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IDN 2010 SUPPLY CHAIN EXCELLENCE

IDN 2010 SUPPLY CHAIN EXCELLENCE. Resource Efficiencies and Cost Savings Scottsdale Healthcare, Scottsdale, AZ 85251 Mark Willmore, Purchasing Manager. Problem Statement. Purchasing Department model at SHC (as of 2008) Buyer resources focused only on PO transactions

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IDN 2010 SUPPLY CHAIN EXCELLENCE

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

  2. 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

  3. 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

  4. 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

  5. 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

  6. BACK-UP DATA

  7. BENCHMARK DATA – PO’S

  8. BENCHMARK DATA – PO’S

  9. BENCHMARK DATA – PO LI’S

  10. BENCHMARK DATA – PO VALUE

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