Supply Chain Management: Technology's Role in Achieving Optimum Performance

1. Healthcare Supply Chain Management: Technology‘s Role in Achieving Optimum Performance Webinar Presented by: Jamie C. Kowalski, MBA, FACHE June 9, 2015 Jamie C. Kowalski Consulting, LLC Copyright 2015

3. TOPICS  Supply Chain Management Defined  Supply Chain Objectives  Information Challenges and Requirements  How Technology Facilitates Optimum Performance 3Jamie C. Kowalski Consulting, LLC Copyright 2015

4. SUPPLY CHAIN MANAGEMENT; ENTERPRISE-WIDE ACTIVITY BASED COST VIEW 4 Evaluate Select Sourcing and Contracting Process Order Ship Product Receive and Pay Inventory and Store Pick And Deliver Deliver, Use, Charge Fill Order Provider/ Customer Manufacturer Distributor Provider Dispose Reverse Logistics Process Comprehensive | Complex | Interdependent Jamie C. Kowalski Consulting, LLC Copyright 2015 SUPPLY CHAIN MANAGEMENT DEFINED

5. Total Hospital Operating Expenses 45% Clinical & General Labor, Other 25% Supply Chain Total Delivered Costs (Activity Based Cost Basis) Supplies 15% Logistics & Distribution 15% Other 100% Total Operating Expenses * Figures based on HFMA 2008 estimates. Labor cost includes salaries, wages and benefits based on average of leading hospitals and Others is inclusive of profits to the hospitals. Source: S&P Industry Surveys: Healthcare Facilities; HFMA; industry reporting; Pipal Research analysis. Copyright Owens & Minor, Inc. 2008 5 TOTAL ANNUAL SUPPLY CHAIN EXPENSES REACH 50+% OF TOTAL ANNUAL OPERATING EXPENSES

6. OPPORTUNITIES  Spend Management  Budget Accuracy and Accountability  Encumbrance  Visibility  Analytics, Metrics  Drill Down From Aggregate to… o Cost Center o Service Line o Product Category o Item  Consume Excess Inventory Levels  Value Analysis o Supplier o Procedure o Patient o Physician 6 Jamie C. Kowalski Consulting, LLC Copyright 2015

7. OPPORTUNITIES  Value Analysis – Meet, Not Exceed, Outcome Requirements;  MD Engagement/  Leadership,  Data Driven,  Emulate Best Practices,  Executive Champions  Standardize Process, Product, Price, Supplier 7Jamie C. Kowalski Consulting, LLC Copyright 2015

9.  Group Purchasing Organizations  Model Evolving  Alternatives Provided by IDNs (CSC Model), Regional LLCs  Collaboratives Forming o Cleveland Clinic + Dignity o Hopkins + Allegheny/Highmark o Barnes/Jewish + St. Luke’s – KC  Insurance Companies  Lack of Distinction in Portfolios, Prices?  If You Are IN, Be IN 9 OPPORTUNITIES Jamie C. Kowalski Consulting, LLC Copyright 2015

10.  Inventory Management  Inventory = CA$H  Visibility  Accountability  Consolidation  Demand Planning  Standardization; Product, Price, Supplier 10 OPPORTUNITIES Jamie C. Kowalski Consulting, LLC Copyright 2015

11. OPPORTUNITIES  Operations  LEAN 6 Sigma  Nurses Doing Supply Chain Tasks vs Supply Chain staff  Operations: Task Necessity; Task Efficiency  Operations: Manual vs Automated (Robotics, Info Tech)  Consolidate, Standardize, Centralize, Schedule 11 Jamie C. Kowalski Consulting, LLC Copyright 2015

12. OPPORTUNITIES  Metrics  Metrics Define and Track Performance & Value  Measure What Matters, Can be Managed  Metrics Are NOT Benchmarks; Benchmarks come from Metrics  Develop for Various needs o Staff Level o Management Level o Customer Level o Executive Value  Produce and Distribute  Analyze, Discuss  Take Action 12 Jamie C. Kowalski Consulting, LLC Copyright 2015

