What can I learn from buyers that have nothing to do with my industry?

That’s the question I came in the door asking. In my decade-long journey managing procurement for over 30 hospitals with an annual supply spend exceeding $2 billion, I’ve come to appreciate the nuances of healthcare procurement and how it compares to practices in other industries. The insights I've gained underscore not only the unique challenges and innovations in healthcare procurement but also the wildly clear potential for cross-industry learning. Let’s walk through what I have learned that healthcare procurement can learn from other sectors and how other industries can benefit from the healthcare procurement model.

Healthcare Procurement vs. Other Industries:

Complexity and Regulation

• Healthcare: Managing procurement in healthcare involves navigating an intricate web of regulations and compliance requirements. For instance, when procuring medical equipment, compliance with FDA regulations and ensuring that devices meet stringent safety standards are critical. The fact that you cant buy direct most times, and country of orgin is one stage in the “chain” of events that it takes to get on the dock. Think Sterilization and that almost all of it is not done in the USA. This complexity necessitates a robust system for tracking and managing compliance.
• The other people: In contrast, while industries like retail or manufacturing have their own regulatory concerns, they often face fewer compliance constraints compared to healthcare. But deal much more with Tarrifs among other things and a much more competitive landscape. However, these industries can learn from healthcare’s rigorous approach to compliance. For example, implementing a compliance tracking system similar to that used in healthcare could significantly reduce risk and improve supplier accountability in other sectors.
• My take away: Adopt a proactive compliance management system to mitigate risks and ensure regulatory adherence, drawing inspiration from the healthcare sector's stringent practices.

Supply Chain Visibility and Transparency

• Healthcare: Transparency in the healthcare supply chain is crucial, given the critical nature of medical supplies and pharmaceuticals. For instance, during the COVID-19 pandemic ( I know, its getting old), hospitals required real-time visibility into PPE inventories to manage shortages effectively. Leveraging technology such as RFID tracking systems and integrated supply chain management platforms enhanced visibility and helped avoid disruptions.
• Other Industries: Industries like manufacturing often deal with complex supply chains but may not always have the same level of transparency. By adopting technologies that enhance visibility—similar to those used in healthcare—such as blockchain for traceability or AI for predictive analytics—other sectors can improve efficiency and responsiveness.
• Lesson: Implement advanced tracking technologies and integrated systems to boost transparency and optimize supply chain management.

Cost Management and Value Optimization

• Healthcare: Cost control is a significant challenge due to the high cost of medical supplies and equipment. The mark up is scary when you look inside GPO books. ?One successful approach was implementing a value-based procurement model. For instance, when negotiating with suppliers for surgical instruments, we shifted towards a model focusing on total cost of ownership rather than just purchase price, which included maintenance and longevity. This approach not only reduced long-term costs but also ensured higher quality and performance.
• Other Industries: Many sectors, such as retail, often focus predominantly on purchase price. However, they can benefit from adopting a value-based approach to procurement. For example, a retailer might look beyond the initial cost of packaging materials to consider factors such as durability and environmental impact, which could lead to better overall value and sustainability.
• Lesson: Embrace a value-based procurement strategy that considers the total cost of ownership and long-term benefits, rather than focusing solely on upfront costs.

Technological Integration

• Healthcare: The integration of technology in healthcare procurement is essential for managing complex data and ensuring accuracy. An example is the adoption of an integrated procurement and inventory management system that streamlined processes across multiple hospitals. This system provided real-time data on stock levels, automated reorder processes, and enhanced forecasting capabilities.
• Other Industries: Industries such as automotive and consumer goods also face complex procurement needs and integrate far more then healthcare. I have been amazed at the collaborative models where they drive buyer planning from tier 2 production schedules.. Adopting comprehensive purchasing systems, similar to those in Automative, could provide enhanced data accuracy, streamlined operations, and better decision-making capabilities.
• Lesson: Invest in a modern, integrated purchasing system that supports real-time data analysis and automation to optimize procurement processes like we see in automative.

Bridging the Gap

The procurement practices in healthcare offer valuable lessons for other industries, and vice versa. The top shelf in my book on capability is automative were healthcare takes complexity. By adopting healthcare’s rigorous compliance frameworks, transparency-enhancing technologies, value-based procurement strategies, and Automatives integrated systems, all ?sectors can significantly improve their procurement practices. Conversely, healthcare procurement can benefit from embracing practices from other industries, such as leveraging advanced analytics and cost management techniques that are prevalent in sectors like retail and manufacturing.

The key to optimizing procurement across industries lies in embracing a modern, complete purchasing system that ensures transparency, compliance, and efficiency. I have always said, if? I cant see it, I cant make it better. Im talking about data and process. By learning from each other and integrating best practices, we can drive improvements that benefit both the procurement function and the broader organizational goals.

?The views expressed on this LinkedIn post are my own and do not necessarily reflect the views of Oracle.

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