Brinmar Consulting Associates, an REM Associates network partner, recently completed a strategic assessment of procurement activities and developed recommendations for process improvements for a mid-western hospital system.
Objectives were to:
- Ensure use of least-cost model for contracting and purchasing
- Assess effectiveness and drivers of the logistical services from the user/customer perspective
- Evaluate potential for expanding supply chain operations to additional products, services and locations
- Review overall effectiveness of current 3PL for hospital supplies distribution.
Results of this work:
This work resulted in:
- Confirmation of competitive invoice prices and superior rebates using current procurement model
- Opportunity to further reduce costs by centralizing contracting and purchasing for all high volume items and vendors and implementing a combination of direct and functional responsibility for contracting and purchasing
- Identification of need to increase effectiveness of central procurement and distribution group by improving communication with local hospital organizations
- Potential to improve product availability and customer service quality.
- Recognition of need for common data bases and operating systems
- Confirmation of overall effectiveness of current 3PL for hospital supplies distribution and identification of opportunity for improved contract terms
Existing Situation:
Prior to the implementation of any process improvement recommendations:
- Local hospital organization leadership and supply chain managers questioned cost effectiveness of current procurement model
- Procurement responsibility for many high volume vendors and products is fragmented and disbursed
- Supply Chain managers and “customers”, at local hospital organizations, were not familiar the effectiveness of centralized procurement and other services
- Significant extra effort is required to manage central procurement in the absence of common data bases and operating systems
Recommendations being Implemented:
Following an in-depth analysis, which included interviews of Purchasing and user department staff at all local hospital organizations, the following recommendations are part of the initial implementation effort:
- Centralizing contracting and purchasing for all high volume items and vendors
- Implementing a combination of direct and functional responsibility reporting for contracting and purchasing
If your current environment in any way resembles the “Existing Situation”, contact REM Associates to develop an action plan for process improvements directed at achieving similar results.