Excelling in Supply Chain Management Through Innovative Practices

1. Advancing Supply Chain Best PracticesThinking Outside the BoxChip Jackson Senior Director Oracle Healthcare Industry Business Unit – N. America Chip.Jackson@Oracle.com

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3. Agenda <Insert Picture Here> • Today’s Challenges • New Approaches/Strategic Opportunity • Adapting and Accepting for Success • Marriage of Process and Technology • Question and Answer

4. <Insert Picture Here> Today’s Supply Chain Challenges

5. Manual Invoices & Payments Manual Invoices & Payments Manual P.O. How the Healthcare Supply Chain Really Works Healthcare purchasing organizations struggle with waste and inefficiency and are slow to adopt enabling technology. Suppliers - Not Approved AP Paper Disbursement Requests ERP system Purchasing Dept. ERP system Location Purchasing Approved Suppliers Paper Requisitions Opportunity

6. Answering Supply Chain Managerial Challenges Reducing Execution Costs • Reduce the cost to train and onboard new hires • Reduce inventory handling costs • Reduce overtime required • Reduce resource idle downtime Costs Improving Organizational Service • Provide real time order status visibility • Provide real time service request status visibility • Respond to last minute order changes • Expedite urgent service requests Customers Managing Exceptions • Get orders out the door faster to avoid expediting costs • Respond to last minute order changes without disruption • Scale to meet spikes in demand • Reduce equipment downtime Exceptions

7. The Supply Chain Solution Life-Cycle Highly Automated Facilities Integrated Warehouse Management Automate physical inventory handling High Warehouse Management Integrated Warehouse Management Implement a true “execution system” using system directed tasks and task management RF / Barcode Only Mobile Supply Chain Applications Improve accuracy and reduce latency of existing transactions Product / Order Complexity Baseline Inventory Traditional Inventory Management Record transactions and track balances Manual? Low Transaction Velocity / Volume Small Large

8. Managing For Recovery What Winners in Last Recession Did Right • Set priorities based on value creation • Focused on strategic & sustained cost management AND value creation • Leveraged technology • Invested in systems to manage & gain insight about key value drivers • Collaborated with customers to improve value propositions • Developed new products, services uniquely suited to the downturn • Priced for profitability • Shaped demand to gain market share with pricing Source: Accenture Consulting

9. <Insert Picture Here> New Approaches/ Strategic Opportunity

10. High Definition Supply Chains Requisition –PO tracking and Replenishment Warehouse Tasks and Activities Facility and Delivery Solutions Shipment, Global Track and Trace Cold Chain and Logistics Business Process Platform Timely Decision Support Automated Event Management

11. ERPs Go MobileFrom Record Keeping Repositories to Execution Engines ACCOUNTING • Inventory Accounting & MRP • Limited Execution Support or Integration • Stale Data • Integrated Planning & Execution • Choices in User Interfaces • Real Time, System Directed Tasks EXECUTION

12. Why Go Wireless? Accuracy Efficiency Visibility Eliminate Data Entry Errors Paperless, Point of Use Data Entry Real Time Updates Information You Can Trust Simplified Data Entry High Definition Supply Chains

13. Mobility Saves MoneyReported by best-in-class companies running a WMS BENEFIT AREAS PERCENTAGE OF SAVINGS • Inventory Count Accuracy • Shipment errors • Productive hours • Perfect order fulfillment • Lost sales • On time ready to ship • Inventory Shrinkage • Reduction in distribution costs • Data entry errors • Achieve Accuracy of up to 99.9% • Achieve Accuracy of up to 99.9% • Achieve productivity of >=95% • Achieve fulfillment of >=99.1% • Reduce lost sales <0.25% • Achieve shipment time >=99.98% • Reduce shrinkage <= 0.005% • Reduce distribution costs <2.1% • Reduce errors upto 1 in 3 million

14. What is RFID/RTLS? RFID is a technology for tagging physical items with a unique ID that can be easily and non-invasively read -- a “wireless bar code.” The ID can then be associated with a system representation of the object that contains all associated records (e.g., contents, state) • Chip holds memory that stores identifier • Implements wireless protocol • Antenna receives power and analog signal from reader • Converts radio signal to and from analog electrical signals • Edge Server collects observations & drives readers • Forwards events to database tier for distribution • Application receives transient messages & reacts immediately • Tag contains chip, power source, & antenna • Sends back identifier upon power up • Reader communicates with tags in range to read all identifiers and memory (payload) • Event Queue, often implemented as transient queue • At most basic level, Database serves as a “better bus” • Data archiving and aggregation performed in application-neutral level

