IDN 2010 SUPPLY CHAIN EXCELLENCE by cwc14199

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									        IDN 2010
SUPPLY CHAIN EXCELLENCE
   Resource Efficiencies and Cost Savings
 Scottsdale Healthcare, Scottsdale, AZ 85251
    Mark Willmore, Purchasing Manager




                                               1
Problem Statement

Purchasing Department model at SHC (as of 2008)
• Buyer resources focused only on PO transactions
• PO volumes extremely high for existing resources
   •   ~ 90K PO’s ( 52% from 2006)
   •   660K+ PO lines to manage ( 23% from 2006)
   •   > $185M in purchases
   •   Number of buyer resources remained stable at 7 FTE
• High volume of PO transactions has added impacts
   • Discrepant invoices (timely resolution to manage credit hold risk)
   • Little time to negotiate on off-contract requirements
   • Little time to engage in continuous improvement programs
• Rising PO volume trend demanded action
                                                                      2
Actions Taken (Plan & Timeline)

• Plan: Secure additional Purchasing resources to
  manage increased volumes – justify with:
   • Industry benchmarking
   • Solid definitions of roles and expectations
   • Improved cost savings targets and ROI commitments
• Timeline (Benchmarking):
   • February 2008: Launched benchmarking effort with local
     AHMMA, GPO IDN, and other national industry contacts
      • Compared PO activity against number of dedicated resources
      • # of PO’s, # of PO lines, and $ volume
      • Compare over a 3 year period (2006 through 2008)
   • Results: Average buyer volume activity ranked highest
     against benchmarked participants

                                                                     3
Actions Taken (Plan & Timeline)

• Timeline (Roles / Expectations):
   • June 2008: Data supports new resource request
      •   Create two (2) Purchasing Aide (PA) positions to absorb the
          majority of buyer administrative duties; including:
           • Order acknowledgements
           • Back orders follow-up
           • Product returns / credits
      •   Free up buyers to focus on cost savings and CIP’s
           • Over $40M spent on non-contracts items
           • New electronic office initiatives to enable and support
• Timeline (Cost Savings and ROI)
   • June 2008: Measure cost of 2 new PA’s against increased
     buyer savings on non-contracted spends
      •   Savings target was 2% of $40M = $800K
      •   ROI target = 3 months
                                                                        4
Results (by end of fiscal 2009)

• SHC Administration approved request (October 2008)
• New PA positions hired (December 2008)
• Began comparing buyer savings reports (March 2009)
   • 1st Report: Buyers captured $485K (easily beat ROI goal)
   • Already exceeded 2008 total savings by ~$200K
• Overall 2009 non-contracted savings (September 2009)
   • $782K (‘09) vs. $290K (‘08) – a 270% improvement
• Other Benefits:
   • Discrepant invoice $ and volume reduction improvement:
      • Invoice $  55% and volume  62%
   • Implemented electronic requisition approval (June 2009)
   • Kicked off electronic return goods process in October

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BACK-UP DATA




               6
BENCHMARK DATA – PO’S




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BENCHMARK DATA – PO’S




                        8
BENCHMARK DATA – PO LI’S




                           9
BENCHMARK DATA – PO VALUE




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