The Top 3 Rules to Improve Supply Chain Performance

The Top 3 Rules to Improve Supply Chain PerformanceWe’ve discovered something elementary.  There are three critical building blocks of healthcare supply chain efficiencies and savings.

Healthcare organizations need to make it easy to:

  1. Find the products users need
  2. Compare items for purchase or standardization
  3. Control the “best” product choice at the point of decision

By automating and simplifying these three processes, you drive faster, more educated decision-making—choices that support your organization’s business objectives and savings goals.

Let’s learn how to improve your healthcare supply chain performance.

  1. Make it Easy for Users to Find the Product They Need

Finding a specific medical-surgical product can be daunting:

  • 30% of buyer systems are inaccurate [i]
  • Item Masters can have 100,000+ products
  • 40%-50% of purchases aren’t captured—often costly devices and implants [ii]
  • Searches must use exact terms and characters sequence

To target searching, your organization must first improve data quality and visibility, and then make that information more easily accessible to everyone in the organization:

  • Incorporate and normalize internal and vendor product and purchase data
  • Expand attribution fields to use full words and nicknames; add product photos
  • Broaden information access through the cloud
  • Harness intuitive, consumer-like engines to speed searching and discern exactly the product needed
  1. Make it Easy for Users to Compare Items for Purchase or Standardization

Requistioners lack the comparison information they need to make the correct choice at the point of procurement.  Value analysis teams can’t easily make apple-to-apple comparisons.  Why?

  • Searches don’t rank product choices by preference or relevance
  • Functional comparison must be done manually in spreadsheets
  • Users can’t see the last price paid

The key is to automatically organize and align item attributes so products can be easily compared by functional similarity—before decisions are made.

  • Align extended attribute/description fields for more accurate, granular comparison
  • Automate grouping of functionally similar items to simplify comparison and functional equivalence definition
  • Promote best value/price item compared to other choices and suggest savings opportunities
  1. Provide the Structure and Smarts to Control Purchases—Before they Happen

There are very few controls in place to prevent off-contract and out-of-system purchases.  This happens for many reasons:

  • Requisitioners lack concrete information at the point of decision
  • Rogue departments and purchasers buy direct from vendors—especially for physician preference items (PPI)
  • It’s virtually impossible to correlate the exact contract line and price from the millions of possible combinations—esp when tier-level contracts require purchases from multiple categories

To better direct purchasers to the preferred item and price, your organization needs to define your company’s product “rules” and enforce better choices:

  • Implement an online buying environment that requires all purchases come through it
  • Rank your product and contract preferences for value and pricing; i.e., create a “product formulary”
  • Guide buyers to the preferred choice at the time of purchase

Today’s SaaS, formulary-based procurement systems can provide the concrete information and structure you need to ensure every purchase is on-price, on-contract and on-target to your organization’s financial goals.  And the savings can really add up.

Learn more about how McKesson Strategic Supply Sourcing addresses these issues.  Watch our newest video.


[i] AHRMM;

[ii] McKesson/Meperia Internal Data from 100 Customer Procurement Data Assessments