Knowledge is Power if You Enhance Your Supply Chain Expense Data to Produce Meaningful Metrics

Robert T. Yokl

Data in and of itself is useless, but if enhanced with clinical, financial and supply chain information to produce meaningful metrics it can become a powerful tool to uncover savings opportunities, quality and safety defects and even predict events in your supply chain streams that you would want to know about.  

Wouldn’t it be great to see all of your supply chain expense savings opportunities (price, standardization and utilization) all at one time? Wouldn’t it be great if you could pinpoint quality and safety defects in your supply streams before they become acute? Wouldn’t it be great if you could predict which costs (not price) are going up on specific commodities that you have purchased? Yes, all this is possible if you enhance your supply chain expense data to produce meaningful metrics. We like to call this effect supply chain radar; being able to see everything that is going on in your supply streams automatically, scientifically and organically. 

In my opinion, an even bigger benefit of enhancing your supply chain expense data to produce meaningful metrics is to validate that the savings you are reporting to your management are really hitting your healthcare organization’s bottom line. Or, it now gives you the ability to discover the change you have made is actually costing your hospital, system or IDN more money – not saving it. Unfortunately, it’s been my observation that 18% to 35% of the time savings that are reported just don’t happen and oftentimes actually increases a healthcare organization’s expense category.

You don’t want the embarrassing situation I have described to ever happen to you as it did to a supply chain director who was called into his CFOs office to explain why his new wound care contract was costing his health system more money than a prior contract that the supply chain director touted as saving even more money for his system. By the way, this director didn’t have an explanation on why this increase happened until he questioned his nursing staff and found a value mismatch (lower cost products available, but not used) that was causing this utilization misalignment. The lesson here is that this supply chain director wouldn’t have been caught off guard if he was on top of his game with enhanced data and meaningful metrics!

Datamining to uncover your next big savings opportunity beyond price is mission critical for every supply chain department. However, this can’t be accomplished without enhancing your data to produce meaningful metrics, since these new savings beyond price are now hidden from your view. More elusive price savings isn’t the answer to this challenge.

There are very few, if any, healthcare organizations that aren’t enhancing their data to produce meaningful metrics to reduce their readmissions, cut their lab tests, reduce their length of stay, and improve emergency turnaround time, etc. So why should supply chain be any different? It is now time for supply/value chain managers to heed this call for more organized and scientifically enhanced data to produce meaningful metrics to improve their supply chain operations (labor and non-labor). It’s the supply chain of the future…now sprouting right before your eyes!