supply chain excellence stephen tambolas, mpm, cpsm, c.p.m. vp, supply chain & facilities admin
TRANSCRIPT
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Supply Chain Excellence
Stephen Tambolas, MPM, CPSM, C.P.M.VP, Supply Chain & Facilities Admin.
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Conemaugh Health System
• Memorial Medical Center• Tertiary, teaching hospital rated as a Distinguished Hospital (Clinical
outcomes among the top 5% in the nation) by HealthGrades • The only hospital in the state and one of just 15 in the country honored with
HealthGrades Excellence Awards in both the Maternity Care and Women’s Health
• 555 licensed beds and 72 skilled nursing beds • Level 1 Trauma Center / Medstar Aeromedical Helicopter Transport • Level 3 Neonatal Intensive Care Unit • Largest teaching hospital in the region
– Eight medical residency programs – Pharm D. residency – School of Nursing – School of Allied Health
• Conemaugh Home Health is one of the largest agencies in the region
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Conemaugh Health System
• Crichton Rehabilitation Center
• Miners Medical Center– A 20-bed community hospital serving
Northern Cambria County
• Meyersdale Medical Center– A 20-bed designated critical access,
community hospital serving Southern Somerset County
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My Journey
• AGH 1971• Polyclinic 1987• PinnacleHealth 2000• Tambolas Consulting
Group 2002• AHS LLC 2003• SSCM5 Inc. 2005• CHS 2009 present
• CPHM 1985• C.P.M. 1995 (life)• CPSM 2008• Med. Ind. Group - ISM• BSBA – RMC• MPM - CMU• Doctoral Candidate –
Walden University
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What’s the opposite of Supply Chain Excellence?
Un-natural Disasters
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“We should not fear failure; rather we should fear succeeding at something that really doesn’t
matter.”
Modern Translation: Philippians 3:7-14
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Un-natural Disasters
• Price focus • Subject matter limited to
medical commodities• End users rule• Silo processes• Ignoring Balance Sheet• Healthcare only networks• Adopting “Best Practices”
as a Strategy• Failing to acquire or
maintain skills
• Doing it alone• Fear of
failure/confrontation• Lack of communications• Clerical only retreat/Living
in the CZ• Everyone gets along• Failure to Lead• The consultant arrives
and careers abruptly end
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Why Excellence?• 50% higher net margins • 20% lower SG&A expenses (Sales, General & Administrative) • 12% lower average inventories (think - days cash on hand) • 30% less working capital expenses/sales • 2X the ROA (return of assets) • 2X the ROE (return on equity) • 44% higher overall economic value added • 2X return on stock prices (reflecting how outsiders view their
performance) • etc., etc.
Swink, M., Rajdeep, G., Richardson, T., (2010, March/April). Does Supply Chain Excellence Really Pay Off?. Supply Chain Management Review, Vol.14, No. 2, pps 14-21
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How to Sell Excellence• 50% higher net margins • 20% lower SG&A expenses (Sales, General & Administrative) • 12% lower average inventories (think - days cash on hand) • 30% less working capital expenses/sales • 2X the ROA (return of assets) • 2X the ROE (return on equity) • 44% higher overall economic value added • 2X return on stock prices (reflecting how outsiders view their
performance) • etc., etc.
Swink, M., Rajdeep, G., Richardson, T., (2010, March/April). Does Supply Chain Excellence Really Pay Off?. Supply Chain Management Review, Vol.14, No. 2, pps 14-21
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Why Reinvent The Wheel?
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Strategy without Tactics is the slowest route to victory.
Tactics without Strategy is the noise before defeat.
Sun Tzu – The Art of War
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SIZE DOESN’T MATTER!
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World Class Supply Chain
• S
• P
• A
• C
• E
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World Class Supply Chain
• S
• P
• A
• C
• E
SSCM5 Inc./Tambolas Model©
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World Class Supply Chain
• Strategic
• P
• A
• C
• E
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Supply ChainA Dept.,…..but not a Dept.
