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Supply Chain Organization Overview: Past, Present and Future Richard Bagley Director Strategic Sourcing.

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Presentation on theme: "Supply Chain Organization Overview: Past, Present and Future Richard Bagley Director Strategic Sourcing."— Presentation transcript:

1 Supply Chain Organization Overview: Past, Present and Future Richard Bagley Director Strategic Sourcing

2 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 Medical Group Medical Group Clinical Programs Clinical Programs Based in SLC, UT 34,000 employees $4.5B revenues $5B assets AA+ Standard & Poors Aa1 Moodys Intermountain Healthcare Overview

3 What does the world look like in Supply Chain?

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5 Notable Recognitions Garters 4 th Best Supply Chain in Healthcare 2013 AHRMM Innovation Award ECRI Healthcare Supply Chain Achievement Award IntelliCentrics 5-Rings Award Our Supply Chain is One of the Industrys Best

6 SCOs 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 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!

8 SUPPLIERNETWORK SUPPLY CHAIN PROCESSES PROCESSES CLINICAL CARE NETWORK PATIENTSPATIENTS Source Buy Deliver Category Management Contract Mgmt P2P Logistics Mgmt Materials & Inventory Mgmt Our Operating Model Supplier Relationship Management Customer Relationship Management

9 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)

10 Sourcing Governance Framework Tier 1 Tier 2 Tier 3 Who?Purpose Decision Making Role Procurement Steering Committee Direction 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

11 Strategic Sourcing Methodology

12 Supplier Segmentation Strategic Growth Maintain Exit 0 10 Supplier Performance Strategic Impact Potential

13 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)

14 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)

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16 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

17 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 Services Pharmacy 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 collaboration Heath & Wellness Center (for use by all SCO employees) Room for expansion Receiving Distribution Cross-docking Bulk Storage Pick/Pack/Ship Courier Services Heavy Fleet Services Equipment Logistics Bulk Storage Asset Recovery Emergency Preparedness

18 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!

19 Supply Chain Center Objectives of Logistics Center Enhanced Responsiveness Improved Fill Rates Value-Added Ancillary Services Supports Standardization Deliver in Right Unit of Measure Single Shipment to Each Location One-Stop-Shop Customer Service Enhanced Responsiveness Improved Fill Rates Value-Added Ancillary Services Supports Standardization Deliver in Right Unit of Measure Single Shipment to Each Location One-Stop-Shop Customer Service Lower Unit Costs Lower Transportation Costs Streamlined Processes Productivity Gains Better Use of Hospital Space New Revenue from Third Parties Enables Product Standardization Enables Sustainability Streamlined Data Exchange Lower Unit Costs Lower Transportation Costs Streamlined Processes Productivity Gains Better Use of Hospital Space New Revenue from Third Parties Enables Product Standardization Enables Sustainability Streamlined Data Exchange Emergency Preparedness Reduce Product Variation Expiration Date Mgmt Improved Traceability Recall Management Enhanced Controls Mitigate Product Shortages Emergency Preparedness Reduce Product Variation Expiration Date Mgmt Improved Traceability Recall Management Enhanced Controls Mitigate Product Shortages Lower Cost Improve Service Improve Service Reduce Risk Reduce Risk

20 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 Manufacturers Example: Total Joints Direct Manufacturers Example: Total Joints Central Lab Central Office

21 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 Distributors

22 Supply Chain Center Location….Location ….Location 80 % of Hospital beds within 50 miles radius Longest distance to facility = 300 miles (Dixie Medical Center)

23 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 Warehouse It is also an Enabler of other Non-Logistics Benefits

24 Questions?


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