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5 best practices for new supply chain leaders

Supplies and equipment touch almost every department in a hospital from the IT team to revenue cycle, biomed engineering, facilities and accounting

One of the most daunting challenges any newly appointed supply chain leader will face is establishing direction. If you are fortunate enough, you will inherit a strong team, defined processes and a clear vision for the department. However, often new leaders are hired because the department lacks one or more of these integral components. The five best practices listed below, gathered from my 16 years of experience in supply chain will get you moving in the right direction:
1. Efficiency maximization and inventory optimization
First, take a look at your materials department. Are they ordering the right quantity of materials to match the volume used by the hospital staff without compromising patient safety? Are they getting supplies to the appropriate departments on time?
Next, you should minimize excess inventory. This has a direct and easily seen impact on the bottom line. If you were promoted to a leadership role from the materials department you likely have a good feel for what is going on. If not, partner with someone on the materials team to get a quick understanding of what is happening in this department and what changes, if any, need to be made.
2. Examine purchasing controls and automation
Secondly, look at purchasing controls and automation. Spend time reviewing and/or creating current policy and procedures for purchasing best practices such as authorization of orders. If your hospital(s) are still using Excel to create purchase orders, you need to immediately implement an electronic system for orders. Most MMIS and ERPs have the capabilities for electronic purchase orders (POs) and will require you to begin inputting your inventory electronically which is essential for inventory management. Most vendors accept electronic data interchanges (EDI) so that you can begin tracking your orders, confirmations and deliveries electronically.
It is best to begin investigating the requirements and cost of implementing EDI immediately. As you capture data electronically, it will prepare you for a future challenge – building and maintaining a clean Item Master file; do not do this immediately though, as it will take some buy-in from leadership. Future automation should include bar coding, electronic invoicing and payments to vendors and potentially integrating supply dispensing.
3. Creating an approach for strategic sourcing
The next move is to create an approach for strategic sourcing. As more and more purchasing responsibilities fall under supply chain, you need to get a clear direction on what your department is responsible for. Traditionally, purchasing departments only handled capital and consumables, but over the years this has expanded to include IT, purchased services and service contracts. Understand what role you want your group purchasing organization (GPO) to play and understand what local agreements are already in place. Determine what flexibility you would like to have when it comes to GPO compliance. It may take some time to understand trends with GPO compliance, so there is no need to make this decision early on. 
For areas that you lack expertise or need additional market overview, a 3rd party can provide insight
4. Gaining buy-in from clinical teams and senior leadership
Fourth, gaining buy-in. Supply chain is a customer-facing department and your customers here are the hospital staff. The clinical team will rely on you to provide the equipment/supplies/services needed for patient care while the senior leadership needs you to reduce costs along the way. This can lead to supply chain departments recommending changes that might not be widely accepted. However, this issue can be mitigated by involving clinicians in the decision-making process.
Product committees and/or value analysis teams should already be in place, but if they aren’t, begin forming these teams to promote collaboration. Include all appropriate stakeholders in these groups and ensure clear lines of communication. I have found that when nurses and physicians understand the goals and strategies of the supply chain team, they are open to change.
As for senior leadership, many times they tend to forget how linked supply chain is to other departments. To add or change inventory impacts the clinical staff who have to use the product but also charge it back to the insurance provider which impacts the revenue cycle who needs to update their charge masters. Supplies and equipment touch almost every department in a hospital from the IT team to revenue cycle, biomed engineering, facilities and accounting. Taking on a huge project like an Item Master cleanse requires multiple departments and senior leadership sponsorship. These types of initiatives should become a key component to the organization’s strategic planning.
5. Gathering data
Fifthly, it is necessary to gather as much data as possible. Capturing or acquiring data will allow you to get an understating of trends and opportunities within your department. Because many supply chain departments are measured on savings, they partner with 3rd parties to help provide business intelligence on savings opportunities on capital, consumables and purchased services engagements. 
Tracking and publishing achieved purchase savings will allow other departments and leadership to understand the progress you’ve made. Use dashboards to help ensure your pricing is level and you are not paying multiple prices for the same supplies. Find a centralized location for tracking active purchased services projects and savings identified and achieved for completed projects as well as active RFPs. The ability to access data analytics is a key component to ensure you are meeting your department’s objectives.
By putting these best practices in play early or re-establishing them during your tenure as a supply chain leader, you are building a foundation for which you can take your department to the next level of supply chain optimization while creating and executing your department’s vision.

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