What advice do you have for a team who is just starting to put together a contract savings and rebate strategy?
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Director of Supply Chain in Healthcare and Biotech10 days ago
Firstly, the process and health KPI's must be clear. The KPI's are best if system generated from the client system, with visible real-time access by provider. Ideally, a positive direction of the metric(s) lower cost to both parties and/or have net benefit to the client/provider. All have the same information and one version of the truth which each can transparently confirm as beneficial. Less is more, covering performance/quality elements of the engagement which are clearly important to client company and ideally meaningful to the client's end customer. Timeframes to be set in which the benefits are planned, i.e. annually, and what constitutes a successful achievement that triggers a savings/rebate.
Both parties agree upon how each will contribute towards achieving the KPI/benefits, including resource and financial investments.
Above being thoughtfully considered, the contract can document the savings/rebate strategy, KPI's, pre-alignment governance and tactical achievement process.
Start by mapping out a plan with your leadership team to understand their focus. Work together with your supply chain leaders to pull data and develop a plan. It's also important to bring in team members who are part of the process, especially subject matter experts from relevant areas. This strategy will evolve over time, particularly with growth and the addition of new service lines and positions.
Another key aspect is working with your vendors. I like to use the cliche that you have vendors and you have partners. Vendors provide a service or supply, you pay an invoice, and that's it. Partners, on the other hand, bring long-term value and information. They can offer opportunities for savings and are just as important in building your savings plans as your leadership team.
True partnerships with distributors and prime distributors bring value beyond just the service or supply. Often, our partners have better information and market intelligence than we do because they are dealing with different aspects of the world. Given the current global situation, including conflicts and manufacturing problems, we need to be smarter in how we operate. Partners help us navigate these challenges effectively.