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Arkestro: 3 Ways to Use Strategic Sourcing in the Healthcare Industry

Strategic sourcing is an approach that goes far beyond the traditional procurement method of focusing on cost and reducing costs. As the name suggests, it’s strategic in nature. That means formalizing procurement and supply chain management, looking longer-term than the price of a single contract. Strategic sourcing means tracking relations with suppliers and optimizing an organization’s sourcing program through constant market analysis. Strategic sourcing also means being able to measure performance and continuous improvement.

Few industries benefit more from strategic sourcing than healthcare.

Being able to effectively transition to strategic procurement requires advanced tools. For a growing number of healthcare organizations, that is, Arkestro, the only Predictive Procurement Orchestration Platform (PPO) built to keep your business ahead of the market.

Before discussing the solution, it’s essential to explore the hows and the whys. Why is strategy so critical to the healthcare industry? And how is the approach applied by procurement professionals working in healthcare?


Why strategic sourcing is vital in the healthcare industry

First is the question of why strategic sourcing is important in the healthcare industry. You need to look no further than what’s happened in the past year for one big reason. The COVID-19 pandemic caused a mad scramble throughout the industry. From a race to acquire PPE to a desperate search for ventilators, then the challenge of transporting vaccines with very specific (and demanding) refrigeration requirements, the pandemic has been a supply chain nightmare for the healthcare industry.

Organizations that adopted strategic sourcing have fared better than most. When the pandemic broke out, they were better positioned to find alternative and non-traditional suppliers of PPE and ventilators.

Looking beyond the pandemic, strategic sourcing has still proven to be invaluable in the healthcare industry. In particular, it has helped to lower healthcare and hospital costs at a time when treatment has become increasingly expensive and many expenses—such as staff salaries—are fixed. But strategic sourcing has gone beyond lowering costs to also make the organizations that adopt it more resilient.

It’s clear that strategic sourcing is critical to success in the healthcare industry, but how do organizations apply this approach? Here are five common ways of using strategic sourcing in the healthcare industry. 


Sourcing software increases equipment supplier diversity

One of the challenges facing medical organizations such as hospitals, healthcare networks, and clinics is the equipment required for diagnosing and treating patients. There are a relatively small number of companies that manufacture and sell it. In traditional sourcing, organizations might purchase all their equipment from a single supplier, hoping for a volume discount.

Strategic procurement takes a different approach. Dealing with multiple vendors can reduce costs because they are competing for the business and can’t assume on winning it automatically. Strategic sourcing also encourages supplier diversity. This protects the organization from becoming overly reliant on a single supplier.


Procurement software helps equipment service programs

Many healthcare organizations—especially ones that are spread across multiple facilities — can easily end up paying more than they need to for equipment service programs. Managers for separate buildings often negotiate these contracts individually.

Under a strategic sourcing approach, the procurement team is able to negotiate much more favorable terms. Instead of having different teams negotiating multiple contracts, a single source is responsible. This means more competitive bidding for the contract, including volume discounts.


Strategic sourcing software finds medical supplies

Healthcare organizations require vast quantities of medical supplies, from surgical masks to syringes. There can be dozens or hundreds of individual vendors involved, or there could be just one or two large medical supply wholesalers. Only by using a planned approach can a healthcare organization determine which path is the best.

Dealing with a wholesaler may be more convenient, but with strategic sourcing, many healthcare organizations have discovered it is more cost-effective to work directly with a wide range of suppliers.

This diverse approach also provides additional resiliency, a factor that has proven critical over the past year when it has been a race to secure supplies of masks, gloves, gowns, and other PPE.


Can sourcing strategies impact effective treatments?

Can strategic sourcing be applied to actual treatments? This may sound like a stretch, but healthcare organizations have discovered that when strategic procurement is combined with medical treatment best practices, there is real synergy.

This combination helps to deliver consistency in treatment and cost reductions for the organization. When physicians set guidelines for specific medications to be used as the most effective treatment, that supports standardization of care. It also delivers cost savings because the procurement team can acquire quantities of approved medications instead of having to buy small batches of different drugs as dictated by individual physician preferences. 


Traceability and transparency for regulatory approval

Strategic sourcing provides a single source of truth. It ensures that all acquisitions by a healthcare organization have an audit trail to verify regulatory compliance. It goes without saying that this is a critical requirement in the healthcare industry.