13. CLINICAL VALUE OPPORTUNITIES  Improve Role & Utilization  Supply Chain = Point of Origin to Point of Use  Nurses Have Role in Value Analysis ONLY  More Time with patients  RNs do what Educated and Trained To Do  Less ‘chasing’; less ‘burnout’  Paid for desired role and service  Surgery Not an Exception  Supply Chain Proves Capability  Earns Trust  Supply Chain is Welcomed (‘09 Survey’) 13 Jamie C. Kowalski Consulting, LLC Copyright 2015

14. CLINICAL VALUE OPPORTUNITIES  Physician Engagement  Employed and non-employed  Value Analysis ‘Rules’  Value Analysis Process  Incentives  CEO leads; SCL Supports and Executes 14 Jamie C. Kowalski Consulting, LLC Copyright 2015

15.  Technology Solutions  Many Supply Chain Components  ERPs Provide the Basics; some evolution on the way  Enables Top Performance  Former “Bolt-Ons” are now Essentials; Development is Exploding  Real-Time Visibility to Point of Use  In Depth Analytics  Automation of All Transactions; Forecasting, P2P,  Costs Down, Capabilities Up; ‘Cloud Based’  Invest to Get a Return 15 OPPORTUNITIES Jamie C. Kowalski Consulting, LLC Copyright 2015

16. Inventory Mgt/Demand Forecast Total Cost Per Encounter Quality Outcome/EMR Standardization Value Analysis Charge/Revenue Cycle Supplies Drugs Equipment Food Linen Sterile Items Waste Order Entry Point of Use Cross-Docking Productivity Sterile Reprocessing Printing Laundry Production Mgt QA Case Cart Mgt Instrument Mgt & Tracking ERP Item Tracking P2P Receipt ERP Sourcing Bidding RFP Mgt Vendor Mgt Contract Mgt Reverse Auction Spot Bulk Buys EDI P2P P Card Price Comparison Tier Analysis Spend Analytics WMS Order Entry Records Storage & Retrieval Transportation & Freight Gen Ledger/ERP Value Analysis Functional Equivalents Outcomes Matching Spend Analytics Cost to Change Ratio Value Analysis Metrics Supply Chain Management Planning Evaluating Selecting Purchasing Contracting Storing Warehousing Processing Distribute Transport Using Expense Management Enterprise-Wide Supply Chain Management Technology Tools, by Function ERP Data Cleansing / Normalizing Use Analytics Demand Forecasting Point of Use Perpetual Physical Count Recalls Rotation PAR Mgt & Analysis Mobile Equip Tracking Verification Asset Mgt Cross Docking Total Cost of Use Spend Analytics Standardizing Receiving/ Accounts Payable Managing Inventory 16 Jamie C. Kowalski Consulting, LLC Copyright 2015

17. Do You Have The Best Possible …? SC Leadership SC Strategic Plan Exec Engagement; Strategy, Coaching, Enabling, Holding Accountable Educated Managers, Clinicians, Physicians, Staff Organization and Processes Business partners, Relationships Technology Tools Performance Metrics and Management Patient Safety, Service and Satisfaction Jamie C. Kowalski Consulting, LLC Copyright 2015 17

19.  To improve your inventory management processes, join us for a product education webinar:  Friday, June 12th, 3:30 PM ET / 12:30 PM PT  To improve your receiving and tracking processes, join us for a product education webinar:  Wednesday, June 17th, 11:30 AM ET / 8:30 AM PT  Registration links will be sent today Jamie C. Kowalski Consulting, LLC Copyright 2015 19 LEARN MORE

Supply Chain Management: Technology's Role in Achieving Optimum Performance

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Supply Chain Management: Technology's Role in Achieving Optimum Performance