Financial Leakage can find its way into Supply Chain a variety of ways, but a lack of time, insufficient data, expired, returned, and recalled items, as well as cost management can plague an entire department.
* Lack of Time - A SpendMend 2018 survey showed that the average Supply Chain Professional spends 2.5 hours per day on tasks outside of their daily assigned tasks. That adds up quickly over a week that is 12.5 hours, 78 work days, or 30% of your total working year on other tasks. These tasks could be due to training, inadequate systems, under staffing, or manual processes overriding system or human errors. Financial leakage can fall through the cracks by rushing through tasks or never getting to them. Imagine have 30% more time every day to finish your specific tasks.
* Insufficient Data – Actionable data allows you to make informed decisions to best serve your health system. According to Global Healthcare Exchange 66% of healthcare leaders say they lack Realtime reporting. Financial Leakage can creep in where decisions need to be changed after orders are made or the wrong product is chosen. Insufficient Realtime Data can all cause communication to fail between Contracts, Purchasing, AP, and Supply Chain allowing Financial Leakage to drop through the cracks.
* Expired and Returned Items – Expired items are often caused by insufficient data. Global Healthcare Exchange estimates 7-10% of products expire on shelves. Based on previous monthly or quarterly data you can order less of certain products, so products are not just thrown away. From our own SpendMend experience we find most health systems have dysfunctional return
models and process allowing for a major recovery area. Healthcare Distribution Management Association estimates 3-4% of products are returned. Return modules are often not accurate and suppliers may or may not make you aware of return credits.
* Costs – Financial Leakage caused by cost inefficiencies can cost hundreds of thousands of dollars every year. One small area where money is rapidly spent is shipping. An overnight shipped product can easily cost over $100. Another area that can be easily overlooked falls onto the supplier. You may be getting charged the wrong tier for items you purchase often.
All these areas are where Financial Leakage can sneak in unseen, but with a strong united effort reaching for full Spend Visibility you can gain better controls over your process