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Why Measure CEO Supply Chain Engagement?

By , SVP CHC Supply Trust April 11, 2022 Financial Performance, Hospital Turnaround, Supply Chain

CEO involvement critical to optimizing performance.

It’s common knowledge that supplies often comprise 25 percent or more of a typical hospital budget. Compared to larger institutions, community hospitals with less buying clout might see an even greater percentage going to supplies.

Considering the business-critical nature of the supply chain operation, CEOs are advised to compare their organization’s supply chain to other similar facilities while educating and collaborating with their materials managers to make educated decisions and positive changes.

When CEOs aren’t actively engaged with their supply chain operation, potential savings and other benefits might be missed.

Questions to measure CEO supply chain engagement

These questions can help assess a hospital CEO’s commitment to supply chain optimization.

Does the CEO understand supply chain operations?

An engaged CEO must understand supply chain operations well enough to know why changes will drive organizational efficiency and cost savings.

Does your material management executive have a strong supply chain background and education?

The supply chain is more complex than ever, and supply chain leaders need formal education, significant experience, or both. Attracting and retaining qualified talent, supply chain management leadership needs to be a valued career path within the organization. Increasingly, these individuals have a place on the executive team.

What is your hospital’s current GPO relationship?

It’s important for the CEO to understand the purchasing process at a high level. Ask what contracts are in place, how often are those contracts reviewed and what selection criteria are used. Also find out if the prices your facility pays are competitive and purchased through established contracts.

If your team is managing relationships with several group purchasing organizations (GPO) as well as supplemental independent suppliers, consider the manpower time required to individually handle purchasing research, contracts and other supply-related work in-house. Ask how much time your team could save by working with one preferred provider.

Does the CEO set and review metrics and benchmarking so that all hospital leaders understand their role in optimizing the supply chain?

Conduct external benchmarking to understand where you stand. Otherwise, it’s impossible to set goals for improvement. A CEO needs to push for a supply chain benchmarking and best-practice analysis—and personally review the results.

Does the hospital CEO stay current on supply chain technology enhancements?

As long as supply chain management remains a black box to the CEO, deficiencies will likely occur. Understanding the latest supply chain practices, technologies and trends helps CEOs evaluate the performance of a supply chain executive and a GPO. This knowledge also enables CEOs to evaluate the business case for new technology.

Are supply chain implications considered during strategic planning and new initiative development?

Supply chain expertise should be central to planning efforts. CEOs, if fully engaged, demand that relevant business planning and negotiations anticipate and explicitly address important supply chain ramifications.

There are many barriers to optimizing the supply chain. In many hospitals, resource and manpower shortages make the process seem overwhelming or insurmountable. In some cases, powerful physicians or other leaders with specific supplier preferences may block the evaluation of alternatives. Other times, long-term GPO relationships may have inherent inertia that prevents an unbiased review of the alternatives.

No matter where your hospital stands today, CEO engagement can enhance supply chain performance.

By , SVP CHC Supply Trust April 11, 2022 Financial Performance, Hospital Turnaround, Supply Chain
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