15. IDTechEx: Apps by Type# Companies implementing (in 000’s) – surveyed (not pilots) • More data for convergence – using WiFi location capabilities to complement RFID • Uses: WMS, Yard, Carrier & Fleet Mgmt, Retail (Store), Logistics, Field Services, MSCA, Any facility tracking & event management solution Source: IDTechEx, Review of RFID in 2009 http://

16. RFID, RTLS Ecosystem Optimization, Analytics of Events using rules, heuristics and solvers. Dashboards for Exception Processing RFID Applications Process Oriented Data Oriented Mapping Device events to Business Events and Controlling Data Flow Device Oriented Adapters, Drivers to process reads and aggregate them Hardware & Edge: tags, readers, network infrastructure Infrastructure

17. Master Data Management Brings InsightFirst Step to Clinically Driven Resource Planning Master Data Analytical Data Transactional Data Designed for “Configurability” in a heterogeneous environment Designed for “Trends” in a heterogeneous environment Procurement & Spend Analytics Supplier Hub • Single Source of Truth Vendor Profile • De-Duplicates • Merges • Standardizes • Captures 3rd Party Data • Validate Addresses • Classify Vendors • On-Board Vendors • Interactive Dashboards • Ad-hoc reporting • Alerts • Charts • KPI’s • Pivoted and tabular reports • Guided navigation Supplier Relationship Management • RFx • Auctions • Purchase Orders • Receiving • Contracts • Ship Notices • Invoices • On-Board Vendors Designed for Transactional “Throughput”

18. Master Data Management for Healthcare Data Standardization and Normalization Consolidation Core ERP Applications Access& Search ProductData Repository Workflow enabled Change Management Synchronization to downstream systems SOURCES GHX Data Loads DESTINATION Multiple Inventory Locations WMS Par Location 3rd Party Inventory Item Masters MedSurge Pharmacy Locations Item Masters Multiple ERPs

19. Consolidation Access& Search Synchronization to Downstream Systems Workflow enabled Change Mgt. Creating a Common Repository for Products and Systems Internal Systems Individual Facility Item Master Central Hospitals Item Master Surgical Systems Point of Use Systems Import ProductData Repository Par Locations * Pharmacy PeopleSoft ERP External Systems Synchronization ERP Output(print catalogs,data sheets, etc.) Distributor’s Catalog XML GHX Mfg’s Catalog

20. What is Inventory Policy Planning? • Inventory Policy Planning enables you to strategically manage inventory policies and service levels throughout the supply chain. Calculate order quantities and safety stocks using selected inventory strategies. Conduct what-if analysis, compare your current inventory policy with simulated inventory policy scenarios—and improve inventory levels. Inventory Policy Planning

21. Reduce Inventory $ Investment while Increasing Inventory Turns • Monitoring Seasonal and Trend Sensitivity • Planning to Target Service Levels • Knowing your Inventory Investment beforehand. Inventory Policy Planning

22. GS1 MandatesFormerly EAN, UCC & ECCC 2 • Locations • Standards for identifying trading partner sites 3 4 • Item Master Synchronization • Global network for secure, continuous data synchronization of item master information • RFID • Electronic Product Code, an RFID tagging standards system 5 • Traceability • Standards & processes for product track & trace • Focus on quality conformance, authentication etc. 1 • Barcodes • Identification standards for items, packages & other label data Designing the standards that drive the supply chain

23. Why Comply?Accuracy and Safety Eliminate discrepancies and confusion between internal and supplier item numbers Eliminate scanning errors • Avoid relabeling at receipt • Automate complex synchronization processes • Zero discrepancies in what you buy, receive and dispense

24. Drug Supply Chain IntegritySerialization and ePedigree Management Application 1 Serialization Returns Reconciliation 6 2 • Unit & case serialization • Multi-site provisioning • Serial import and export • Contract manufacturing serial data exchange • Custom serial algorithms Packaging • Import returned serials • Reconcile serials against sales orders • Assess and authorize valid returns • Serial disposition • Web services integration to packaging systems • Packaging hierarchy maintenance UI and services • Serial and packaging inquiry Comply, Track, Trace, Protect 5 3 Shipping Track & Trace 4 • Portal for customer and consumer serial verification • Mobile access • Flag counterfeit serials • Protect public health • Outbound ePedigree management • Shipment and serial analytics • Export product data to regulatory database(s) Receiving • Inbound ePedigree management • BI dashboard drilldown into receipt and serial details

