ahrmm 2009 - upmc prodigo panel discussion
DESCRIPTION
UPMC and Prodigo presented an interactive panel discussion to educate AHRMM members on the benefits of implementing Prodigo's marketplace technology.---About Prodigo: Prodigo Solutions is focused on driving savings in the healthcare supply chain. Created by healthcare supply chain professionals, the company's suite of solutions and services drive compliance, automation, data quality and user adoption. Prodigo Solutions, LLC is an operating division of UPMC's International and Commercial Services Division. Visit www.prodigosolutions.com and www.upmc.com.TRANSCRIPT
Extend Your ERP – Lessons
from a $8B IDN
Opening Remarks
Jack CollettiCEO, Prodigo Solutions, LLC
Prodigo Solutions is focused on driving savings in the
healthcare supply chain. Launched by healthcare
supply chain professionals, the company's suite of
solutions and services drive compliance, automation,
data quality and user adoption.
Typical Environment
5
Internet
Item
Master~85% of Transactions
~15% of Transactions
Supplier Connections
Background
Bob PavlikDirector, Non-Clinical Sourcing
UPMC Profile
• Leading integrated health care system in Pennsylvania; one of the largest and most diverse in the nation
• 48,000 employees; second largest employer in Pennsylvania
• Hospital – 20 tertiary, community, and specialty hospitals
• Physician – more than 4,000 physicians with privileges at UPMC hospitals including about 2,300 employed
• Community Provider Services – extensive network of rehabilitation, home care and senior services
• Insurance – products covering commercial, Medicare and Medicaid segments, EAP, Behavioral Health (1.3 million covered lives in Health Plan)
How we stack up?
Supply Chain Profile
•Centralized Operation
•$1.8 billion in spend
•Process 4000+ Purchase requisitions per week
•Process 70,000+ invoices per month
•Receive 1.1 million+ packages per year through a
central distribution center
•Manage over 600 point of consumption material
carts
•Manage 30+ value analysis teams
Key Systems
Non-Clinical Team Spend
Overview
Overall Team Spend Spend
Corporate Admin Services $452,622,000
Information Technology $206,000,000
Facitilities, Construction, & Dietery $362,789,000
$1,021,411,000
Non-Clinical Sourcing Team
Transformation
• Sourcing organization that is driven by internal customer’s
business goals and objectives
– Commodity Council approach – cross functional teams, executive
sponsorship, etc..
• Utilizes a structured sourcing methodology
• Integrated organization from vendor selection through order
placement
– Stronger sense of ownership when implementing contract• Better accuracy will reduced match exceptions and returns
– Can be more proactive with career management• Clear path from Sourcing Specialist to Commodity Manager
– Can be more creative with regards to resource management• Split time between sourcing and order placement, etc.
