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That Value Analysis Was Developed Back In the 1940's After World War II as a Way to Find Lower Cost but Higher Quality Alternative products and methods. This was Due to the Lack of Material Resources At The End of The War.

Savings Beyond Price -Weekly eNewsletter - May 3, 2011

Robert T. Yokl
President & Chief Value Strategist
 

Does Just-in-Time Still Make Sense?

Just-in-time inventory management was and is a big success story for thousands of healthcare organizations, but does it still make sense?  Based on the experience of thousands of companies over the last few years and even before the Japanese earthquake and tsunami that has disrupted global supply lines in a big way, it does make sense, but it’s vulnerable to disruptions. That’s why most companies are modifying their just-in-time philosophy and practices to be more practical.   

Just-in-time works in the perfect world where there are no lead times, hording, transportation snafus, earthquakes, tsunamis, hurricanes, tornados, wars or conflicts.  A perfect example of this truism is our own automobile manufacturers who can’t build cars because of a shortage of parts from Japan. This problem is acerbated by suppliers fearing getting stuck with unsold goods if their customers change their buying patterns, so they keep their inventories at a bare minimum without any safety stock.

What smart companies are doing to hedge their bets are: (i) building a buffer stock on their critical items, (ii) sourcing additional suppliers for must have items, (iii) guaranteeing their suppliers a set amount of volume for three months, and (iv) warehousing safety stock off-site on essential items to ensure quick availability in disasters or manufacturers delays.

All of this might seem theoretical to us who are in healthcare, but just look at the chaos in our hospital’s drug supply chain. Over the last few years drug manufacturers have had major shortages in critical drugs (cancer, anesthesia, cardiac, etc.), almost weekly, due to manufacturing glitches or political correctness that has actually become life threating to thousands of patients.

So if you want to avert major shortages and disruptions to your supply chain, maybe it’s time for you too to modify your own just-in-time philosophy and practices. Remember, almost all healthcare supply chain best practice have been borrowed from industry, so don’t ignore this warning before a disaster or a supply chain disruption comes calling in your neck of the woods or urban environment.

Warmest Regards,

Robert T. Yokl
Chief Value Strategist
Strategic Value Analysis® In Healthcare
Bobpres@strategicva.com
1-800-220-4274

Your Partner In Savings Beyond Price™,

P.S.  To get more ideas about how to increase the value of your VA program, you might want to consider investing in our “Ultimate Value Analysis System”. This is where we reveal all of the little known secrets of the best in class VA programs that we have worked with over the last 24 years.

 

 

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