Strategies for Communicating Supply Chain Improvement Projects to the C-suite
When a hospital in South Carolina was struggling with financial management, executives brought in HealthTrust consultants to help them decide where to cut costs. When the hospital’s executive team invited these consultants to attend their monthly meeting, HealthTrust noticed one valuable voice was missing—that of the director of supply chain management. There was a communication void between supply chain managers and corporate executives, so there was little focus on reducing supply chain costs.
“We helped the hospital understand that taking costs out of the supply chain makes a crucial impact on the bottom line, and supply chain professionals needed a seat at the table,” says Tom Griffin, assistant vice president of consulting for SolutionsTrust. “When the vice president of supply chain was not part of executive team meetings, there was no focus on cost-reduction strategies.”
For that hospital, opening the lines of communication between C-level executives and supply chain professionals was the first step toward achieving substantial cost savings and “getting their financial house in order,” Griffin says. Similarly, to be successful, every supply chain improvement project requires effective communication with facilities’ top executives.
“An open communication stream to top-level executives ensures that decisions made by supply chain professionals are in line with the overall mission and vision of the organization,” says Annette Pummel, chair, Association for Healthcare Resource and Materials Management (AHRMM), a division of the American Hospital Association. Those mission-minded decisions will allow supply chain professionals to “take the lead in their organizations at the intersection of cost, quality and outcomes,” she adds.
Communicating Is Crucial
As the pressure continues for hospitals to cut costs, discussions about improving supply chain management are “critical conversations to be having with the C-suite at this moment,” Griffin says. Every top hospital executive is concerned about cost control and healthy bottom lines, and supply chain professionals should position themselves as essential in helping them meet those goals.
“Historically, supply chain has been an afterthought—the department in the basement that nobody pays attention to,” Griffin says. “But not anymore. It’s no longer enough to simply get a status report from supply chain. Those leaders have to be strategically involved in conversations about controlling costs.”
“Effective communication with the C-suite is not a ‘one-and-done’ approach. It involves a continuous, ongoing commitment.”
—Tom Griffin, assistant VP of consulting at HealthTrust Supply Chain Solutions
According to HealthTrust research, it takes $10,000 in new revenue to achieve the same bottom-line impact of removing $1 in costs, Griffin says.
“If your bottom line already is suffering, you either have to add a lot of revenue or decrease costs to get the same result,” he says. “When C-suite executives understand this, it makes a lot more sense to decrease costs by a little than to try to increase revenues by a great deal. But sometimes supply chain executives need to explain this more fully and repeatedly to C-level leaders.”
When hospital executives decide to cut costs, the supply chain often is the logical place to look. After labor costs, supply chain costs are hospitals’ second-largest expense. “And labor can’t always be cut; you can take away only so many doctors and nurses before you start making an impact on patient care,” Griffin says.
Supply chain leaders understand that there is a wide range of options for how to cut costs, such as outsourcing and contract negotiations, Griffin says. C-suite executives need their insight to understand what the options are and which ones can work best for their facilities. “Those hospitals that get their supply chain leaders at the executive table on a consistent basis achieve the highest degree of cost reduction,” Griffin says.
While opening the lines of communication is vital, it can be a slow process. At first, professionals in the C-suite may not invite input from supply chain leaders, or they may not identify with supply chain managers’ point of view.
To overcome those initial misgivings, “first and foremost, be prepared to listen,” says George Hays, assistant vice president for SolutionsTrust. “The facility or executive may have unique problems that need to be solved. Don’t position your offering as a ‘one-size-fits-all’ solution. Do your homework and find out as much as possible about the challenges executives are facing prior to the meeting.”
Second, supply chain leaders must be flexible in their approach and willing to accommodate the preferences of C-suite executives. For instance, if top-level executives always hold financial meetings on Monday mornings, don’t ask for a Monday afternoon meeting. If your CEO arrives early to catch up on phone calls, don’t schedule a breakfast meeting to discuss supply chain issues.
“Know your executives’ preferred communication style,” Pummel says. “Are they a traditionalist or a social media junkie? Do they prefer a regular, one-on-one conversation? Moving into their communication comfort zone will get your message across.”
After accommodating executives’ preferences, the best method of communicating information about supply chain issues is simply common sense: “Keep it at a high level with accurate, unbiased information,” Pummel says.
Finally, don’t plan to hold a few meetings to discuss a specific project with C-level leaders and then disappear again. Successful supply chain leaders make communication with their executives an ongoing priority.
“Effective communication with the C-suite is not a ‘one-and-done’ approach,” Griffin says. “It involves a continuous, ongoing commitment to openly sharing ideas, strategies and results.”