Category Archives: An HSCX Blog

Do we know the path to a high performing Supply Chain?  At HSCX during the past couple of years we have assessed and advised dozens of healthcare supply chain organizations.  All are filled with well-intentioned, hard-working professionals striving to drive value in their organizations.  But most will acknowledge that progress is slower than they would like – and certainly slower than their administrative and clinical organization leaders want and need.  Why is this?  How can we accelerate progress?

Our conclusion from this work is that most supply chain strategies as articulated by supply chain organizations are not sufficiently clear, comprehensive, nor understood by the customers (the buyers) of the supply chain services.  Relatively few clinicians understand the workings within the black box of the supply chain.  They just want the best products easily accessed and, increasingly, within budgetary envelopes.  And surprisingly many administrative owners of supply chain only view supply chain as a necessary cost to be worked down through supplier negotiation.

We know that supply chain is much more than sourcing and negotiation.  And we know that in addition to fiscal management, it has a major impact on clinical efficacy and revenue recognition.  When supply chain managers through awareness of these three drivers build and drive effective and comprehensive strategies towards this end, progress is more likely.  Further, when clinicians and administrators understand and are aware of these drivers, they are much more likely to support and facilitate efforts by the supply chain organization.

In next month’s blog, we’ll tell you how to build supply chain strategies for higher performance.

Supply Chain Management (SCM) comprises one of the most diverse set of functions in an organization.  Consequently, it is not surprising that in healthcare organizations, supply chain decisions, more than most other hospital processes, impact almost every other function in a hospital, influencing clinical outcomes and financial performance.  With such breadth and responsibility, layered on top of multiple conflicting objectives specifically in healthcare, managing the supply chain can be challenging and overwhelming.  For leaders keeping their eyes on a multitude of initiatives, functions in a highly dynamic environment requires knowledge, agility, and expertise.

In our consulting, strategy and operational work at HSCX (www.hscxi.com) we have observed 12 specific keys to leadership in supply chain management.  By developing these capabilities, managers can assure themselves that they are addressing the right priorities while keeping their eye on the right ball.

1. Highly committed executive leadership teams which understand and appreciate the value achievable from supply chain management
2. Physicians and other clinicians actively engaged in supply chain management decision making together with open and trusting collaborative relationships between clinicians and SCM staff
3. Supply chain processes designed from Procure to Pay
4. Category Management focus in sourcing
5. Effective and pervasive use of analytics to support decision-making
6. Large majority of spend under contract (both GPO and hospital negotiated)
7. High compliance of purchases to contracts
8. Greater utilization of standardized products
9. Effective and well-organized value analysis team process
10. Product identification through GS1 standards and UDI
11. Optimized distribution networks and capabilities
12. Targeted performance management

HSCX works with hospital administrative and clinical groups focusing on these priorities and to help develop organizations to ably leverage them.

Supply Chain Management has fast become a critical function in healthcare.  Given that supply chain costs are approaching 25% of the total hospital budget today, it is no wonder that there is increased attention to this hospital function.  But even more importantly, evidence shows that product selection and use have a significant impact on patient outcomes. High functioning supply chains directly drive high organizational performance and conversely, supply chain failures can cripple a hospital.  Consequently, decisions by supply chain managers are no longer just about ordering a required product.  Supply chain decisions also have a strategic impact on the overall performance of a healthcare system influencing quality performance.  For this reason, medical practitioners have an important reason (in fact some might say, a responsibility) to actively participate in supply chain decision-making.  At HSCX (www.hscxi.com) we have been helping healthcare supply chain organizations move from tactical procurement organization to strategic supply chain leaders.

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