Faced with declining revenues and increasing operating expenses, hospitals are evaluating numerous mechanisms designed to reduce costs while simultaneously maintaining quality care. Many facilities have targeted initial cost reduction efforts in the reduction of labor expenses. Once labor expenses have been "right sized," facilities have continued to focus on service delivery improvements by the optimization of the "supply chain" process. This report presents a case study of the efforts of Vanderbilt University Medical Center in the redesign of its supply chain management process in the department of Perioperative Services. Utilizing a multidisciplinary project management structure, 3 work teams were established to complete the redesign process. To date, the project has reduced costs by $2.3 million and enhanced quality patient care by enhancing the delivery of appropriate clinical supplies during the perioperative experience.