• Leverage technology to reduce transactional work
– True North = 100% lights out
– Use efficiency gains to off set workforce reductions
– Move tactical FTEs to sourcing
18 Month Staff Impact
Sourcing Operations Total
Jan-08 8.5 13.5 22
Jul-09 9 10 19
Increase/Decrease 6% -26% -14%
Technology Impact
Next opportunities:
•Dietary (Sysco & GFS)
Vendor # % # %
Intercontinental Subscription Service Jan 9 2009 145 145 100% 143 99% 99%
Software House May 9 2008 1,067 255 24% 0 0% 0%
Airgas Mar 7 2008 554 435 79% 0 0% 0%
Worldwide Technologies Feb 26 2008 5,385 2,438 45% 678 13% 32%
Grainger Feb 19 2008 6,537 5,621 86% 5,055 77% 77%
WorkflowOne Oct 17 2007 45,209 44,043 97% 43,624 96% 96%
Jeter Sep 13 2007 4,951 3,859 78% 660 13% 84%
BatteriesPlus Oct 9 2007 382 197 52% 127 33% 53%
Franklin Interiors Oct 10 2007 2,674 435 16% 118 4% 13%
Corporate Express May 30 2007 331,362 326,993 99% 311,076 94% 97%
398,266 384,421 97% 361,481 91%
eMarket Lines Lights out linesTotal eligilble
LinesGo-live Date
Current
Run Rate
Category Recap Overview
Inventory Products 1,323 items Inventory Value = $ 975,363
Print On Demand 3,010 items Coordinate Options in UPMC Print Shop
OMS Program 47 Suppliers 2008 Annual Activity Value = $ 2,723,378
Stationery Program 8,167 Orders 2008 Annual Activity Value = $ 629,495
Promotional Products 428 Orders 2008 Annual Activity Value = $ 498,617
ePro Orders 81% Usage 2008 Annual Requisitions = 13,360
Workflow One
Requisitions via ePro accounted for 81% of activity (96%
lights out)
Reduced work load from 2 FTEs to .5 FTEs
Match Exception Improvement
15
Staples / Corporate Express
Month Oct 2008 Nov 2008 Dec 2008 Oct 2009 Nov 2009 Dec 2009
Metrics
Total Purchases $1,155,305.61 $938,648.63 $997,605.77 $833,603.39 $801,576.67 $824,456.72
Total Returns & Credits $48,627.01 $109,941.01 $47,976.72 $17,405.62 $17,248.61 $16,418.60
Total Net Purchases $1,106,678.60 $828,707.62 $949,629.05 $816,197.76 $784,328.05 $808,038.13
Avg Order Size $154.71 $155.76 $160.61 $156.65 $149.45 $149.46
Avg Lines Per Order 3.53 3.58 3.51 3.44 3.42 3.45
% CEB of Net Purch. 38.59% 38.44% 37.09% 18.47% 19.57% 18.82%
% Electronic of Net Purch. 89.34% 91.63% 93.35% 97.41% 97.45% 97.05%
% MWBE of Net Purch. 14.34% 14.17% 14.41% 18.67% 21.33% 20.00%
% CEXP Catalog Fill 93.01% 92.87% 93.80% 86.22% 86.93% 85.78%
% Total Returns/Credits 4.21% 11.71% 4.81% 2.09% 2.15% 1.99%
# of Orders Placed 7,428 5,563 6,153 5,292 5,343 5,491
# of Order Lines 26,220 19,941 21,583 18,191 18,277 18,965
Requisitions via ePro accounted for 97% of activity (97% lights out).
Reduced work load from 1 FTEs to .25 FTEs
Match Exception Improvement
Better catalog control
Increased MWDBE business (improved business compliance and improved reporting)
Executing the Strategy
Jeff AndersenManager, Consulting Services
Supply Chain Profile
• Sourcing – implement contracted savings & improve data quality
• Accounts Payable – minimize Matching Exceptions
• Purchasing – focus on value-added transactions only
• Materials Management – reduce product returns
• CFO’s – ensure spend compliance
• CEO’s – maximize user efficiency/redistribute resources
• Business Unit Leadership – improve ease-of-use
• Department Users – “we want content too!…”
Enterprise-wide Stakeholders
Supply Chain Profile
•Platform
•Supplier Ramp
•User Experience
•Leverage PeopleSoft ERP Investment
•Low TCO
Ingredients For Success
A Look Back… 2 Yrs. Ago
19
Internet
Item
Master
~85% of Transactions
~15% of Transactions
Supplier Connections
Special
Requests
Ad-hoc
21
Content is King!
UPMC Implemented in mid 2007…
2008/2009 = tremendous supplier ramp
Catering Print Shop
eMarketplace isn’t solely for external suppliers!
Telecom
On the Horizon
Medical Media Services
Coming soon:
Resources
• Catalog Manager = 1 FTE
• IT Resources (post-integration) = None
• EDI Integration Manager = 0.5 FTE
Maintenance & Growth was/is inexpensive
Data
Management
User
ExperienceCompliance Automation
Drive more spend under management with improved contract compliance and rapid enablement of key suppliers and punchout suppliers.
