Healthcare companies have been throwing around the term, ” strategic sourcing” for years to mean just about anything involved in the procurement process. In reality, this term is all about analyzing all of your sourcing options to continuously improve spend management and service quality. Existing models of health care are becoming economically unsustainable and new ways must be found by healthcare companies to control costs.
Strategic sourcing best practices are a particularly effective way to lower costs rapidly. But strategic sourcing isn’t just identifying cost-effective suppliers. You must consider adopting best practices and more procure-to-pay alternatives to receive the full benefits of strategic sourcing. A whole new “mindset” needs to be developed to optimize sourcing strategies beyond just investigating, bidding and negotiating with a new supplier.
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Strategic Sourcing Best Practices for Healthcare Companies
Strategic sourcing best practices #1: Create a portfolio of strategic alliances
Local or regional regulations play a critical role in defining the types of alliances a procurement group can consider. The European Union, for instance, requires public-sector companies to tender all contracts above certain amounts, making it difficult for healthcare companies in the EU member countries. However, companies can find ways to establish alliances to capture savings. They can put out a tender to expand their purchasing and logistics efforts apart from developing internal procurement capabilities, including strong ties with clinicians to capture a range of new savings opportunities. Not only this, healthcare companies can expand their efforts into product design and co-develop surgical products.
Strategic sourcing best practices #2: Identify technology that works for you
Technology is vital to enable and sustain new processes and capabilities in any industry. The Affordable Care Act is a major factor driving healthcare companies to expand the use of technology. New and emerging technologies can point new and innovation capabilities. Established healthcare companies are scanning the horizon for new technology to meet new regulations, better track, and account for products, and to enhance the speed of the production process. Leveraging technologies can help companies to gain end-to-end visibility across all parties in the supply chain. Also, visibility technologies can improve the sourcing process, thereby lowering inventory costs, enhancing service to customers, improving tracking and alerts, and reducing delivery times.
Strategic sourcing best practices #3: Shift contracts under the supply chain function
Procurement teams often negotiate significant potential savings during the sourcing process, but they fail to realize those savings. One of the key reasons includes a failure to communicate contract terms and monitor contract compliance. Many companies are shifting the responsibility of contract management from purchasing, legal, finance, or operations to the supply chain organization. This ensures the contracts are collected and maintained in a central repository. The migration of contract management function allows healthcare companies to effectively leverage the companies spend, especially in the area of services.
Inability to manage contracts can impact the profit margins of healthcare organizations. Give SpendEdge a try by requesting a free demo of our procurement platform to identify strategic sourcing best practices and gain exclusive access to 1000+ reports.
Strategic sourcing best practices #4: Analyze and minimize risks
Lack of a robust process to identify, prioritize, and mitigate risks is a clear threat to the supply chain. Most healthcare companies do not have a formal supply chain risk management process in place. The healthcare supply chain faces a higher risk than the supply chain in most other industries. Companies must integrate risk-mitigation methodologies into their sourcing decision process. It includes identifying risk elements, determining the probability of the risk event occurring and analyzing the dollar impact on the sourcing process if the risk event takes place.