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Providers need to think, plan and operate strategically more than tactically

The provider CEO said that as a provider, in order to maximize the goals and objectives of your organization you must make sure you include materials management and the supply chain function in all phases of your IDN or hospital strategies. In fact, he further stated that he has now added the supply chain to his personal management business objectives (MBOs).

In other words, he has moved the supply chain function "from the basement to the boardroom." It was music to my ears. Bravo!

I believe there is no more important segment to which this applies than capital equipment.

Too often materials management is relegated to the tactical/transactional process and not included in the strategic process. With the economy being so challenged resources will continue to diminish. And with the uncertainties as to how a new president will approach healthcare come January 2009, providers who only use materials management to execute a transaction do so at their peril.

Having pointed a finger at providers I also caution suppliers of capital equipment that only working with materials management at a tactical level, without knowing the IDN or hospital’s strategy regarding products and services, is also done at your peril.

To further highlight this point, I sat with a representative from a capital equipment supplier who was attending the "IDN Summit" to learn for the first time how to approach IDNs. To me this was unbelievable, but unfortunately, not unique. Capital equipment suppliers have lived in the tactical/transactional world for so long that it might be said they are trying to avoid living in the providers’ strategic world.

To be fair there are many capital equipment suppliers who are extremely proactive regarding their strategic approach to their provider customers, but at many key supply chain meetings capital equipment suppliers can be few and far between.

It may be that the rules of engagement regarding capital equipment between providers and suppliers are perceived to be either too restrictive or just misunderstood.

It is also true that too often the provider representatives attending such meetings are either not at a level to effectively discuss the capital equipment segment or they are there to just discuss pricing on other product segments. In the worst case it is someone who will just be able to "pass along your business card."

If I were a capital equipment supplier approaching an IDN at a meeting and finding that their attendees are only versed in pharmaceutical and medical/surgical supplies I would have to question my future participation.

A supplier has to make an investment decision when they participate at industry meetings, and one of the most important things to consider is who will be there from the provider side. If there are no provider executives who are able to address capital then the meeting return-on-investment for capital equipment suppliers would be minimal.

So here we are in the classic Catch-22. If the provider attendee has no value to the capital equipment supplier, then the capital equipment supplier reduces or eliminates participation in what could be a valuable supply chain meeting.

However, if a provider attendee is prepared to speak to capital equipment suppliers on a strategic level as well as a tactical level, both sides win.

Maybe a well-placed phone call from the supplier to the provider prior to the meeting to define who will attend would be in order – or even better to request proper representation.

As an independent strategic planner seeing real opportunity squandered has certainly reinforced my views on the absolute need for a provider’s supply chain function – and chief executive – to command a seat in the boardroom.

Does yours?