Value Analysis Non-Salary Expense Reduction Supply Chain Management Savings

5 Reasons Why Most So-Called “Value Analysis Programs” Fail To Produce Double Digit Savings

“Let’s Face It…Most So-Called Value Analysis Programs Are Window Dressing To Impress Senior Management. If These Organizations Were Really Serious About VA They Would Be Producing Double Digit Results, Not Just Talking About Them!!"

I hear a lot of talk from supply chain professionals about how they want to reinvent their current value analysis program to produce double digit savings, but I have only seen a few that are actually doing it. Meanwhile, there are scores of hospitals and systems were we have provided their value analysis training, coaching and mentoring that are saving, on average, 26% annually. How can you explain this disparity in results?

Here are five reasons why traditional and conventional value analysis programs fail to generate double digit results:

We all know about that vision thing and how the lack of it will lead us in every direction -- but forward! To be successful in value analysis you must know before you start what your value analysis program will look like when you meet your stated mission.

Your Mission: “To reduce your supply chain/non-salary cost to the lowest levels possible, while providing reliable products, services and technologies to your customers.”

How will it look to others? What will people say about it? What results do you expect to achieve? How will it change your culture?

Healthcare organizations that are culturally committed to being a “low cost provider” consider their cost as their enemy and are always on the attack to reduce it. If your organization doesn’t have “lean thinking” attitude you will never achieve double digit savings.

It not enough to know the classic philosophy, principles and practices of value analysis; you also must be organized to save. By organized to save I mean, you must develop a team approach to value analysis that holds people mutually and individually accountable for results, not just talk a good game.

New skills, techniques and tactics are required for you to reduce your supply chain/non-salary expense beyond price. These skills can only be acquired by advanced value analysis training. Then and only then, can you insure consistency, greater focus, effectiveness and superior productivity in your value analysis program, as opposed to “winging it” and hoping you will save something for your efforts.

With few exceptions, 99.9% of all value analysis programs are focused on price and the aesthetics of the products, services or technologies being purchased and not on their reason for being …FUNCTION.

Since our studies have documented that price savings generate less than 1% savings annually, why do we continue to focus on price, when the “study of function” is the direction you need to go in order to create 26% savings annually.

As these five reasons reveal, being traditional and conventional with your value analysis program isn’t going to spawn double digit savings for your healthcare organization. Only by employing non-traditional and unconventional methods and practices can you obtain this type of superior performance.

Strategic Value Analysis In Healthcare
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Home Weekly Strategic Value Analysis Newsletter View Archived Strategic Value Analysis Newsletters Fast Target Savings Strategic^TM Value Analysis ValueNet Central^TM Value Analysis Software Training About HCP Client List Articles and White Papers Contact HCP Click Here to Access the NO Obligation Free Non-Salary Survey to find out what your savings opportunities are for your organization. Free Weekly Strategic Value Analysis Newsletter Free Web poll for your Web site - freepolls.com		September 16, 2004 by Robert T. Yokl, President 5 Reasons Why Most So-Called “Value Analysis Programs” Fail To Produce Double Digit Savings “Let’s Face It…Most So-Called Value Analysis Programs Are Window Dressing To Impress Senior Management. If These Organizations Were Really Serious About VA They Would Be Producing Double Digit Results, Not Just Talking About Them!!" I hear a lot of talk from supply chain professionals about how they want to reinvent their current value analysis program to produce double digit savings, but I have only seen a few that are actually doing it. Meanwhile, there are scores of hospitals and systems were we have provided their value analysis training, coaching and mentoring that are saving, on average, 26% annually. How can you explain this disparity in results? Here are five reasons why traditional and conventional value analysis programs fail to generate double digit results: 1. Lack of Vision We all know about that vision thing and how the lack of it will lead us in every direction -- but forward! To be successful in value analysis you must know before you start what your value analysis program will look like when you meet your stated mission. Your Mission: “To reduce your supply chain/non-salary cost to the lowest levels possible, while providing reliable products, services and technologies to your customers.” How will it look to others? What will people say about it? What results do you expect to achieve? How will it change your culture? 2. Lack of Cultural Commitment Healthcare organizations that are culturally committed to being a “low cost provider” consider their cost as their enemy and are always on the attack to reduce it. If your organization doesn’t have “lean thinking” attitude you will never achieve double digit savings. 3. Lack of Organizational Architecture It not enough to know the classic philosophy, principles and practices of value analysis; you also must be organized to save. By organized to save I mean, you must develop a team approach to value analysis that holds people mutually and individually accountable for results, not just talk a good game. 4. Lack of Training New skills, techniques and tactics are required for you to reduce your supply chain/non-salary expense beyond price. These skills can only be acquired by advanced value analysis training. Then and only then, can you insure consistency, greater focus, effectiveness and superior productivity in your value analysis program, as opposed to “winging it” and hoping you will save something for your efforts. 5. Focused on Price and Aesthetics With few exceptions, 99.9% of all value analysis programs are focused on price and the aesthetics of the products, services or technologies being purchased and not on their reason for being …FUNCTION. Since our studies have documented that price savings generate less than 1% savings annually, why do we continue to focus on price, when the “study of function” is the direction you need to go in order to create 26% savings annually. As these five reasons reveal, being traditional and conventional with your value analysis program isn’t going to spawn double digit savings for your healthcare organization. Only by employing non-traditional and unconventional methods and practices can you obtain this type of superior performance. About the Author Robert T. Yokl, President, The HCP Group, Ltd., has over 35 years of experience as a consultant and manager in the field of Supply Value Chain Management and is one of the country's leading healthcare experts in value analysis, value engineering, Non Salary Expense Reduction and materials management. He is the developer and program leader of the award winning Certified Value Analysis Practitioner Training Program™. Mr. Yokl is also the developer of the healthcare industry's leading ValueNetCentral™ Value Analysis Software. Over the past two decades he has trained thousands of healthcare managers in his patented Strategic Value Analysis™ and Team-Based Project Management™ processes and has assisted scores of organizations in developing their own value management programs. He has published six books, videos and audios on supply/value chain management. His latest book being, “ Strategic Value Analysis™: The #1 Smart Strategy for Taking Cost Out of a Healthcare Organizations’ Healthcare Supply Value Chain”. _____________________________________________________________ COPYRIGHT 2004 - THE HCP GROUP, LTD. - ALL RIGHTS RESERVED

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