Streamline item master management, and improve UNSPSC quality.
Realize extensive process savings and increased user adoption.
Reduce special requests and enable touchless (no buyer) purchasing, and improve overall connectivity with your supplier base.
Results
Success Story
25
In early 2007, UPMC made the decision
(after a thorough technology review) to
implement eMarketplace technology as an
enhancement to the existing PeopleSoft
eProcurement module.
Background
Decision Points
Results
UPMC had grown from $2b in revenues to
over $7b in 10 years. Despite having a major
ERP system in place, contract compliance
was below 20%, special requests and maverick
spending was rampant, and the growing user
base and supplier base was compounding the
issue. 24 months post implementation:
•UPMC is fully deployed at 20 locations (including Corporate)
•Transaction level: 340,000 (past 12 months)
•Compliance: 50% increase in contract compliance
•Automation: 15% increase ; currently 40% of total purchase
transactions are “touchless” (estimate $30 savings per
transaction).
•Process: 33% reduction in time spent on placing orders.
Also, UPMC experienced a 40% reduction in time spent on
item master management.
Solution
UPMC implemented the eMarketplace solution as a
single connection from PeopleSoft ERP. The supply
chain group then began a systematic onboarding of
punchout suppliers and hosted supplier catalogs.
Further, UPMC integrated the Item Master file
(60k+items; 850 suppliers) into the eMarketplace.
Metrics Tell the Story: Leveraging Best Practice
in Pursuit of “World Class”
Increase
eMarkeplace
transactions from
15% to 68%
Contract
Compliance Benefit
& FTE Impact
Increase “Lights
Out” (automated
transactions) to
remove tactical
FTE’s Every 5%
Increase Represents
a FTE
Results
Results of Deployment
• Eliminated Paper Disbursement Requests
• Eliminated Paper Requisitions
• Eliminated 60% of faxed/phoned PO’s to supply base and working toward 100%
Hard Impact
• eVoucher eliminated 4 FTE’s in the AP Entry Group
• eProcurement/eMarketplace eliminated 6 FTE’s that comprised the SCM Pre-Key Group
• Allowed for the reduction or limited the need to hire 15.31 FTE’s and counting as
eMarketplace and “Lights Out” programs expand………
Soft Impact
• Efficiencies gained with supply base
• Efficiency & effectiveness of remaining Procurement Operations staff
• Increased control through automation & interfaces: PO spend rogue (limit use of P-
Card, Flat File Invoice & Blanket PO) spend
What’s Next?
“According to a recent survey, the healthcare industry is at least 15 percent behind other industries when it comes to automation.” – Healthcare Finance News
“Hospitals are about five years behind non-healthcare industries in terms of adoption of paperless invoice processing. Of the survey respondents, more than 70 percent of the hospitals received in excess of 80 percent of their invoices in paper format. As a result, they said resolving matching errors and exceptions were their most challenging tasks.” – PayStream Advisors, a Charlotte-based research and consulting firm
UPMC is removing all paper based invoices.
The Future: Accelerate Benefit Capture
Continue aggressive push to access supplier hosted (and local)
content through single eMarketplace punchout
Incorporate services & internal purchases (telecom, print
services) into eMarketplace
Add more direct connects through eMarketplace for
“configurables” (furniture, clinical equipment, catering)
Leverage content and supplier enablement to drive back-end
Procure-to-Pay automation (ERS, Assumed Receipt, ASN
Receipt etc.) Lights Out Perfect Order
Segment Supply Base and funnel toward appropriate automated
flowpath – using the PeopleSoft SRM suite as the foundation
Q&A Session
Contact Information
Janette “J.P.” PerrettaDirector, Sales & Marketing
703.574.4479 (office)
412.445.8096 (cell)
www.prodigosolutions.com