Supply Chain Horror Story: Buyer/Supplier Communication Blunder

Supply Chain Horror StoriesSupply Chain Horror Story

This horror story involves a serious disconnect between hospitals and suppliers. Not only do suppliers need to understand the detailed and mandated specifications for capital equipment, but also they should listen to hospitals’ needs in order to provide a better alternative.

I belong to a 456-bed hospital in the Midwest.  We have been growing steadily over the past 10 years, and we are seeing our service lines expand across the board.  Particularly with our radiology because of a new stroke and cardiology program being implemented at our hospital.

A few months ago, I was dealing with our incumbent radiology equipment provider to add a CT scanner. I had provided a very detailed requirements document outlining specifically what we wanted. These requirements were based on both clinical and financial specifications provided by the clinical and operations stakeholders. I reached out to the vendor after sending the RFQ asking for a price quote on adding the new CT scanner to our new stroke and cardiology wing. When we got the supplier on the phone, it sounded like they were going to fleece us based on the cost relative to what others were paying in the market. However, at the time I had no way of proving the tactic. The supplier kept saying that they wanted to earn our business and the rep was so nice, I honestly believed that they were being upfront and honest and giving us the best price.

So, after about 45 minutes of discussion on the phone with our rep, I realized that if I wanted the new CT scanner in by the preferred time, I had to take their bid. It was only after four weeks of waiting for the equipment to ship that we realized the quote that the vendor provided was incorrect and not based on what we wanted. So, there we were staring at an uninstalled CT scanner that didn’t fit the specifications for the room, didn’t have the right functionality for our patient mix, and included training and service plans that were in the hundreds of thousands of dollars. What we ultimately found was that the quote was based on the vendor’s interpretation of what we told them in writing. This was a horror story that ended up costing us the most valuable resource of all: time.

The Solution

MD Buyline has been helping hospitals for over 30 years avoid purchasing mistakes just like this every day.  One of the first recommendations we make to hospitals purchasing any capital equipment is to look at the entire market and make it your mission to perform an apples-to-apples comparison between vendors and their products. Instilling this best practice as part of the purchasing life cycle allows hospitals to see side by side the features and benefits by vendors and, in this case, would have allowed the hospital to see discrepancies in what they asked for and what was quoted by the vendor. Given the significant changes in offerings by each vendor, it’s often best to have a clinical expert on the technology review each quote and provide feedback based on what is most important to the hospital.

Most automated online negotiation tools do not solve the buyer/supplier communication problem. Nor do they enable suppliers to truly collaborate with hospitals and get creative on either specification needs or ongoing training and service. In this particular case, it just so happens that MD Buyline would have been able to help the hospital not only develop the RFI and RFQ, but also have our clinical experts analyze the responses, benchmark the pricing and recommend the best technology for the hospital, thus saving them time and money.

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