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Inventory Management Practices to Get Your Supply Chain Back on Track: Start with Data

by | Jul 6, 2020 | Blog Posts

  1. The year of hard lessons. We learned firsthand that the U.S. healthcare supply chain is a finely connected thread. When something goes wrong – supplies are consumed at unusual volumes, supplies are difficult to obtain, or organizations experience temporary closures and patients aren’t able to receive certain treatments – that thread can break, and putting it back together challenges us all. Providers, manufacturers, distributors, group purchasing organizations, and solution providers must work together to repair and strengthen this fragile system.

Get started today. Taking steps to manage inventory – building in processes that increase control and visibility – is an important component of restarting your business, and also, building a more resilient system.

You’ve heard the phrase “It’s all about the data” for years now, and it’s true. Data is the fundamental building block of robust supply chains. With data, we can identify products, understand quantities, appreciate consumption and usage patterns, and locate items anywhere within our system. Consider data as the lifeblood of your organization.

Now let’s do a quick assessment of your current state:

  1. Do you have a fully functional item master containing every item your organization orders and consumes?
  2. Is your item master data cleansed? Is the data structured and normalized?
  3. Are contracts loaded for accurate pricing?
  4. Have you entered GL codes for every item?

Building your data infrastructure provides visibility to supply ordering, consumption, loss and waste, products you’re no longer using, items still on backorder, on- and off-contract spending, and spend categories, for your single facility or across your entire organization.

Need to make improvements?

If you feel like your data isn’t where it needs to be, get started by building an accurate formulary that captures the supplies most frequently used by your organization, at your best available contract prices.

  1. Make your item master the source of truth, representing the approved products and prices for your organization.
  2. If the data quality is poor, it becomes a barrier to accuracy and automation. Determine the most effective method to help your organization de-dupe, normalize and standardize data, whether that’s using an internal team or an outsourced resource. There are services that can help tackle this challenge.
  3. Load your contracts. You’ll ensure your best contract prices, monitor notifications of contract expirations and do 3-way price matching downstream.
  4. Shift to electronic requisitioning and purchasing, using your item master as the foundation for everything you buy. It’s best practice to create a PO for every purchase, so you can track from ordering through receiving, consumption, and payment, with accuracy at each step.
  5. Use reporting tools to fully understand your organization’s spend, including product categories, spend by vendor, on- and off-contract spending. Track consumption to understand usage for data that will drive your planning processes.

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