Inventory Is not an asset

Imagine staring at the balance sheet for your business.

Almost every company--public or private--that follows modern convention would list inventory as an asset. Why? Companies just like yours look at their inventory number as money in the bank, when it’s really an expense. It’s not as asset, at least not yet.

If you viewed your company’s finances the way you see your own checkbook, you would see inventory for what it is—money that’s been spent without a return. Yes, the inventory’s been paid for, with labor, raw materials and hard-earned cash, but it hasn’t been sold, and you haven’t been paid for it.

Cash out, but no cash in.

Imagine if medical device manufacturers and hospitals managed inventory with a “checkbook” mentality instead of a “balance sheet” mentality.  

Everything would be different--inventory processes, business activities and even the way leaders viewed their assets. Manufacturers would only build what is needed, working diligently to turn inventory into revenue more quickly.  Hospitals would purchase products in smaller quantities, more frequently, and make sure that none was wasted.

Some facts to ponder:

·      Most medical device manufacturers hold 10 – 12 months of inventory on their books at any time.

·      Medical device manufacturers routinely lose about 3%-5% of their field inventory each year, accepting this exorbitant write-off % as “the cost of doing business.”

·      Hospitals throw away millions of dollars of unused and expired inventory each year, and fail to get reimbursed for millions more due to faulty charge capture processes.

The days of absorbing the waste and expense of current methods are over.   Our nation’s healthcare system simply can’t afford to cover up broken processes with extra inventory.

When the system isn’t working, it’s time to see things different. Let’s change the way we think about inventory. Inventory is an expense to be minimized, not an asset to be stockpiled.

Which of your peers have already shifted their perspective? See how you stack up.

Contact us to learn more of about best practices in healthcare supply chain and inventory management.


3 steps to collaboration

Supply chains are everywhere - from the biggest companies in the world to running a household. We all experience supply chain in some form even if we don’t know what exactly it is.

Technological advances have made it easier than ever before to improve communication and collaboration across the supply chain—and many industries are taking note. Streamlining your supply chain can greatly cut costs, increase profits, and improve efficiency while adding value to consumers.

Unfortunately, while some industries harness technology for their advancement, others lag behind. While the medical device industry seems focused on new technology, this isn’t reflected in their supply chains.  

This lack of innovation is disheartening in its own right, but it is even more troubling when you consider the industry medical devices serve. Healthcare itself is always innovating and moving forward. If the medical field can collaborate to produce the cost-effective healthcare that millions of Americans rely on each year, then medical device supply chains should be able to collaborate to produce an efficient, cost-saving supply chain.  

Here are 3 easy steps to take to start a collaboration:

1.   Identify a customer and product

2.   Analyze your value opportunity

3.   Schedule a discussion with your customer to share your value opportunity and learn from each other

Now we’re turning this back on you. What do you think?

Questions, comments – we want it all. Just share your thoughts.

How To Find Winning Collaborative Partnerships

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In today’s economy, collaboration is key across all industries. From tech start-ups, to fortune 500 companies to independently owned brick and mortar retail outlets, American businesses embark on collaborative ventures on a daily basis and health care is no different.

Most business owners and managers recognize that collaboration is key to success, but they often miss one big, important caveat. The real key to business success, and supply chain efficiency, is in effective collaboration. All parties involved should come out ahead.

Technically, it is possible to “collaborate” with a florist when filing corporate taxes or to “collaborate” with an auto mechanic when purchasing medical supplies for your research facility. In both cases, the collaboration would most likely wouldn’t work. Collaboration is only as strong as the sum of it’s parts. With extreme examples like this, it is easy to weed out ineffective collaborators.  More often than not, unsuitable collaborative partners are difficult to identify.

At JR Healthcare Solutions, we refer to this as the ‘Donkey Problem’.

This problem, which occurs across all industries, was first pointed out to me back when I was starting out as a supply chain professional, working for a successful medical device manufacturer. I had just gotten off the phone with a client of mine and was sitting at my desk, frustrated.  This particular client, who we’ll call Bill (not his real name), was a real headache, constantly asking questions and demanding actions, all while offering the company very little business. One of the sales guys, Dave, approached me and asked why I was wasting my time on Bill.

This caught me off guard.

Wasting my time? 

I was a problem solver and a fixer. My job was to identify problems within the supply chain and then provide in depth solutions. Bill had plenty of problems, I had plenty of solutions, and even though he was frustrating, Bill was a paying customer with no outstanding debts. Plus, I was just getting started with the company and looking to burnish my reputation. How was I wasting my time?

“Bill’s a donkey,” Dave said. “Donkeys are stubborn. They never do what you want.  There’s only so many hours in a day, you need to invest your time wisely.”

Then, Dave turned to me and imparted valuable knowledge that I still rely on today.

“Look,” he said, “We’re growing 15% this year, and we need to grow 15% next year.  We need to invest our time in those customers that can give us that 15% growth.  Spending our time and resources on donkeys won’t get us there.  We need thoroughbred race horses.  An hour spent on a race horse can generate more results than a week with a donkey.”

After processing this information, I quickly realized he was onto something.

Don’t waste resources on donkeys.  They will absorb all your time and attention if you let them.  And, at the end of the day, they will still be a donkey.

That’s the Donkey Problem.

This concept became something of a parable within the ranks at our company, shorthand for an insidious version of the Pareto principal, where 80% of your effort, capacity, resources can be sucked away by the bottom 20% of your customers if you are not careful.  With every interaction, we started asking ourselves whether we were dealing with a donkey or a race horse and, just as importantly, whether we were acting like a donkey or a race horse from our business collaborators point of view.

