We started this blog series with the audacious goal of creating a Better, Faster, Cheaper, Safer Hospital through both proper design and the implementation of A Better Capital Equipment Supply Chain. This particular blog installment addresses the stated goal of “Cheaper.” Just so we’re clear, let me clarify the goal of achieving a “Cheaper” supply chain. When we use the word “cheaper,” we don’t mean to apply the word to the goods themselves, in terms of goods of poorer quality. Rather, we refer to our stated goal of securing higher quality equipment for less money.
This seems like a simple concept, but the challenge is how to know what a good price is in the first place. As simple as it should be to determine, there can be challenges. Prices differ based on the complexities of the equipment’s configuration, geographic market, type of healthcare facility, temporal supplier goals, etc. The good news is that we are here to help you unravel the secrets of strategic sourcing. Even better news, the folks here at Attainia have been talking to professionals in this area, and they know a lot more about the topic than me.
Our preceding blog posting, A Better Group Purchasing Organization, mentioned that the optimal pricing we can achieve is known as the “Best Negotiated Market Pricing.” I think we can all agree that the best is better than all the rest. The challenge we face is knowing how to get the best, or perhaps more realistically, how to get close to the best. I posed the same question to Bruce Rainey, of Scripps Health. In Bruce’s opinion, “Getting the best price is about using the best information to first estimate and next refine your budget, and, then ultimately hone in on the final price with negotiation.” To get there, Bruce uses Attainia PLAN Advanced, the best capital equipment supply chain and construction application on the planet.
Supplier List Pricing Data @ Attainia
Group Contract & Group Buy Pricing @ Attainia
Community Average Pricing (CAP) @ Attainia
First, Supplier List Pricing is an important tool for getting a coarse estimate for a project or replacement budget that has one too many items. Second, as the project and budget matures, Group Contract Pricing helps to fine tune the dollar amount, supporting even greater budget accuracy by closing in on the final price. Third, throughout the process of quote analysis, Community Average Pricing (CAP) helps to assess how pricing compares to variables in the Market. The last step is price negotiation, and this is done by either a Provider or a Strategic Sourcing Firm.
We could spend quite a bit of time talking about how much better price should be than some reference price to make it the best, and even how to get a right reference price in the first place. Or, we could simply follow some sound professional advice. To make life easy, I contacted executives of several Strategic Sourcing Firms:
Equipment Management & Technology Solutions
Littleton, Colorado, United States
+1 720 875 0505 x9922
Skokie, Illinois, United States
+1 847 637 5646
Turner Medical & Research Solutions
Brentwood, Tennessee, United States
+1 615 277 1735
According to the collective wisdom of these professionals, the best pricing that can be negotiated at any particular time is dependent on several factors pertaining to the supplier and their products, including:
Market economic conditions
Material cost variations
Product phase-out incentives
Supplier strategic objectives
Strategic Sourcing Firms collectively identify their skills as: knowing the capital supplier’s structure and organization, including its sale’s team and management; both recent and past history of the supplier’s pricing; the difference between capital products; and finally how to create a competitive pricing environment for capital equipment.
Providers who augment their purchasing arsenal with Strategic Sourcing Firms contend that the inclusion of a third party Strategic Sourcing Firm can provide both pricing concession and product upgrades to an equipment purchase. In the case of construction projects, the provider often hires Strategic Sourcing Firms because the additional project purchasing workload overwhelms their staffing for routine capital purchasing. The value proposition seems straightforward, as these firms’ income is typically tied to achieving a savings greater than the quote received by the Provider.
It is my belief that every provider probably could or should avail themselves of such a low-risk cost saving process. I certainly believe that some provider cultures would not welcome an outside firm improving on their own performance, and my guess is that it takes a Provider solely focused on maximizing profit to partner with a Strategic Sourcing Firm.
For information about Strategic Sourcing Firms, please write us at firstname.lastname@example.org