Predictions for 2019 are all over the news, and it’s no surprise that healthcare providers are expected to be under continued pressure to reduce costs. As you look for ways to reduce total supply chain costs, one of the questions you may hear is “why don’t we just buy direct from manufacturers and save on distribution fees?” You probably already know the answer to that: distribution services represent real value in your supply chain, and duplicating their services internally would increase other costs for things like staffing, inventory, and space. So instead, include your distributor in the conversation about how to cut your total spend. Consider whether services like low-unit-of-measure or just-in-time distribution would allow you to reduce inventory and convert storage space to revenue-producing areas. Ask for data on your operations that could guide financial or operational decisions.
Keep in mind is that while the supply budget is always under pressure for cuts, there are many other areas where providers can save. New research indicates that inappropriate clinical variation is both a key cost driver and is not on the radar for many healthcare executives.
So, when you decide it’s time to streamline your operations, remember that your distributor can help.