Supply chain tip of the week: Use the 80/20 rule

When searching for savings opportunities, it is wise to sort your item master file using the Pareto principle, also known as the 80/20 rule, says John Mateka, MBA, MHA, interim director of materials management for Florence, S.C.-based McLeod Health.

The Pareto principle, named after economist Vilfredo Pareto, describes an unequal relationship between inputs and outputs. The rule states that 20 percent of the invested input is responsible for 80 percent of the achieved results, according to Investopedia.

Mr. Mateka shared the following tip with Becker's Hospital Review:

"[This principle] is very applicable to the supply chain — roughly 20 percent of your items comprise 80 percent of your spend. When sorting products in descending total dollar value, your top spend items will reveal themselves. Supply chain leaders should spend time ensuring competitive pricing and utilization per volume of service for the top 20 items. This will save time and deliver the most benefit."

If you would like to submit a supply chain tip, please email Mackenzie Bean at mbean@beckershealthcare.com.

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