Provider Post: improving supply chain performance

Introducing the chief supply chain officer

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The chief supply chain officer is responsible for creating savings within the entire enterprise supply chain and aggressively pursuing cost-saving opportunities with supplier channel partners.

Consolidating supply chain functions

Health care organizations can reduce costs by consolidating disparate supply chain functions.

Then: Traditionally, the health care supply chain comprised medical-surgical chains and pharmaceutical product chains.

Now: Today, the enterprise supply chain is actually 10 distinct supply chains.

 

The enterprise supply chain: traditional and progressive views

EY - The enterprise supply chain: traditional and progressive views

 

Then: Typically, the organization’s supply chain executive manages most of the medical-surgical supply chain and procurement responsibility while influencing other purchasing-related decisions, such as those for administrative supplies and capital equipment.

Now: This role is shifting. Progressive provider organizations — particularly large, integrated networks and academic medical centers — are creating the role of "chief supply chain officer," embracing strategic sourcing and procurement initiatives from other industries and centralizing the procurement responsibilities for all enterprise supply chains within this emerging role.

Chief supply chain officer responsibilities

The chief supply chain officer is responsible for creating savings within the entire enterprise supply chain and aggressively pursuing cost-saving opportunities with supplier channel partners — primarily manufacturers, distributors and group purchasing organizations (GPOs). Negotiation skills are key, as each of these channel participants is seeking to increase total value as well as market share for its products and services.

Manufacturers are initiating direct business relationships with major provider organizations. Distributors went to a larger share of the provider supply spent through lower-cost product alternatives and high-value services.

GPOs are seeking to expand their services to offer their provider members more value beyond savings in contract acquisition price.

In a recent focus group with chief financial officers from leading provider care organizations convened by EY, participants noted that they are looking to their supply chain executives to "provide leadership in harvesting all possible savings" from their supply chains.