Your prime vendor has data on your spending history and may be able to mine that information for ideas and opportunities.
Predictions for 2019 are all over the news, and it’s no surprise that
healthcare providers are expected to be under continued pressure to
As you look for ways to reduce your total supply chain spend, one of
the questions you may hear is, “Why don’t we just buy direct from
manufacturers and save on distribution fees?” You probably already know
the answer to that: distribution services represent real value in your
supply chain, and duplicating their services internally would increase
other costs for things like staffing, inventory, and space.
So instead, include your distributor in the conversation about how to
cut your total costs. Here are a few ideas that you might want to talk
over with your prime vendor:
- Low-unit-of-measure/just-in-time (LUM/JIT): Most distributors have
programs that allow you to order in smaller quantities, often with
products delivered in totes ready for delivery directly to patient care
areas, rather than in cases or pallets. Talk with your distributor about
whether such a program could allow you to reduce or eliminate storage
areas and convert storage areas into revenue-producing space. LUM also
reduces your inventory levels and therefore your carrying costs, and can
reduce the risk of expired or overstock inventory.
- Emergency preparedness: If you’re holding a lot of inventory in case
of epidemics or other emergencies, talk with your vendor about ways to
reduce this investment. For instance, having an agreement with your
distributor to sequester certain items for you may allow you to have the
safety stock you need without committing the storage space.
- Standardization opportunities: Your prime vendor has data on your
spending history and may be able to mine that information for ideas and
opportunities. Ask for insights on what product lines could be
standardized further, and what the savings opportunities might be.
- Non-acute spend: Ask about ways to work together to drive contract
compliance and standardization in your non-acute locations. Your vendor
can also offer ideas for improving operational efficiencies, keeping in
mind that most physician offices and clinics are short on both time and
- Construction or expansion projects: If you’re planning to open new
facilities or expand existing ones, bring your vendor into the
conversation early. Some distributors have particular expertise in
planning for projects like these and can ensure that the equipment and
supplies you need are ready to install the moment the paint is dry.
- Patient satisfaction: While cutting costs is probably the first,
second, and third item on your to-do list, keeping those HCAHPS scores
up is also critical. Talk with your prime vendor about products and
services that can help. For example, your distributor might recommend
lab tests that deliver fast results and eliminate waiting time, products
that increase patient comfort, or items that create a more pleasing
patient care environment.