As much as 50% of the cost a hospital or IDN pays for traditionally sourced hospital medical supplies can be attributed to the middlemen taking profit. Here are some top needs and metrics for high value global sourcing programs capable of generating significant savings and quality improvements.
Top needs for global sourcing program development prior to launch
IDNs, hospitals and large group practices should ensure their global sourcing programs for medical supplies include: 1. the right products, 2. outstanding quality control capabilities of the team and facilitators, and 3. capacity for receiving or identification of a willing 3PL or existing distributor partner. Read more about how to set up a global sourcing program for success prior to launch.
Top indicators of the effectiveness of global sourcing programs for hospital medical supplies.
1. Overall savings – start with the bottom line
You should expect savings levels from your global sourcing program at a minimum of 15% on medical commodities annually when compared to traditionally sourced, distributor branded products.
2. SKU reduction & consolidation
On a 100 product program, eliminating 20 SKUs is a solid goal. As part of this standardization you’re saving on the items themselves, tracking only one item instead of three or more, all the while saving space.
3. Program expansion
If your global sourcing program is working well, it is worth expanding. One of the nation’s largest hospitals (more than 2,500 registered beds), initiated a global sourcing program in 2013 with 20 products generating savings of 32% across the program. The program doubled in size in 2014 to 50 products and $1 million in savings on a $3 million spend.
IDNs, hospitals and large group practices in the early stages of a global sourcing program for hospital medical supplies should anticipate expanding these programs by 50% per year for the first three years assuming overall savings rates of more than 20%.
4. Fill rates
If your hospital’s receiving areas or warehouses are not capable of supporting large containers, enlist other existing suppliers, distributors or 3PLs to provide some support. Done right, this has the capability of smoothing the transition for globally sourced items in a nearly seamless fashion for the end-users. Your global sourcing partner and program should be providing annual fill rates at 99% or better.
5. Growth in number of products receiving clinical enhancements
Outstanding global sourcing programs should improve clinical utility and quality at the same time as reducing costs. These improvements range from color changes on products for department cost assignation and tracking to clinical improvements in products including thermometers, hot packs and more.
Inclusion of the clinical team in product development and improvement should be part of any global sourcing program. And the number of products receiving clinical enhancements within the program should increase year-over-year. Can you say that about your current supply partner?
Are you ready to put global sourcing of hospital medical supplies to work? Let us help you determine your readiness and put the wheels in motion. Contact info@aspglobal.com or call 404-696-6999 today.
