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Hospital Supply Chain Challenges that can be Easily Fixed

Rob O’Byrne & David HarrisonLogistics Bureau

www.LogisticsBureau.com

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31,200  +  Consulting  Projects,  23  Countries,  over  17  Years

Logistics  Bureau  GroupConsulting

Social  Enterprise

Education

Watch  this  space!

Author

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Logistics  Bureau  experience  …  sample

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.6.5

3.1%

2.1%

1.0%

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PurchasingInventory  Management

Inventory  HoldingWarehousing

TransportCustomer  Service

7.7%

Hospitals  %Sales  -­ lower  20%  of  Performers

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Supply  Chain  Key  Focus  Areas

Costs

The  SCM  Wheel  of  Fortune

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Supply  Chain  Key  Drivers

Costs

The  SCM  Wheel  of  Fortune

Customer  Order  Size

Customer  Order  

Frequency

Supplier  Performance

Ranging

The  Right  Assets

Asset  Utilisation

Product  Flow

Product  Velocity

Appropriate  Service

At  Appropriate  

Cost

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What  to  Measure?  ………..  Don’t  OD!

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KPIs  – A  Sound  Approach

Cross  functionalStakeholder  engagement  and  review  at  critical  

stages  is  vital

1Review  Strategic  Plan

2Review  Customer  Perceptions

3Identify  Strategic  Imperatives

4Quantify  Current  

Performance

5Identify  key  functions  &  processes

6Develop  KPI  Sets  &  Owners

7Benchmark  Performance  

&  Set  Targets

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Commonly  Used  Top  Level  KPIs

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Cost  v  Service  Targets  WHY  BENCHMARK?

%  of  Gross  Sales  

<3%

<6%<5%

<6% <6%7%

10%11%

12%10%

12%

<7%

0

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4

6

8

10

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Best-­in-­ClassAverage

Supply  Chains  that  provide  a  Best  In  Class  serviceoperate  at  half  the  Total  Supply  Chain  Cost  of  their  peers

Source:  Benchmarking  Success,  2015  

Half  the  cost!!!

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Service  and  Cost  – Level  1  MetricsPharmaceutical  Sector

The  Bottom  20%  !

Where  are  you?

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1. The  customer  is  king,  but  the  shareholder  is  verily  the  King  of  Kings.2. Know  thine  Supply  Chain  well,  how  it  be  formed,  how  it  doth  function  

and  how  it  may  be  defined  in  stories  to  others  3. Whilst  thy  flock  may  number  in  the  thousands,  thou  must  understand  the  

needs  of  each  and  group  and  care  for  them,  like  with  like,  such  as  those  that  bite  the  hand  that  feeds  them,  or  those  that  are  timid  and  must  be  nurtured.

4. Know  thine  Supply  Chain  costs  like  the  back  of  thine  hand.5. Covet  thy  neighbours  customers  and  woo  them  with  superior  offerings.6. Thou  shall  not  make  for  thine  leaders  or  customers,  false  images  of  

thine  performance,  but  be  open  and  honest  even  if  such  may  incur  their  wrath.

7. Honour  thy  customers  and  suppliers  and  treat  them  as  thou  wouldst  be  treated,  for  they  put  the  bread  on  thine  table.

8. Remember  the  promised  delivery  date,  and  keep  it  thus.9. Know  and  understand  this,  that  Thou  hast  more  than  one  Supply  Chain,  

but  not  so  many  as  the  stars  in  the  sky.10. Keep  thine  humour  at  all  times,  for  it  will   succour  thee  through  adversity.

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“Good  to  Great”

• Tips  on  Procurement

• Develop  Key  Internal  Client    Relationships

• Map  Staff  Capabilities  

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RATE

REDUCTION  THRU  RATE

Specific  Tools Blanket  %  off

StructureFocus  on  Middle  

line.

KPI  triggers.

Suppliers  want  to  see  C-­Suite

“Industry  Average  1/3  leakage  or  non-­compliances  to  Procurement  Contract”Aberdeen  Benchmarks

SUPPLIERS  VIEW:  will  reduce  if  they  can  see  grow  of  market  share  or  removal  of  competitors

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DEMAND  MANAGEMENT

REDUCTION  THRU  DEMAND  MANAGEMENT

Simplify  specification

“$100  TO  $200  million  of  bottom-­ line  cost  reductions.  Because  demand  management  affects  purchases  at  their  source,  savings  begin  immediately’

SUPPLIERS  VIEW:  look  to  your  ability  to  move  down  the  Customers  Supply  Chain.  Eliminate  steps  and  other  suppliers  in  the  chain.

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SCOPE

REDUCTION  THRU  INNOVATION  /  SCOPE

Alliance  models Leverage  the  company  ethos

Ask  the  SupplierI    NOT  P

Promote  RFI  vs RFPThe  “I”  will   identify  

innovation

Bundle  multi  scopes

SUPPLIERS  VIEW:  they  are  looking  for  “customer  of  choice”  to  highlight  to  future  clients  

their  products  and  services  in  action  

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WITHOUT  EFFECTIVE  RELATIONSHIP  MANAGEMENTVALUE  FROM  THE  CONTRACTS  ERODE  OVER  TIME…

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Supplier  Relationship  Program

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Develop  Key  Internal  Client  Relationship

Key  to  Supplier  Relationship  Management

Business  Alignment  Appraisal.

Client  –Centered  

Engagement.Project  

Engagement  Mapping

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Map  staff  capabilities

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Thank  You  …

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Hospital Supply Chain Challenges that can be Easily Fixed

Rob O’Byrne & David HarrisonLogistics Bureau

www.LogisticsBureau.com