25. Sourcing At-a-Glance IdentifyOpportunities Implement Agreement Identify Suppliers, Define Strategy Buying Professional LOB Stakeholder Supply Base Approve and Issue Define Negotiation Analyze and Award Conduct Negotiation “Strategic sourcing applications are providing the triggers for cultural change, higher productivity and -- above all -- return on investment.”

26. Solicitation Life Cycle Standards Team Contract Expiration Requisition Sourcing Event Vendor Responses Analysis Award • Created from Req’s, PO’s, Contracts, Bids, etc. • Bid Factors • Cross-Functional Collaboration • Internal or external Deliverables • Formal Ammendment Tracking • Notify individuals or groups via email/website • Vendor Self-Service Registration • Surrogate Bidding • “What-if” Analysis • Auto-Award Recommendation • Import/Export Excel • View status change history • AutoCreate Purchase Orders or Contracts • Track History of Bids/Award Issued

29. Filter Out Identical Bid Factors Focus Review on Bid Differences Easily Identify “Outlier” Responses Side-by-Side Comparison Use structured bid data Automatic bid scoring Provide online analysis for fast, accurate awards Graph formats and export to Excel Flexible award methods Facilitated Online Bid ComparisonMake Faster Award Decisions

30. Sourcing Knowledge Capture Drive Optimal Results by Re-Using Best Practices Bidding Rules Supplier Lists Sourcing Policy Rules New Sourcing Event Sourcing Templates BID Factors Scoring Methods • Leverage Proven Practices and Buyer Expertise • Retain Knowledge across the Organization • Reward The Best Suppliers With More Opportunities Negotiation Event Style Knowledge from Past Sourcing Events

31. Strategic sourcing is emerging as the leading strategy to control costs, capture innovation, and maximize performance • E-sourcing technologies deliver information visibility and globally infrastructure to enhance and accelerate strategic sourcing What Analysts are Saying…

32. Primary KPI Dashboard Supplies / Discharge Elevated Drill to Region Drill to Supply Category Data Warehouse Revenue Data Clinical Data Cost Data Drill to Diagnoses Drill to Providers Analytics Drives Effective Supply Chains It will give you a serious competitive advantage – that will eclipse all other early savings!

33. Challenges in Spend AnalysisIncorrect Classification, Multiple Taxonomies Incorrect Classification • Large uncategorized Invoices (>50% of invoices not tied to PO’s) • Pervasive use of Miscellaneous category

34. <Insert Picture Here> Adapting and Adopting

35. A Need for ChangeLeading Business Trends • Focus on consolidating product information • Drive toward better product data quality • Automatic data synchronization with trading partners • Improve collaboration across and beyond the enterprise • Increasing component reuse in product designs • Accelerated new product introductions & changes

36. The Top Strategies for Process Improvement

37. Deploy Best Practice Processes • Close down non-controlled, non-compliant P2P flow paths • Incorporate eCommerce language into contract templates • Incorporate internal service operations (Print, Catering, Telecom etc.) • Use of pop-ups/forms/websites to capture strategic information needed for order (Serial #, Lot # etc.) • Think “Lean”

38. Collaboration is Essential • Integrate • Optimize • Simplify

39. <Insert Picture Here> Technology’s Impact

40. Marriage of Process and Technology

41. Time and Technology are Driving Efficiency – Real World Example • Requisitions via ePro accounted for 97% of activity (97% lights out). • Reduced work load from 1 FTEs to .25 FTEs (less than WFO due to EWay) • Match Exception Improvement • Better catalog control • Increased MWDBE business (improved business compliance and improved reporting)

42. Leverage Technology to Reach Partners

43. <Insert Picture Here> Summary

44. Consolidate with Shared Services Solutions Adopt Industry Standards Leverage business analytics and decision support Collaborate within the Community (suppliers and end users) Automate material flows and leverage technology Summary of Best Practices for Effective Supply Chain Management

45. Q&A

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