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Supply Chain Organization

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Presentation on theme: "Supply Chain Organization"— Presentation transcript:

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

2 Intermountain Healthcare Overview
Hospitals Since 1975 22 hospitals (36% of Hospitals) 2,790 licensed beds SelectHealth Since 1983 Health plans (23% of Utah Insurance) 630,000 members Medical Group Since 1994 1,100 employed physicians 150 clinics Based in SLC, UT 34,000 employees $4.5B revenues $5B assets AA+ Standard & Poor’s Aa1 Moody’s Clinical Programs Since 1997 9 key service lines

3 What does the world look like in Supply Chain?


5 Our Supply Chain is One of the Industry’s Best
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 Cardinal Health Mayo Foundation BD Intermountain Healthcare Owens & Minor Abbott Johnson and Johnson Novartis Mercy (MO) Geisinger Health Systems

6 SCO’s Strategic Imperatives
Increase Savings and Value Deliver $42M in savings Deliver plan to support CPI + 1 Expand Scope Optimize efficiency and minimize variation Risk mitigation plan for supply chain New Forms of Value Develop capability to deliver post contract value Rum/Lum Enhance Technology Project eLEV8 – Go Live in Q1 2014 Data Standardization Generate Revenue Cost Neutral in Five Years!

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 Materials & Inventory Mgmt
Our Operating Model Goods & Services SUPPLIER NETWORK P A T I E N S SUPPLY CHAIN PROCESSES CLINICAL CARE NETWORK Category Management Contract Mgmt P2P Logistics Mgmt Materials & Inventory Mgmt Source Buy Deliver Supplier Relationship Management Customer Relationship Management 8

9 Source (Procurement) 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 active agreements)

10 Sourcing Governance Framework
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 Tier 1 Tier 2 Tier 3

11 Strategic Sourcing Methodology

12 Supplier Segmentation
Strategic Impact Potential 10 Strategic Growth Maintain Exit We see many different definitions of strategic partnership — Clearly, they take time to develop, and some companies' product or service may limit the combined value that can be extracted from this type of relationship. UPMC example — strict definition of "strategic" GE example of how it approaches imaging — What level and what measures, and how that differs from the typical medical surgical or device approach. Mayo example of SC cost as a % of procedure and tie to reimbursement Supplier Performance

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 Deliver (Logistics) 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.

15 Logistics’ fundamental Role = Balance

16 Supply Chain Center Overview
Opened - October Q – 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

17 SCO Leadership & Administration
What is the Supply Chain Center? So much more than a self-distribution center! Receiving Distribution Cross-docking Bulk Storage Pick/Pack/Ship Courier Services Heavy Fleet Services Equipment Logistics Asset Recovery Emergency Preparedness 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 Logistics Center Ancillary Services SCO Leadership & Administration Nb Everything Supply Chain co-located here at the SCC Solutions, Sourcing, Contracting, Analytics, Systems, Purchasing, Accounts Payable, Logistics plus programs Professional and technology-enabled meeting spaces Spaces designed to facilitate collaboration Heath & Wellness Center (for use by all SCO employees) Room for expansion

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 Objectives of Logistics Center
Supply Chain Center Objectives of Logistics Center 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 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 Emergency Preparedness Reduce Product Variation Expiration Date Mgmt Improved Traceability Recall Management Enhanced Controls Mitigate Product Shortages Lower Cost Improve Service Reduce Risk

20 Legacy Distribution Model
Hospital 1 Med/Surg Mfg. Med/Surg Dist. Hospital 2 Pharma Mfg. Pharma Dist. Lab Mfg. Lab Dist. Hospital 3 Film Mfg. Radiology Dist. Hospitals Dietary Mfg. Dietary Dist. Clinics Home Health Direct Manufacturers Example: Total Joints Retail Pharma Central Lab Surgical Center Central Office

21 SCC-Enabled Distribution Model
Supply Chain Center Consolidated Transportation Mfg. Direct Logistics Center Hospital 1 Hospital 2 Hospital 3 Hospitals Clinics Home Health Retail Pharma Surgical Center Central Lab Central Office Med/Surg Mfg. Pharma Mfg. Lab Mfg. Film Mfg. Dietary Mfg. Linen Mfg. Ancillary Services Pharmacy Distributors IT Asset Management Production Print Equipment Services

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 The Supply Chain Center is More than a Warehouse
It is also an Enabler of other Non-Logistics Benefits 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

24 Questions?

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