• Management Discipline
• Applies to all non-labor expense
• Similar to HR– policies guide organization-wide behavior– positioned on org. chart – line 2 (main bar)
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S tra te g ic
IT H R F in an ce S u p p ly C h a in
C E ON u m ero U no
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World Class Supply Chain
• Strategic
• Performance (strategy drives design)
• A
• C
• E
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World Class Supply Chain
• Strategic
• Performance
• Architecture (end-to-end)
• C
• E
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World Class Supply Chain
• Strategic
• Performance
• Architecture
• Collaboration
• E
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World Class Supply Chain
• Strategic
• Performance
• Architecture
• Collaboration
• Effective use of Metrics
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The 5 Core Disciplinesof Cohen and Roussel
• Strategic
• Performance (design to)
• Architecture (end-to-end)
• Collaboration
• Effective use of Metrics
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Ten Traits of the Best Supply Chains
• Sound Strategy supported by Solid Leadership
• Focus of Financial Impact• Portfolio approach to
innovation and PI• Selective Collaboration
with trusted partners• Excellence in Strategic
Sourcing
• World Class Logistics Execution
• Proficiency in Planning & Responsiveness
• High Customer Integration & Satisfaction
• Anticipate and Manage Risk
• Globally Optimized Operations
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World Class Supply Chain
• Strategic
• P
• A
• C
• E
Sound Strategy supported by Solid Leadership
Anticipate and Manage Risk
Proficiency in Planning & Responsiveness
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World Class Supply Chain
• S• Performance (design to)
• A
• C
• E
Excellence in Strategic Sourcing
World Class Logistics Execution
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World Class Supply Chain
• S
• P• Architecture (end-to-end)
• C
• E
Portfolio approach to innovation and PI
Globally Optimized Operations
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World Class Supply Chain
• S
• P
• A• Collaboration
• E
Selective Collaboration with trusted partners
High Customer Integration & Satisfaction
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World Class Supply Chain
• S
• P
• A
• C• Effective use of Metrics
Focus of Financial Impact
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If every expert in the field is saying the same thing
does it apply to healthcare?
Or are we different - again?
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A Case Study
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CVAC
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Clinical Value Analysis Committee
Voting Members
– CMO (Chairperson)– Chair Dept. CV– Chair Dept. of Surgery– General Surgeon– Orthopedic Surgeon– Internist– Family Practice– Chair, Dept. of Med.
Non-Voting Members
– President– VP Revenue
• Financial Analyst
– VP SC • VA Coordinator (RN)
– VP Clinical Services– Dir. SS– Dir. Pharmacy
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CVAC
Price Bench Marking
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Price Benchmarking
• ECRI – Medical Commodities
• Propurchaser.com – Raw Materials
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CVAC
Price Bench Marking
Neuro CVAC
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CVAC
Price Bench Marking
Neuro CVAC
CV CVAC
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CVAC
Price Bench Marking
Neuro CVAC
CV CVAC
Supply Chain Exec Committee
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SCEC
• President
• All hospital VP’s
• CMO
• DMM
• Dir. Pharmacy
• Chairpersons of all Supply Committees
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SCEC
• Meets quarterly
• Reviews results– Report out from each committee/group
• Reviews current benchmarks
• Establish new goals and objectives
• Focus on Income Statement and Balance Sheet
• Annual Strategic Retreat
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CVAC
Price Bench Marking
Neuro CVAC
CV CVAC
Supply Chain Exec Committee
SC/SS
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CVAC
Price Bench Marking
Neuro CVAC
CV CVAC
Supply Chain Exec Committee
SC/SS
Lean SS
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LEAN Six Sigma
• Hospital wide rollout.
• Every manager and director expected to achieve Green Belt status.
• Green Belt requires demonstration project.
• Hospital wide teams created by senior leadership.
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CVAC
Price Bench Marking
Neuro CVAC
CV CVAC
Supply Chain Exec Committee
SC/SS
Lean SS
SC/Construction
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CVAC
Price Bench Marking
Neuro CVAC
CV CVAC
Supply Chain Exec Committee
SC/SS
Lean SS
SC/Construction
MRO
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MRO
• Uses LEAN for all processes.
• Addresses service and indirect spend categories.
• Chaired by Dir. Facilities Operations (GB).
• Staff includes Finance, MM, BioMed, and PI (BB).
