Health systems should bring strategy to materials management
A stock analysis value recapture (SAVR) committee can help a health system strategically elevate its materials management function.
Health systems too often view inventory management as a back-office task, relegated to counting boxes and reordering supplies. But that perception ignores the direct role inventory plays in the patient experience. Being able to deliver the right supplies to the right place at the right time supports safe care and helps clinicians do their jobs well. The lack of this capability can lead to delayed procedures, extended patient lengths of stay, substitution of unfamiliar products and added stress for staff. All these effects have a direct impact on a health system’s financial performance.
Unfortunately, executive leaders often do not give materials management the attention it deserves to ensure supplies are treated as a strategic resource, supported by good data and clear accountability.
A stock analysis value recapture (SAVR) committee can fill this gap by integrating material management processes internally within the health system and externally with suppliers. Its fundamental goal is to ensure the health system’s materials managers have the guidance they need to make informed, timely decisions about inventory.
How a SAVR committee relates to existing materials management structures
Currently, most health systems rely on three structures for different aspects of supply management. A SAVR committee complements two of these structures and provides essential guidance for the third.
1 Value analysis committees (VACs). Having been used by health systems for more than two decades, VACs focus mainly on procurement. These committees are charged with evaluating products, controlling the health system’s formulary and ensuring clinicians use approved products in a standardized way. A typical VAC spends most of its time reviewing new products or services and coordinating activities that can build purchasing power or obtain price discounts. These are valuable efforts, but unlike a SAVR committee, a VAC devotes little time to managing existing stock.
2 Group purchasing organizations (GPOs). With a national focus and a concentration on supplier credentialing, contract terms and price negotiation, GPOs can assist health systems in standardizing agreements and achieving economies of scale. But they generally will not assist a health system with its local inventory decisions without a contract in place.
3 Materials management departments. These departments handle the day-to-day logistics of inventory but are rarely equipped to manage strategic, cross-functional improvement efforts without informed input. A SAVR committee can address this limitation by providing the material management function with cross-functional guidance to inform its inventory decisions.
Healthcare supply chain integrated planning: model comparison
| Value analysis committee (VAC) | SAVR committee | Group purchasing organization (GPO) |
|---|---|---|
| VACs focus on procurement and product evaluation. | SAVR committees emphasize inventory optimization and cross-functional collaboration. | GPOs concentrate on contracting, pricing and supplier alignment. |
| – New product reviews – Product trials – Strategic contracting – Cost-savings initiatives | – Inventory management – Supplier relations – Demand forecasting – Materials and sustainability processes | – Standardized contracting – Group discounts – Benchmarking – Advisory services |
Benefits of the SAVR committee model
A SAVR committee improves a health system’s inventory governance by bringing together experts from across the organization to work on process improvements that go beyond daily operations. To support its efforts, the committee applies new technologies such as cloud computing, AI, robotics, traceability technologies and logistical automation, and its membership necessarily includes individuals with expertise in using these tools.
As a complement to the procurement efforts of a VAC, a SAVR committee provides the health system with a structured way to identify, measure and recapture value from stock that already exists within their operations. That structure also ensures clinical teams have the supplies they need when they need them, supporting consistent quality of care and an improved patient experience.
How a SAVR committee contributes to integration and collaboration
A SAVR committee helps to promote internal and external integration of inventory management. Internally, it brings together multiple perspectives from within the organization, and externally, it coordinates those internal views with the views of suppliers, vendors and other partners.
Procurement processes often create a perception of zero-sum trade-offs, where one party wins and the other loses on issues such as price, rebates or contract terms.
Once a product becomes part of inventory, however, the relationship between the health system and its suppliers should become cooperative. A SAVR committee provides the forum for constructive engagement with suppliers to ensure stock and supply continuity are maintained at necessary levels and improvement goals are shared. The committee’s goal should be to turn strategy into measurable outcomes.
Strategic areas of focus for a SAVR committee
Under a SAVR committee, strategic inventory initiatives can be organized as workstreams with defined leadership, clear milestones and measurable outcomes. Typical key performance indicators that the committee should track include:
- Reduced carrying costs as a result of lower expenses associated with storing and managing excess stock, including space, insurance, taxes and labor
- Reduced stockout costs as a result of avoiding shortages that delay procedures or create emergency purchasing costs, and of stock depletions that require last-minute product substitutions, which can disrupt care delivery and patient confidence
- Improved cash flow resulting from less money being tied up in slow-moving or expired stock
- Optimized purchasing resulting from improvements in contract terms and pricing that are informed by data-driven insights
Beyond tracking workstreams, SAVR committees can also oversee supplier performance reviews that consider factors such as the following:
- Delivery accuracy
- Order fulfillment
- Customer service
- Sustainability initiatives
- Recall management
- Documentation of upstream Tier 2 and Tier 3 sourcing methodsa
The SAVR committee can establish supplier report cards and review them at set intervals. Suppliers that consistently underperform can be escalated to the VAC for further action at the level of procurement.
Representation and participants of a stock analysis value recapture (SAVR) committee
| Functional representatives | Invited participants |
|---|---|
| – Supply chain – Purchasing and value analysis committee – Finance – Nursing leadership – Physician leadership – Green team liaison – Performance improvement – Strategic planning – Pharmacy – IT and decision support – Others as needed (e.g., procedural areas, site leadership) | – Cardiovascular – Spine – Neurosurgery – bIV systems and solutions – Imaging – Laboratory – Anesthesia |
Areas of strategic focus for SAVR committees
These committees should maintain a strategic view of materials management, tracking broader trends related to the following elements as change drivers. Addressing these elements lays the groundwork for inventory to function as a strategic capability.