Arkestro: The Most Effective Way to Implement Strategic Sourcing

The challenge many healthcare organizations face isn’t the decision to adopt strategic sourcing. That makes sense on so many fronts that it’s essentially a foregone conclusion that strategic sourcing needs to be adopted. The problem is finding the right solution or tool to support the move.

Software used for traditional procurement methods is sorely lacking when it comes to the many complexities of strategic sourcing.

For healthcare organizations and companies operating in the health industry, the answer is Arkestro. With Arkestro you can quickly request the best price from the right supplier for any line item resulting in a 10-15x increase in quote velocity. Keep your healthcare business ahead of the market by predicting opportunities and never leave money on the table.

Ready to predict, procure and win? Visit Arkestro today to schedule a demo and learn more about how your organization can benefit from Arkestro.

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Rob DeSantis

Founder

As a former co-founder of Ariba running sales, Rob has deep expertise in the procurement space, having helped propel Ariba from zero to $250 million in revenue in four years and IPO of the year in 1999 before its acquisition by SAP a decade later. In addition to co-founding Ariba, Rob was also an early angel investor and board member of LinkedIn, the world’s largest professional online network.

More recently, Rob served as an investor and advisor to a small portfolio of companies including Bloom Energy, AEye, Inc., HiQ Labs, Agiloft, USEND and more. He is also a co-founder of Dibbs Technology and TrueParity. Rob holds a BSME from the University of Rhode Island.

Marty Meyer

Chief Financial Officer

A trusted partner and advisor on the executive team, Marty has a unique background having been the CFO of nine venture backed technology companies. Marty has raised over $300M in venture funding and has closed six strategic M&A transactions with a combined value of over $1B. Marty has deep domain expertise in ecommerce, consumer internet, networking, data security, data privacy, media technology and enterprise software industries. Marty is especially experienced in the finance and operations activities of SaaS companies and is driven by data and metrics to help create outstanding customer experiences and drive efficient growth.

Neil Lustig

President and Chief Operating Officer

Neil is a seasoned executive with over 30 years of experience leading and building teams in Tech. Neil brings insights from a variety of market spaces and company sizes. Most recently Neil was the CEO of GAN Integrity, an innovative SaaS Compliance technology company serving enterprise customers in North America and Europe. Before that Neil was the CEO of Sailthru, a leader in ML driven personalized multi-channel marketing communications for media and e-commerce markets. Prior to that Neil was the CEO of Vendavo, the leader in B2B price optimization and management for large enterprises. Before Vendavo, Neil led the commercial team at Ariba, the market pioneer that defined and created the eProcurement space. Neil served as the GM of Ariba Europe and subsequently the GM of Ariba North America. Neil started his career at IBM where he spent sixteen years, initially as a software developer, and then twelve years in a variety of Sales and Marketing roles

 

Neil has a BS in Computer Science and Applied Mathematics from SUNY Albany. He is a native New Yorker, Brooklyn born, and still resides with his wife and three children in New York City.

Bonnie Adams

Director of People Operations

Bonnie is a People Operations and HR veteran, with over a decade of experience establishing successful people and culture functions for early to mid-stage tech startups going through high growth phases. She has a passion for supporting and creating inclusive and collaborative work environments and is well-versed in driving positive changes in her organizations as a trusted leader. Prior to joining Arkestro Bonnie worked as the People & Culture Coordinator for Ionic Security, helping them scale from 5 to over 200 employees in addition to a $120M funding round. Most recently she was the Head of People & Culture for blockchain innovator Storj Labs and was the Director of Human Resources at PrizePicks, the largest independently owned Daily Fantasy Sports platform in North America.

Arym Diamond

Chief Revenue Officer

Arym Diamond joined Arkestro in January 2022 bringing over 20 years of experience in the enterprise software and consultancy industry.  He is responsible for the worldwide go-to-market revenue strategy. Prior to Arkestro, Arym was Chief Revenue Officer at CalAmp focused on Telematics and Logistics. He also served as the area vice president of North American Sales within the Salesforce.com Enterprise Business unit for Einstein Analytics & AI, where analytics and machine learning were re-imagined for the front office.  Prior to that, he spent over 10 years at Oracle in various sales positions. Arym holds an MBA from the University of Southern California Marshall School of Business, and an undergraduate degree from California State University.

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