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Situation
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- A nationwide health service provider
- Procurement spend of $2 billion (excluding drugs)
- Semi-autonomous hospital-level procurement
- Limited professional procurement capability
- Local and limited computerisation of procurement
- Some national contracts with poor compliance
- A desire to change and improve
A nationwide health service provider with a third party expenditure (excluding drugs) of $2 billion per annum wanted to transform its procurement operation in order to reduce expenditure by 10%, improve the value delivered through suppliers and free up clinical staff to focus upon front-line care.
The procurement function was decentralised, fragmented and inefficient. There were some national contracts but they were largely ignored. Suppliers divided, conquered and cherry-picked.
There were islands of automation for procurement and finance. The systems duplicated functionality, were incomplete and did not support the business processes. Data was patchy, inconsistent and difficult to share.
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Solution
- Created a jointly staffed programme team
- Undertook an opportunity assessment to create a business case and engage stakeholders
- Created a transformation programme to:
- Deliver quick wins through accelerated sourcing
- Strategically source clinical and complex categories to prove the prize
- Procurement and sourcing
- Improve customer service
- Focused on sustainability through:
- Methodology development
- Collaborative working
- Professional procurement training
- Transparent benefits and value tracking
A jointly staffed programme
f team undertook an opportunity assessment to create a business case for change, prioritise categories, evaluate technology and engage stakeholders.
This resulted in a transformation programme of interrelated work streams designed to both deliver benefits and sustain the changes:
- Early wins fueled the change process through Accelerated Sourcing
- Complex, clinical category sourcing delivered a step-change in performance
- Sourcing was used to accelerate the tender process and maximise savings
- Procurement was introduced nationwide to streamline transaction processing, improve compliance to new contracts and free up clinicians to focus on front-line care
- A new methodology was developed and all procurement staff fully trained, there was significant knowledge transfer from the consultants
Robust and auditable benefits and value tracking proved the case.
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Benefits
- Over 18 months delivered savings 50% higher than the agreed business case
- New professional procurement organisation
- National methodology and effective, fully trained people
- Significant benefits across all categories, including clinical
- Increased stakeholder engagement
- Compliance and efficiencies from procurement
- Acceleration through sourcing
- Agreed strategy for logistics and inventory
In 18 months we exceeded the agreed business case by 50%.
e-Procurement reduced transaction processing by 60% and improved compliance to contracts. e-Sourcing delivered rapid benefits on a variety of commodities including 40% cost reduction on non-surgical gloves.
Senior stakeholders became even more engaged as the programme progressed and delivered. This created a virtuous circle of increased benefits and improved sustainability.
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