1 AI. The SAVR committee should champion the data improvements needed to make AI useful in practice. The potential of AI depends on accurate and reliable data, yet many health systems struggle to track the tens of thousands of stock-keeping units (SKUs) they purchase each year due to factors such as unscanned or misplaced inventory, expired products and incomplete return or exchange processes. The committee should address these types of shortcomings, build a clear picture of available stock and pave the way for effective use of AI to manage it.
2 Supply chain risk. In today’s environment, disruptions can come from trade policy, inflation, geopolitical conflict and natural disasters. Health systems that focus only on procurement may find it difficult to maintain supply continuity when external shocks occur. By monitoring supplier capacity and reviewing their upstream sourcing, the SAVR committee can prepare contingency plans for substitute products or alternative suppliers.
3 Sustainability. More health systems are working with suppliers to minimize packaging, shift from disposable to reusable products, improve recycling and streamline preference cards to reduce water and energy use. Including a sustainability liaison within the SAVR committee ensures that environmental initiatives are connected to broader inventory practices.
4 Traceability technologies. Tracking tools such as barcoding, radio-frequency identification and Internet-of-Things sensors are becoming more common. The U.S. Veterans Health Administration was recently cited for challenges in tracking non-biological implants, underscoring the importance of having reliable systems and cross-functional oversight.b These tools can improve visibility into how products move through the system but require coordinated planning across departments. A SAVR committee provides a natural forum for such coordination.
5 Changing care models. As a health system expands through mergers and the growth of ambulatory and home-based services, it needs consistent oversight of stock across multiple sites. A SAVR committees can help design hub-and-spoke distribution models and promote collaboration among facilities to balance central efficiency with local responsiveness.
Elevating inventory to a strategic capability
Health system supply chain leaders, with input from finance leaders, have an opportunity to elevate inventory management within their organizations from an operational task to a strategic discipline. While VACs and GPOs manage procurement issues, materials management departments perform vital daily work. But they often lack the reach to coordinate enterprise-wide improvement.
A SAVR committee can fill that gap by creating a structure for cross-functional collaboration, data transparency and shared accountability. Health systems should expect more from their suppliers than fair pricing and reliable delivery. Through the SAVR process, health systems can go beyond simply obtaining fair pricing and reliable delivery from suppliers to also monitoring performance, strengthening partnerships and communicating where collaboration can drive measurable outcomes.
Moving from inventory management to inventory strategy requires leadership commitment, reliable data and a forum for integrated planning. A SAVR committee facilitates this shift by assembling expertise on the organization’s healthcare supply needs and uses enterprisewide into a resource that supports clinicians, strengthens the patient experience and reinforces the link between operational excellence and high-quality care.
These benefits of approaching materials management from a strategic standpoint are well worth pursuing. Moreover, the benefits will grow as health systems continue to establish SAVR committees and as the committees evolve and become more adept at keeping pace with the forces driving industry change.
Footnotes
a. Tier 1 refers to vendors a health system buys products or services from directly; Tier 2 refers to suppliers that that supply these items to the Tier 1 vendors; and Tier 3 refers to companies that provide materials to Tier 2 suppliers (see Workiva, “What are Tier 1, 2, and 3 suppliers?” Jan. 5, 2026).
b. Government Accountability Office, Veterans Health Care: Improvements needed in patient tracking for non-biological implantable medical devices, report, March 27, 2024.
Case example: Orthopedic SAVR application at an AMC
A large academic medical center (AMC) in the Midwest recently addressed an ongoing inventory management challenge within its orthopedic service line. The AMC had experienced years of shifting clinical practice patterns, inconsistent scanning compliance and unclear vendor processes, resulting in excess implant inventory, workflow friction and limited visibility into true demand. The lack of a formal structure to coordinate inventory management with finance, clinical leaders and analytics had allowed orthopedic implant inventory to grow unchecked. Slow-moving items accumulated, swap opportunities were missed and storage spaces became congested.a
These issues underscored the need for governance dedicated to existing inventory rather than procurement activities alone.
Recognizing these deficiencies, the AMC saw an opportunity to reduce cost, improve space utilization and strengthen clinical support by applying a structured, crossfunctional approach that incorporated principles of a stock analysis value recapture (SAVR) committee.
A team-focused solution
The AMC’s leaders assigned a team to undertake a multi-month orthopedic implant pilot that would develop and test the new approach. The team included the orthopedic service line lead and representatives from nursing, perioperative services, supply chain operations, purchasing, sterile processing and decision support.
In applying SAVR principles to identify savings opportunities, the team adopted three areas of focus:
- Using analytics to assess consumption
- Using periodic automatic replacement (PAR) modelling to determine minimum stock levels
- Seeking clinical input on item usage and preference
As a result, the team was able to identify an opportunity to reduce owned inventory that would generate over a million dollars in savings, with most achievable in the first year through natural utilization and improved swap processes. This timeline aligned well with leadership expectations for results within annual budget cycles.
The SAVR structure complemented, rather than duplicated, VAC activities. Physician leaders participated in two forums: VAC meetings addressing product strategy, and SAVR meetings focusing on optimization of stock already on hand.
Integration promotes improvements
The SAVR model also supported both internal and external integration, giving way to improved documentation of vendor-owned items, strengthening swap cadence, expanding consignment opportunities for low-use implants and reducing storage congestion.
Although the initiative did not explicitly increase surgical volume, improved quality and clinician satisfaction resulted from smoother workflows, faster access to priority implants and fewer procedural delays.
Footnote
a. Swap opportunities involve various approaches to transfer, sell or donate under-utilized, about-to-expire or surplus items.
