supply chain organization overview: past, present and future richard bagley director strategic...
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Supply Chain Organization
Overview:Past, Present and Future
Richard BagleyDirector Strategic Sourcing
• Since 1975• 22 hospitals (36% of
Hospitals)• 2,790 licensed beds
• Since 1983• Health plans (23% of
Utah Insurance)• 630,000 members
• Since 1994• 1,100 employed
physicians• 150 clinics
• Since 1997• 9 key service lines
Hospitals
SelectHealth
MedicalGroup
ClinicalPrograms
• Based in SLC, UT• 34,000 employees• $4.5B revenues• $5B assets• AA+ Standard &
Poor’s Aa1 Moody’s
Intermountain Healthcare Overview
What does the world look like in Supply Chain?
Critical Success Factors• Supply chain became a strategic focus
by senior leadership
• $3 Million initially investment and 25 new FTEs – skilled & talented
• Centralized buyers and reporting relationships of the warehouse
• Added couriers, travel services, publishing and central laundry
• Earned trust of stakeholders – management & clinicians
• Implemented effective strategies
• Deliver on commitments - Savings, value, efficiency & more
• “Skate to the puck”
Notable Recognitions
Garter’s 4th Best Supply Chain in Healthcare
2013 AHRMM Innovation Award
ECRI Healthcare Supply Chain Achievement Award
IntelliCentric’s 5-Rings Award
Our Supply Chain is One of the Industry’s Best
SCO’s Strategic Imperatives
•Deliver $42M in savings
•Deliver plan to support CPI + 1
Increase Savings and Value
•Optimize efficiency and minimize variation
•Risk mitigation plan for supply chain
Expand Scope
•Develop capability to deliver post contract value
•Rum/Lum
New Forms of Value
•Project eLEV8 – Go Live in Q1 2014
•Data Standardization
Enhance Technology
•Cost Neutral in Five Years!
Generate Revenue
7 Things You Need to Know About the Healthcare Supply Chain
Logistics costs in healthcare are more than 10X the costs of the retail industry
The most expensive and high risk items often have the least control
Personal preference drives many product decisions
Healthcare outsources less than most other industries
Healthcare industry has the lowest level of trust between buyers and suppliers
Supply chain is still in the basement of many hospitals (literally) – even though non-labor expenses are approaching 50% of total costs
Data standards, transparency, traceability…oh my!
SUPPLIERNETWORK SUPPLY CHAIN
PROCESSESCLINICAL CARE
NETWORK
Goods & Services
PATIENTS
Source
Buy
Deliver
Category Manageme
nt
Contract Mgmt
P2P
Logistics Mgmt
Materials & Inventory
Mgmt
Our Operating Model
Supplier Relationship ManagementCustomer Relationship Management
• Drive value up and cost down on $1.4B in spend
• Facilitate governance to select best projects and manage prioritization of work
• Facilitate the process to select best supplier(s) and products
• Segment and manage suppliers we have sourced
• Manage catalog of products/services/equipment
• Manage category plans (spend analysis, opportunity assessment and calendar of events)
• Manage supplier contracts (820 new agreements in 2013 with 5400+ active agreements)
Source (Procurement)
Sourcing Governance FrameworkTier 1
Tier 2
Who? Purpose Decision Making Role
Procurement Steering
CommitteeDirection Setting
Approves Complex Decisions
Impacting the Entire
Organization
Functional Steering
Committee(i.e. IS
Leadership Team)
Functional Oversight
Approves Complex Decisions Impacting Function
Category Council(i.e. Telecom)
Project Execution
Approves Straightforward
Decisions Impacting Category
Strategic Sourcing Methodology
Supplier Segmentation
Strategic
Growth
Maintain
Exit0 10
10
Supplier Performance
Stra
tegi
c Im
pac
t P
oten
tial
Buy (Purchasing)
• Manage the daily transactions to ensure right product/service/software/equipment is at the right price at the right location
• Support 22 hospitals and 186 clinics centrally with team of 30 buyers
• Buying team is centralized and co-located with Accounts Payable to work together
• Process 1.2M PO lines a year• 3 way matching and moving towards perfect order
(touchless)
• Ensure employees and clinicians have the products they need, when and where they need them
• We do this by utilizing the best practices in warehousing, transportation, automated materials handling equipment, and inventory optimization.