“Are we working on the right thing?”

“Are we wasting time in an area that will never pay off?”

“How would my trading partners describe me and my company?”

“Are we race horses or donkeys?”

With JR Healthcare, we are trying to now take that a step further. Not only are we focused on picking our own partners wisely and presenting them with high value solutions, we also want to help company’s fall into the Donkey Problem trap with other third parties.

There is nothing to gain by wasting your company’s time and resources on a donkey that will never win the Kentucky Derby.

Don’t be a donkey.  Be a race horse.

The good news ? Picking winners for your collaborative efforts is not completely synonymous with a day at the races. Here at JR Healthcare Solutions, we rely on skill, not luck, when helping clients avoid donkeys and find their supply chain race horses.



Why We Need Collaboration In Healthcare Supply Chain

The world has never been more connected than it is today. Goods located thousands of miles away can be ordered with the click of a button. Services can be rendered instantly from halfway across the world. It is important that companies stay ahead of the curve, and as such, robust supply chain management is essential for all industries. Health care is no exception. Companies must transport goods from A to B in a safe, reliable, and cost-effective manner in order to remain competitive. Not only does this reduce operating costs and improve the company’s bottom line, it can also be a boost to customer service. Whether you are stocking the shelves with your product before the holiday season or delivering medical equipment to a hospital across the country, supply chain management is of vital importance.

To have an effective supply chain, it is important to first foster dynamic collaboration between the various stops. For that to occur, we must first establish high confidence and trust. To maintain collaborations, is imperative for businesses and individuals alike to put their differences aside, establish role clarity and transparently share information.

For example, the construction of a new home is not a simple exchange between the construction company and the landowner. The company must collaborate with architects, designers and so forth in order to build the home, while the landowner must collaborate with either cable companies and furniture salespeople or real estate agents and potential buyers, depending on whether or not he or she intends to live in the home. At any rate, the exchange only occurs seamlessly if all parties understand their roles and deliver as promised.

As the construction example shows, the importance of collaboration holds true across all industries. However, it is of particular relevance to those in the healthcare field. When we deliver medical supplies in an efficient manner, patient lives are improved, operating costs are reduced and everybody wins.

Collaboration between manufacturers, distributors, hospitals and the rest of the supply chain benefit not just the industry itself, but the country as a whole. Despite this, health care lags behind other industries when it comes to collaboration in the supply chain.

Here at JR Healthcare Solutions we are constantly asking ourselves two questions:

Why is it that healthcare, a sector of national importance with an emphasis on innovation, fails to produce collaboration to the same degree as other industries? For example, via their partnership and shared understanding of role clarity, Harvard and MIT, the so called competitors, created edX, a non profit organization that offers free online courses. Why isn’t healthcare supply chain collaboration producing similar innovative results?

·      How can we nurture this type of robust supply chain collaboration in healthcare? Another example through dynamic collaboration, Microsoft and Toyota have taken steps towards fostering enhanced car experience for consumers. What do we have to do to develop these types of mutual beneficial relationships in healthcare supply chain?

As an industry, healthcare benefits greatly from cutting edge research and innovative technology for medical products and services. At JR Healthcare Solutions, we want to encourage collaboration and cooperation throughout the supply chain. As such, we are always interested in hearing from medical device manufacturers, hospital management teams and others on the supply chain.

Interested in learning more about what we do?  At JR Healthcare Solutions, we are always looking to collaborate.

We would love to hear your ideas. Please don’t hesitate to contact us.

Together we can make this happen!

What we do!

Here at JR Healthcare Solutions we believe that the future of healthcare looks very different to what it does now. To that end, our goal is to improve supply chain efficiency in healthcare. We believe that, by applying proven methodologies and plans from other areas of industry into healthcare, everybody reaps the benefits. We can reach a new era in efficiency and potentially revolutionize the healthcare supply chain as we know it.

There are numerous challenges in the healthcare supply chain that we hope to address with our new methods. Supply sometimes exceeds demand and vice versa, transportation costs of vital goods can be excessive, communication between suppliers and healthcare providers can often be difficult  – but we aim to eliminate these problems one at a time, through systematic review and improvement similar to what you might find in other industries. We look at each section of the supply chain on an individual basis and in meticulous detail, to try and identify problems so that we can then find the solutions that work best for everybody.

At JR Healthcare Solutions we collaborate with manufacturers, hospitals, distributors, and the rest of the supply chain to eliminate some of the excess cost, time and energy. We believe that our combination of collaboration and technology application can revolutionize the healthcare industry and change the way we see healthcare as a whole. We can do this by opening up the lines of communication between manufacturers/distributors and providers.

We established our company in 2018 with the express desire to make the world of healthcare a better place for everyone. We focus on healthcare supply chains, reducing costs, patient safety and improving the level of overall care throughout the system. 

To be successful we must form a sort of 'tribe'... like a team of like-minded healthcare professionals.  We are looking for partner companies – and that could be you! If you are passionate, driven and want to use your healthcare company to make a difference in the world then we need you! Collaboration is mutually beneficial, and you might even find that your company picks up a few good habits along the way!

You can find out more about JR Healthcare Solutions by perusing our website at your leisure. However, should you have any specific comments, questions or queries, you can contact us . Likewise, if you want to become part of our exciting new venture and help us to revolutionize healthcare please do not hesitate to get in touch! We would love to share some of our innovations, and better yet, go forward into the future of healthcare, together.