Almost overnight, the COVID-19 pandemic forced the global medical industry to switch its procurement strategy from cost-reduction to value-driven. A new perspective was required as critical supplies of personal protective equipment (PPE), test kits, cleaning supplies and vaccines needed to be secured, and a disrupted supply chain dealt with.
While the initial scramble for resources is over, the opportunity remains: now is the time to carry the momentum forward and fully transition procurement in healthcare to a value-driven enterprise. To achieve this, spend analytics is key.
Value-driven procurement has already been shown to work
In terms of national healthcare procurement, the NHS was one of the first to wholeheartedly pursue a value-driven process. The results have been overwhelmingly positive. In 2018, the NHS was able to demonstrate a reduction in carbon emissions by 18.5% and a 21% drop in water usage. All this alongside a 27.5% increase in clinical activity.
Simple campaigns achieved this, such as ‘Gloves Off’, which encouraged clinicians to only use clinical gloves where absolutely necessary, reducing glove orders by an extraordinary 3.7 million pairs. Yes, this saved significant money, but consider too the reduced amount of waste going to landfill this campaign was also responsible for.
Australia needs to follow this lead. Our healthcare system generates 43,000 tonnes of waste every year and is responsible for 7% of total carbon emissions. The AMA (Australian Medical Association) has called on all health professionals to help address this issue. But real change lies within the hands of procurement officers and the opportunities they can uncover with spend analytics.
3 Uses for Spend Analytics in Healthcare Procurement
- Sustainability. Spend analytics can help organisations identify inefficiencies in their supply chain, such as duplicated or unused products, which can lead to waste and increased costs. By optimising their supply chain, organizations can reduce waste and improve the sustainability of their procurement processes.
Spend analytics can also help organisations track their spending on environmentally friendly products and services, and identify opportunities to increase their spending on these products.
This software can also be used to assess the sustainability performance of suppliers and identify areas for improvement. Organisations can use this information to engage with suppliers and encourage them to adopt more sustainable practices.
- Supplier diversification. Contract management is prone to becoming stuck in a rut. Spend analytics can break the cycle by identifying new opportunities. For instance, it can identify the proportion of spend on a small number of suppliers and assess the risks associated with this concentration. It can also assess the performance of these suppliers, based on quality, delivery times, cost and more.
On top of this, spend analytics can analyse the market for emerging suppliers and their potential as new partners.
- Supplier engagement. Hospitals deal with thousands of suppliers – and each one needs to be managed. With finite resources, it’s pivotal that procurement teams determine how much time to dedicate to each supplier. Spend analytics can help organisations categorise their suppliers into quadrants that determine what sort of approach and management is appropriate for them.
This capability is one of the biggest value-drivers for procurement in the health industry, as it allows more resources to be directed elsewhere and more projects get the attention they need.
Capture the value with Comprara’s Spend Analytics dashboards
Comprara has deep experience with procurement in the healthcare industry. They’ve been helping hospitals shift their ambitions from cost-reduction to value-capture. The common misconception is that these are two mutually-exclusive approaches, but the reality is different, and initiatives like those undertaken by the NHS prove it.
Spend analytics is the key driver behind the successful adoption of value-driven projects. It provides the necessary clarity and insight into sprawling healthcare supply chains, not only uncovering hidden risks, but revealing opportunities for measures that capture value for the organisation and the environment.