• This reduces variation and waste in our supply chain, and improves service to the end-users.
Deliver (Logistics)
Logistics’ fundamental Role = Balance
Opened - October Q3 2012 – LEED Certified
327,000 sq ft – Distribution Center – and much,
much more
• 151k sq ft Warehouse space (area of three
football fields)
• 111k sq ft Office and logistics management
space
• 65k sq ft Ancillary Services space
Supply Chain Center Overview
What is the Supply Chain Center?So much more than a self-distribution center!
Logistics Center
Ancillary Services
SCO Leadership & Administration
Production Print Center• Design Services• Print Fulfillment
Imaging Equipment ServicesPharmacy Services• Retail Central Fill• Compounding• Unit Dose Packaging• Inventory Optimization• Bulk Buy Support
IS Asset Management Service• Computer Imaging• MFD Deployment• Asset Disposition
Everything Supply Chain co-located here at the SCC• Solutions, Sourcing, Contracting, Analytics, Systems, Purchasing,
Accounts Payable, Logistics plus 12-15 programs
Professional and technology-enabled meeting spaces Spaces designed to facilitate collaborationHeath & Wellness Center (for use by all SCO employees)Room for expansion
Receiving• Distribution• Cross-docking
Bulk StoragePick/Pack/ShipCourier ServicesHeavy Fleet ServicesEquipment LogisticsBulk Storage Asset RecoveryEmergency Preparedness
Why is this Significant?
Demonstration that Intermountain senior leadership understands the critical importance of supply chain as a key
corporate strategy
Everything Supply Chain resides at our Supply Chain Center!
Supply Chain Center Objectives of Logistics Center
Enhanced ResponsivenessImproved Fill Rates
Value-Added Ancillary ServicesSupports Standardization
Deliver in Right Unit of MeasureSingle Shipment to Each LocationOne-Stop-Shop Customer Service
Lower Unit CostsLower Transportation Costs
Streamlined ProcessesProductivity Gains
Better Use of Hospital SpaceNew Revenue from Third PartiesEnables Product Standardization
Enables SustainabilityStreamlined Data Exchange
Emergency PreparednessReduce Product Variation
Expiration Date MgmtImproved TraceabilityRecall ManagementEnhanced Controls
Mitigate Product Shortages
Lower Cost
ImproveService
ReduceRisk
Legacy Distribution Model
Med/Surg Dist.
Lab Mfg.
Pharma Mfg.
Dietary Dist.
Film Mfg.
Lab Dist.
Radiology Dist.
Pharma Dist.
Med/Surg Mfg.
Hospital 1
Hospital 2
Hospital 3
Hospitals 4 - 23
Clinics 1 - 150
Home Health
Retail Pharma
Dietary Mfg.
Surgical Center
Direct ManufacturersExample: Total Joints
Direct ManufacturersExample: Total Joints
Central Lab
Central Office
SCC-Enabled Distribution Model
Lab Mfg.
Pharma Mfg.
Film Mfg.
Med/Surg Mfg.
Dietary Mfg.
Linen Mfg.
Supply Chain Center
Mfg. Direct
Pharmacy
IT Asset Management
Production Print
Consolidated Transportation
Hospital 1
Hospital 2
Hospital 3
Hospitals 4 - 23
Clinics 1 - 150
Home Health
Retail Pharma
Surgical Center
Central Lab
Central Office
Ancillary Services
Logistics Center
Equipment Services
DistributorsDistributors
Supply Chain Center Location….Location ….Location
80 % of Hospital beds within 50 miles radius
Longest distance to facility = 300 miles (Dixie Medical Center)
Improved employee engagement and collaboration throughout the SCO
Consolidation of ancillary services, which leverage logistics platform
Value-generating direct relationships with suppliers
Improved transparency throughout value chain
Technology-enabled data synchronization and exchange
Process effectiveness and efficiency
Reduced Variation = Quality Improvement = Cost Improvement
Enables clinicians to focus more time on clinical care
Enables SCO to invest more time on other supply chains• Pharmacy• OR & Cath Lab
Environmental stewardship
The Supply Chain Center is More than a WarehouseIt is also an Enabler of other Non-Logistics Benefits
Questions?
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