Cycle Management essentials:

1. You need to track, trend, identify, and then investigate the products, services, and technologies that are increasing (month-to-month, quarter-to-quarter, or year-over-year) in their velocity that aren’t caused by an increase in patient load.  

This process is more difficult than you might think, since traditionally your department heads and managers will tell you that the increase you have identified is due to an increase in patient load. That’s why you need to case/procedure/test mix adjust for any commodity you are monitoring, so that your department heads and managers can’t dispute, contest, or ignore your findings.

2. You will need to apply benchmarks and KPIs to measure your healthcare organization’s supply utilization efficiency and effectiveness compared to your peers’. Then, act on this information.

Without applying benchmarks and KPIs to your purchases, you will miss millions of dollars of savings opportunities that are hidden in your data. For instance, one of our Utilizer® Dashboard clients recently discovered, through benchmarking, that they were using 3x more nutritional products than their peers. This fact would have been hidden if they hadn’t benchmarked this commodity.

3. You will need to develop a process to continuously monitor and control the supply utilization of the thousands of products, services, and technologies you are buying annually. 

Some healthcare organizations utilize their value analysis teams for this purpose while others establish a utilization team (our preferred methodology) whose sole job is to monitor and control their healthcare organization’s supply utilization misalignments. It’s your choice, but make sure that supply utilization management doesn’t take a backseat in your supply chain organization.

Supply Utilization Management is here to stay. We predict that it will be a major cost containment tool for healthcare organizations for decades to come. Make sure that you are ready, willing, and able to implement the Supply Utilization Management essentials to up your supply chain department’s savings yields over the next few years.