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CVAC
Price Bench Marking
Neuro CVAC
CV CVAC
Supply Chain Exec Committee
SC/SS
Lean SS
SC/Construction
MRO
SC/Facilities
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CVAC
Price Bench Marking
Neuro CVAC
CV CVAC
Supply Chain Exec Committee
SC/SS
Lean SS
SC/Construction
MRO
SC/FacilitiesPhys. Led Capital
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CVAC
Price Bench Marking
Neuro CVAC
CV CVAC
Supply Chain Exec Committee
SC/SS
Lean SS
SC/Construction
MRO
SC/FacilitiesPhys. Led Capital
Capital Mgt. CouncilSC VP
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What the Voting Members of CVAC Understand
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Product Life CycleThe Bell Curve
• Innovators 2%
• Early Adopters 14%
• Early Majority 34%
• Late Majority 34%
• Laggards 16%
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32.43% of Medical Product Introductions Fail (Karakaya, 1994)
Karakaya, F. (1994). New product development process: An investigation of success and failure in high-technology and non-high-technology firms Journal of Business Venturing, 9(1), 49-66. doi:10.1016/0883-9026(94)90026-4
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Sales
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The Close
• “Secrets Of Closing The Sale”, Zig Ziglar, over 100 closing techniques illustrated.
• “24 Techniques for Closing The Sale”, Brian Tracy, “These are 24 of the most ruthless tactics -- kept under wraps for years --
that can turn even your most hard-nosed prospects into cash-generating customers.” Kevin Wilke, Founder, NitroMarketing.com
• “6 Tried and Tested Closing Techniques”, David Quinn, “..closing sales are what top performing professionals do for a living…”
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Average first-time sale requires 6-8 close techniques
How many can you identify?
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Strategic
• Organizationally Positioned
• Senior participation• High expectations• No apologies• Participation expected• Viewed as broad
management resp.• Proper resource
allocation
• Both Income Statement and Balance Sheet responsibility
• Skill sets appropriate to goals
• Future stretch goals set
• Ongoing Process• Planned
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Performance
• Committee/Structures designed to meet goals
• Staffed to meet goals• Fuzzy definitions• Application of LEAN
to all functions
• Organization changed to meet objectives
• Disruptive Policies reflecting principles
• SC empowerment
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Architecture
• Another Session on Strategic Sourcing, Logistics & IC
• Key personnel (OR, etc.) integration
• All order processes & inventories
• Products enter via prior peer review (gatekeeper)
• LEAN principles
• Disposition (waste, recycle, etc.)
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Collaboration
• With, not To
• Physician/User integration first
• Supplier integration second
• System-wide dialog
• Disharmony (emphatic honesty)
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Effective use of Metrics
• Benchmark once – trend forever
• All decisions related to trend impact
• Cost decisions as both top and bottom line
• Inventory decisions related to liquidity
• Provide full disclosure of all data
• Use outside research
• High level (Board) reporting of SC metrics
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Continuing Education
• Certification
• Skills– Lean SS– Negotiations– Finance– Marketing
• Supply Chain Theory
• General Management Theory
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Thank You
Questions
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Suggested Readings• Cohen, R., Roussel, J. (2005). Strategic Supply Chain Management: The 5
Disciplines for Top Performance.
• Poirier, C., Quinn, F., Swink, M. (2010). Diagnosing Greatness: Ten Traits of the Best Supply Chains. Fort Lauderdale, FL: J. Ross Publishing, Inc.
• Rudzki, R., Smock, D., Katzorke, M., Stewart, S. (2006). Straight To The Bottom Line: An Executive’s Roadmap to World Class Supply Management. Fort Lauderdale, FL: J. Ross Publishing Inc.
• Emmett, S., Crocker, B. (2006). The Relationship-Driven Supply Chain: Creating a Culture of Collaboration throughout the Chain. Hampshire, England: Gower Publishing, Ltd.
• Lencioni, P. (2002). The FIVE Dysfunctions of a TEAM. San Francisco, CA: Jossey-Bass Publishing.
• Swink, M., Golecha, R., Richardson, T. (2010, March/April). Does Supply Chain Excellence Really Pay Off? Supply Chain Management Review, Vol. 14, No. 2. 14-21.