Session: Anchors Away: 5 Strategies to Right-Size Your Inventory and Improve Supply Contracts

Editor's Note

As executive director of the Association for Health Care Resource & Materials Management (AHRMM), Michael Schiller, CMRP, gets regular insight into strategies employed by healthcare organizations, suppliers, technology leaders and frontline staff—insight he was happy to share with OR business Management Conference attendees in a February 11 presentation. Titled “5 Strategies to Right-Size Your Inventory and Improve Supply Contracts,” the session covered demand planning, supply contracts, resiliency strategies, labor constraints, and headwinds driving up costs.

Schiller began with the ongoing evolution of inventory strategies in the post-pandemic healthcare environment. Once reliant on just-in-time inventory, many hospitals were forced to overstock during COVID-19, leading to inefficiencies. He advocated for a more refined approach: balancing just-in-time, just-in-case, and just-enough inventory models, depending on product utilization patterns, to improve forecast accuracy and move toward data-driven demand planning.   

This strategy begins with accurate utilization data, he said, and from there, preference card management. By ensuring surgical preference cards reflect actual product usage, hospitals can eliminate unnecessary stock, improve cost-per-case accuracy, and reduce waste. Additionally, integrating demand forecasts with distributors enables a more efficient supply chain, decreasing unnecessary overordering and stockpiling while preventing shortages.

Strategically fostering supplier relationships was another major focus of the presentation. Establishing vendor scorecards and supplier councils fosters transparency, ensures accountability, and improves contract negotiations, Schiller said. He emphasized the value of predefined key performance indicators (KPIs) and collaborative cost-reduction efforts. For example, vendor-managed inventory and consignment agreements, which allow hospitals to pay for supplies only when used.

To cultivate supply chain resiliency, Schiller urged attendees work closely with risk management teams to identify potential disruptions. Transparency—understanding where products originate and how they are transported—is essential, as evidenced by recent shortages of IV fluids and blood culture media. Other topics included recent developments in rising costs and the risks presented by newly announced tariffs.

Ultimately, the session underscored the need for surgical leaders to adopt a proactive, data-driven approach to supply chain management. Learn more in this session preview article.